Many companies are going to present IPOs. Therefore, it is important to know the main things related to the IPO. Like What do you do think about IPO?
1. What is the price band?
2. How is the allocation of shares?
3. What does the cut-off price mean?
Let’s try to find answers to these questions.
1. In order to apply in a correctly filled forms IPO, you first have to fill in the form. First of all, you must fill in the IPO form correctly. For heavy IPO, many applications are cancelled due to technical reasons.
2. What is the price band?
If the price band for any IPO has been kept at Rs 90-100. Investments bid for Rs 90, but if price goes out 98, then he will not get a single share. This means that the bid of the investor is revoked.
If it seems that this IPO will be taken in hand and valuation is also reasonable, then the upper limit of the price band can be bid for the IPO. If there is a price band of Rs 100-110 for IPO, then a bid of Rs 110 for the IPO can be made.
3. What is the cut-off price?
Some analysts believe that it is better to buy shares at the cut-off price. In the bid, investors have to pay the price within the price bank and if they do not, then they should seek the help of the cut-off price.
If the price given by the investor is less than the actual price, the investor can not get the shares. Therefore, investors should resort to cut off pricing. Only retail investors can take advantage of this. Investors must fill the cut-off option.
4. How many shares do you bid for?
In an IPO, a retail investor can bid up to a maximum of 2 lakh rupees. However, it is necessary to have a low bid. This means that if an IPO has a lot of 15 shares, then you have to bid for at least 15 shares.
After this, you can bid in multiples of 15. It is compulsory for an investor to buy at least one lot. If IPO is highly subscribed, then the shares are allocated to the investors on proportional basis.
Also, keep in mind that at least one lot will be allocated to a retail investor. This means that bidding for a low lot can prove to be harmful to the investor in the case of a higher subscription.
Apart from this, lucky draw can also be used for allocation of shares. That’s why many investors bid for the names of their families. Because of this, the probability of allocation of shares increases as compared to that person in that family.