Fashion IPOs allow you to not just own the products from your favorite brands, but also own a piece of the company. From owning earrings, necklaces, bracelets, bags, shoes, kurtas, dresses, now you get to own the company that brings them to you. Isn't that exciting? BIBA's IPO is coming up. Maybe it's time to give it a thought and move into the stock market game.
What are IPOs?
If you are interested in getting started in the IPO space, it essentially means you are buying shares of the company before they hit the stock market. It is less scary that it sounds. To make things simple, let's image this. There is a little cart near your house that sells fresh fruits. Let's assume it's tender coconut water since it is summer and we can never have too many of them. The guy spent INR1000 to buy his cart, and INR500 to buy a stack of tender coconut which he needs to sell the same day. He manages to sell them all for INR2000 by end of today which means he made a profit of??? INR500. Now, if you were to help him with the next batch of tender coconuts he purchases and give him INR100 and he add his own INR400. The profit he makes out of it, for easy calculation let's say is INR1500, you get a share of it. How much you get is between you and the vendor. Now instead of taking the part of your profit, say you let him keep it. It will grow over time, and you get to earn more with your investment.
Now let's think of the bigger companies. Most of the companies are private till they want to go public. Meaning, whatever they earn is their own and their investors'. Companies go public, or are listed in the stock market so they can raise money to grow their business and expand. When they list themselves, they are able to sell their stocks, that means their claim on their own business, to stockholders. This can be done once it is listed and anyone can buy the stock through apps like Zerodha and others. Now, here is what they also do. Before the company goes public, they sell their stock to chosen subscribers. This is what is called IPO - initial public offering. Here you need to buy more stocks than the option of buying only 1 in the regular stock market.
But, the catch is you need to bid. Which means, you may or may not get the stock in IPO.
How to bid for IPOs
To bid for an IPO, you need to register yourself on once of the trading apps like Zerodha, PayTM money etc. There you can find the option of bidding for a stock of your choice. Once you do that, it takes a few days before you find out if you have been chosen to receive the IPO or not.
What happens next?
Next, when you find out that you have received the IPO, you have two options. When the company goes public on the stock market, you can see if the opening price is better than the amount you spent on the IPO. If yes, you can either choose to sell or retain the stock for a better day.
Do I make money for sure?
No. There is no hard and fast rule that you make money. Like the PayTM IPO which had great expectations crashed from the day it went live on the stock market. Many existed soon and cut their losses and many chose to stick on with the hope that it will revive someday.
You can consult a stock market expert for more inputs on what can be done with the particular stock you have chosen.
Nykka was one of the rare IPOs that gave fantastic returns to those who sold their IPOs. This was a fashion brand that is truly loved and saw a great growth on stock market for a while. It may or may not happen with BIBA. But do read more on the internet to understand how it works and see if the IPO game is for you.