Member Since: 12/30/2005
Message Posted: 24
||Posted on 7/17/2011 4:09:23 PM|
Few Questions about IPO's
1.) why do companies rated low performing better than company rated high in IPO? example Muthoot finance was rated 4 out of 5 ICRA whereas Aanjaneya Lifecare rated 2 out of 5.
[Chittorgarh.com] IPO Grading is about fundamentals of the company. There are many other factors which have equal impact on performance of the IPO shares. This includes:
• Price of the IPO shares (over-priced shares may perform bad even the grading is high),
• Market Sentiments (bullies or bearish) at the time of listing
• Size of the issues (Large issues may have huge selling pressure on listing day, as many people invest in IPO’s for listing gains)
• Operators who generally choose small lowgrade IPO’s and speculate the prices for their own benefits by artificial demand and other illegal ways.
But if you look at long term prospects, you money is safe with a good fundamental company. You can check out below reports and find out the performance of shares which are graded 5 or 4 in long terms.
2.) Will highly rated companies have an advantage over lowly rated companies in the long run?
[Chittorgarh.com] This is simply because of IPO Grading is based on fundamental of the company. Good fundamental companies perform well in long term.
3.) Could you please tell me how much should a company spent when the company issue or bid open?
[Chittorgarh.com] Its approximate 5% but depend on multiple factors including size of the issue, strong brand, budget for promoting the IPO etc.
4.) Is there any specific advantage of getting listed with lower face value? Example TCS listed with face value 1
[Chittorgarh.com] Lower face value means lower price on the share in market, which results in more trade volume. Better volume in market result in to strong share performance. i.e psychologically more people will prefer to trade 1 share of TCS share for Rs 1148 (FV 1) then 11480 (FV 10).