While ordinary investors usually put their money into safer, low return shares like blue-chips; the world of finances relies more heavily on futuristic investments like pre-IPOs. The Initial Public Offering a company makes is heavily determined on the number of people who have already claimed a stake in their future, the portfolio of these backers, and background information regarding the company hosting and brokering an upcoming IPO in India.
For making the most profit out of pre-IPO investments; it is important to understand certain tricks of the trade. Here are 5 ways to understand some secrets of upcoming IPO stocks in India, and assessing their future prospects -
#1 - Start Investigating Their History:
The value of any pre-IPO offers is based on the company's overall performance and growth over the years; as well as their credibility on the public domain. To determine the true value of a company, thoroughly investigate their past failures and mistakes. This will allow you to assess how the company has since addressed their shortcomings and grown over time. A good place to start with such an investigation is through the references and resources of extra-government business and trade consortiums like local Chambers of Commerce.
#2 - The Company's Real Market Value:
A company's real value is not merely about the facts and statistical figures that define the paper value of an enterprise. The real market value of any upcoming IPO in India should be determined on the general public opinion and relevance of that company in commercial circles. It is important to identify the company individual worth, as well as their relevance and relationships with other companies and industries within their forte. If the company has a lot of influence on the wider market of their industry, you investment is in safer hands.
#3 - The Agencies Making the Offering:
Agencies that broker upcoming IPO stocks in India are usually large financial consultancies or NBFCs who are independently responsible for their offer. However, none of these agencies are entirely responsible for the performance of your investment over time. They will be able to provide you all the needed and relevant current information but have no control over how well a company will perform in the future, and the prospects of income from such growth.
#4 - Stakeholders and Their Portfolios:
It is very important for any investor to find out about the other stakeholders who have invested in the same company. As a part of investigating any upcoming IPO in India; make sure that you also learn about the portfolios of the investors who have already put their money and trust in a company. Companies that have the trust and recognition of bigger investors and equity firms have more resources and funds at their disposal when their shares go public.
#5 - Money in the Bank:
After investing all the above-mentioned factors about a company, you can now assess the statistics and numbers. Since clever accounting and bookkeeping can easily be manipulated, you must know the true financial strength of a company you are investing in. A company offering upcoming IPO stocks in India should have enough capital investment; while also having enough current assets to support steady growth. Also judge a company on figures of their annual turnover, gross production value, and the profits they are making over time.