{"id":40689,"date":"2023-03-24T12:22:08","date_gmt":"2023-03-24T06:52:08","guid":{"rendered":"https://www.5paisa.com/finschool/?p=40689"},"modified":"2025-07-13T19:13:59","modified_gmt":"2025-07-13T13:43:59","slug":"ipo-advantages-and-disadvantages","status":"publish","type":"post","link":"https://www.5paisa.com/finschool/ipo-advantages-and-disadvantages/","title":{"rendered":"IPO| Advantages and Disadvantages"},"content":{"rendered":"\u003cdiv data-elementor-type=\u0022wp-post\u0022 data-elementor-id=\u002240689\u0022 class=\u0022elementor elementor-40689\u0022\u003e\u003csection class=\u0022elementor-section elementor-top-section elementor-element elementor-element-993586f elementor-section-boxed elementor-section-height-default elementor-section-height-default\u0022 data-id=\u0022993586f\u0022 data-element_type=\u0022section\u0022\u003e\u003cdiv class=\u0022elementor-container elementor-column-gap-default\u0022\u003e\u003cdiv class=\u0022elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-09a8c58\u0022 data-id=\u002209a8c58\u0022 data-element_type=\u0022column\u0022\u003e\u003cdiv class=\u0022elementor-widget-wrap elementor-element-populated\u0022\u003e\u003cdiv class=\u0022elementor-element elementor-element-a7ab6e6 elementor-widget elementor-widget-text-editor\u0022 data-id=\u0022a7ab6e6\u0022 data-element_type=\u0022widget\u0022 data-widget_type=\u0022text-editor.default\u0022\u003e\u003cdiv class=\u0022elementor-widget-container\u0022\u003e\u003cp\u003eIPO માં રોકાણ હંમેશા કંપનીઓ તરફથી આકર્ષક ઑફર રહ્યું છે. કોર્પોરેટ પ્રારંભિક જાહેર ઑફર, રાઇટ્સ ઇશ્યૂ અથવા વેચાણ અથવા ઇક્વિટી અથવા ડેટ માટે ઑફર દ્વારા પ્રાથમિક બજારમાં મૂડી એકત્ર કરવાનું નક્કી કરે છે. ચાલો આપણે સમજીએ કે IPO શું છે અને કેટલું મહત્વપૂર્ણ છે \u003ca href=\u0022https://www.5paisa.com/gujarati/stock-market-guide/ipo/what-is-the-ipo-process\u0022\u003e\u003cu\u003eસિક્યોરિટીઝ માર્કેટમાં IPO ની પ્રક્રિયા\u003c/u\u003e\u003c/a\u003e\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eતો IPO શું છે?\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg\u0022\u003e\u003cimg fetchpriority=\u0022high\u0022 decoding=\u0022async\u0022 class=\u0022size-medium wp-image-40694 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-1.svg 375w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cp\u003eIPO એટલે ઇનિશિયલ પબ્લિક ઑફરિંગ. જ્યારે કંપની પ્રથમ તેના શેર જાહેરમાં વેચે છે ત્યારે તેનો અર્થ એ છે કે પ્રારંભિક જાહેર ઑફર. તેનો અર્થ એ છે કે ખાનગીમાંથી જાહેરમાં માલિકી ટ્રાન્સફર કરવી. IPO ને સામાન્ય રીતે \u0022જાહેર જવું\u0022 તરીકે ઓળખવામાં આવે છે.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eકંપનીઓ શા માટે IPO ઑફર કરવાનું નક્કી કરે છે?\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eકંપનીઓ IPO ઑફર કરવાનું નક્કી કરે છે કારણ કે એકત્રિત IPO ફંડનો ઉપયોગ કરજ ચૂકવવા, વૃદ્ધિ અને વિસ્તરણ કરવા માટે કરવામાં આવે છે. In this process the company appoints an underwriter to help with the securities registration process and distribution of the shares to the public. The underwriter appoints investment banks and brokers usually known as syndicate who will be responsible for selling shares as IPO.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eWhy One Decides to Invest in IPO?\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eThrough IPO, investors will become shareholders of the company. A Shareholder receives dividend, bonus shares based on the company’s earning. IPO are equity investments and therefore they can provide good returns. Investors believe that the shares offered through IPO are low and if company performs better in future, the share prices can go up.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eBelow mentioned reasons states why one should invest in IPO\u003c/strong\u003e\u003c/h2\u003e\u003col\u003e\u003cli\u003eDiscounts offered\u003c/li\u003e\u003cli\u003eWealth Generation due to equities.\u003c/li\u003e\u003cli\u003eMost of Companies who offer IPO are quality companies\u003c/li\u003e\u003c/ol\u003e\u003ch2\u003e\u003cstrong\u003eWhat are the Benefits of Investing in IPO?\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003ca href=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg\u0022\u003e\u003cimg decoding=\u0022async\u0022 class=\u0022size-medium wp-image-40695 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/gujarati/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 150w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 300w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 1024w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 1536w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 2048w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 50w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 100w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 96w, https:/www.5paisa.com/finschool/wp-content/uploads/2023/03/Untitled-design-2.svg 375w\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/a\u003e\u003c/p\u003e\u003cp\u003eThere are many benefits of Investing in IPO. Companies get their stock valued and mention the offer price in the prospectus. An investor can apply for a particular number of shares. If the listing price is more than is more than what is listed on the IPO then it is called listing gain.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eLet us understand benefits of Investing in IPO in detail\u003c/strong\u003e\u003c/h2\u003e\u003col\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eListing Gains\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eThe first benefit of investing in IPO is Listing Gains Which means the day when the IPO gets listed if the share price is more than what was invested then it is known as Listing Gain.\u003c/p\u003e\u003col start=\u00222\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eલિક્વિડિટી\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eInvestors can sell the stocks in the open market once the company goes public. Because of this there is liquidity as the investors can buy and sell the shares whenever they want.\u003c/p\u003e\u003col start=\u00223\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eSmall Retailers can earn\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eSEBI has made several rules and regulations to ensure that small retail investors get a chance to invest in IPO. Sometimes small investors do not get fair chance in the secondary market.\u003c/p\u003e\u003col start=\u00224\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eIPO Norms\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eThe third benefit by investing in IPO is IPO markets are safe and professional. The company prospectus gets all information like performance, financials, growth risk and future plans Here investors gets enough information to decide which investments are best.\u003c/p\u003e\u003col start=\u00225\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eપારદર્શિતા\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eInvestors who invest in IPO and receives shares through the allotment becomes the shareholder The company owner ensures that investors are retained with them Also the company plans to achieve its goals and reach profit levels as promised to the investors and analysts. The stock price will rise or fall depending on the company’s performance.\u003c/p\u003e\u003col start=\u00226\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eEconomical\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eSEBI has developed an application that supports the blocked amount of an IPO. This application ensures that the money is debited from the account only after the shares are allotted. The money continues to receive interest till the time of allotment. However it is not the case with the secondary market where the money is immediately debited from the account.\u003c/p\u003e\u003col start=\u00227\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eShareholder Ownership Authority\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eWhen you invest in the company you receive the voting rights in the company. For example company decides in its annual general meeting that it will open new branches and planning for expansion. Shareholders have the right to vote against or for the decision.\u003c/p\u003e\u003col start=\u00228\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eBuying Cheap\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eThe IPO is offered often at the lowest price. This is because the company offers shares at a discounted rate. This is why IPO becomes beneficial as it may be difficult to buy shares when the price increases.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eIPO ના ગેરફાયદા\u003c/strong\u003e\u003c/h2\u003e\u003col\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eટ્રાન્ઝૅક્શનનો ખર્ચ \u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eInitial Public Offering cost lot of money. One such high cost involved is payment to underwriters. Apart from this there are costs involved like legal fees, Accounting Fees, Listing Fees. Companies who are going public work with the law firm to carry out the legal due diligence.\u003c/p\u003e\u003col start=\u00222\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eTime Consuming \u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eAlthough the pricing and success details of the company are mentioned in the prospectus, an investigation of the company requires time and effort.\u003c/p\u003e\u003col start=\u00223\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eRisk of Selling Shares\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eMany investors nowadays want to sell their shares soon after the listing if there is profit. But it’s sometimes only to do the same. Selling is quite simple but there are chances that there will be no potential buyers in the market.\u003c/p\u003e\u003col start=\u00224\u0022\u003e\u003cli\u003e\u003ch2\u003e\u003cstrong\u003eLoss of Control\u003c/strong\u003e\u003c/h2\u003e\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eA company’s founders may have less influence over its organization after an initial public offering. When a company becomes public customer satisfaction becomes very important. Votes from shareholders and negative public perception might compel a change in leadership.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003ePlanning Required Before Going for IPO\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eWhen the company decides to go for IPO, it must first build the right team to go public. The company must select competent lead managers and merchant bankers for issuing IPO. Internal Restructuring of the company is very important aspect. Easier compliance management, existing capital restructure and better presentation and transparency in the financial statements is very important. \u003c/p\u003e\u003cp\u003eSecondly the company should do proper SWOT analysis. Company should review its Strategic Objectives, Business Threats, and Market Size for its products and services. There are two major reasons for going public. One is to raise funds through capital markets and second is for growth and building up resources. A company should check whether it has clear and valid strategies. \u003c/p\u003e\u003cp\u003eA company should have good business predictability and a 10 year long vision towards developing its own company. So company management should check whether the company business model is predictable.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eRisk Analysis of Threats from Market Forces\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eCompany should make Risk Analysis and Appropriate Risk Mitigation strategies to ensure minimal impact from any Business threats. Business risk on the operational and financial front, there is risk around compliance like regulatory risk, legal risk and code of conduct risk, risk around compliance like regulatory risk, legal risk, and code of conduct risk, risk around communication and investor relationship and climate and reputational risk. \u003c/p\u003e\u003cp\u003e\u003cstrong\u003eThe management must consider transferring the financial impact of this risk and its future ramifications onto risk transfer mechanisms such as IPO insurance to safeguard their people, profits and public image.\u003c/strong\u003e\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eUnderwriting Fee\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eUnderwriting Fee are the largest single direct cost associated with an IPO. A fixed fee is distributed among all bankers handling the IPO mandate. Then there are variable fees which could vary from transaction and transaction and is dependent on parameters such as the procurement done by banks on the institutional and retail HNI side. \u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eLegal Fees\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eCompanies working with external counsel and underwriter counsel incur cost for due diligence on the company’s operations, management and business. Drafting of the Forms and providing other advice related to the offering, interactions with the underwriter their counsel and other matters related to going public.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eAccounting \u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eCompanies incur accounting costs in working with the auditor and accounting advisor. Such costs directly contribute to the IPO costs. It includes technical accounting and financial reporting issues, interactions with underwriter counsel and external company counsel on matters directly related to the offering.\u003c/p\u003e\u003ch2\u003e\u003cstrong\u003eનિષ્કર્ષ\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003eAn Initial Public Offering has both advantages and disadvantages. If an investor is considering to invest in IPO he must first carefully analyse and be patient. Before investing in IPO one should remember that no investment is free of risk. Investing IPO does not mean that always it will be profitable. At the same time one should understand one own risk appetite. One must access financial situation age liabilities and other factors before investing in IPO.\u003c/p\u003e\u003cp\u003eThen the next important point is investor must understand and do a research the reason for which the company is raising money. Every investment banks publishes a prospectus for the IPO. So it is very important to read the prospectus very carefully.\u003c/p\u003e\u003cp\u003eApart from Prospectus the investor should look for reports and analysis done by third parties in magazines, newspapers and journals. Investor also should if there is any lock up period for investing in IPO. Lastly investor should never get over excited for any investments as investment market is subject to market risk.\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/section\u003e\u003c/div\u003e","protected":false},"excerpt":{"rendered":"\u003cp\u003eInvesting in IPO has always been an attractive offer from the companies. A corporate decides to raise capital in the primary market by way of initial public offer, rights issues or offer for sale or equities or debt. Let us understand what exactly is an IPO and how important is the process of IPO in … \u003ca title=\u0022IPO| Advantages and Disadvantages\u0022 class=\u0022read-more\u0022 href=\u0022https://www.5paisa.com/gujarati/finschool/ipo-advantages-and-disadvantages/\u0022 aria-label=\u0022Read more about IPO| Advantages and Disadvantages\u0022\u003eRead more\u003c/a\u003e\u003c/p\u003e","protected":false},"author":1,"featured_media":40707,"comment_status":"બંધ છે","ping_status":"ખોલો","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18,78],"tags":[],"class_list":["post-40689","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogs","category-learn-every-aspect-of-markets"],"acf":[],"_links":{"self":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/40689","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts"}],"about":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/types/post"}],"author":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/users/1"}],"replies":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/comments?post=40689"}],"version-history":[{"count":26,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/40689/revisions"}],"predecessor-version":[{"id":73510,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/posts/40689/revisions/73510"}],"wp:featuredmedia":[{"embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/media/40707"}],"wp:attachment":[{"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/media?parent=40689"}],"wp:term":[{"taxonomy":"શ્રેણી","embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/categories?post=40689"},{"taxonomy":"પોસ્ટ_ટૅગ","embeddable":true,"href":"https://www.5paisa.com/finschool/wp-json/wp/v2/tags?post=40689"}],"curies":[{"name":"wp","href":"https://api.w.org/{rel}","templated":true}]}}