Typically IPO are considered safe bet for retail investors.
1) You always apply at cut-off (which means you do not have to spend a lot of time doing research about what the allotment price is)
2) There is a 35% reservations (yes Indians love reservations)…
3) You can expect some listing gains.
But recently I have started questioning my investments
1) A good issue gets oversubscribed 30-40 times .. and very good ones even more.
2) Your capital gets blocked for 20 days (almost a 550/- interest lost on a 1L application)
3) If by mistake you apply in a bad IPO, you will not only get 100% allotment, but it will also list below the issue price.
4) If by stroke of luck you get an allotment, it would be of 6-7K worth… Now this is so small a piece of pie for me to track.. so either I need to shell out an additional 20-25k to make it sizable or get rid of the allotment on the very first day 🙁 Hence defeating the very purpose of application.
For the past 1 year, i used to keep 1L aside for IPO applications. But since I got 1L straight refund for my last couple consecutive applications I am thinking of revisiting this strategy. From now on I won’t be investing in IPOs unless it is a mega issue.
What has been your experience with IPO?