How To Spot A Winner!

Hi ,

Off late i have seen a lot of queries on issues relating spotting good IPOs .....but what process has to be followed and what kind of homework is required is the essence of this thread.
First up, please go through the word file which is an unedited version of the article i authored for times of india and also the supporting excel sheet.
Also please go through the offer document for the risk factors , pricing of the issue and promoters history which i have emphasized in the article .
Iam a brokers right now and i know how DLF issue was promoted ahead of vishal retail (which proved to be a great issue interms of listing gains) . Hence investors should do their own research instead of relying on their brokers advice who recommend on the basis of the commission they get rather than the merit of the issue.
Also note that listing gains for IPOs can be easily predetermined as its mainly a function of valuations of the issuing company vis a vis its competition.Lower the issuing company valuation higher will be the listing gain .Other factors like issue size ( particularly for getting allotments) , grey market price ( visit www.smartinvestment.in) and the investment made( invest close to 1,00,000 to maximise your chances of getting allotment under retail portion) decide the likely listing gains.
IPOs are a fantastic way of making money as the effort to reward ratio is extremely high due to two main factors i.e. every month you get maximum 9 or 10 issues compare this with the effort required to spot a winner among thousands of stocks trading in the market . Also unlike stocks already listed in the market where both fundamentals and technicals play a role , the listing gains on IPOs are purely based on the fundamentals .
Post your queries on IPOs here and i will try my best to answer them.


Regards,

Rajaram.D




pls note :I have assumed that investors only look for listing gains and dont consider IPOs for long term investment.
Also the BRLM excel sheet contains data of issues between 2006 feb - 07 april

Rajaram, Thanks for the document. I am a newbie in the investment world, and i want to understand the fundamentals before i jump in, so i was wondering how i should go about reading the IPOs or which equities to put my money on in the short term?

If anyone can help me with this, i would really appreciate.

It was really nice article. However, could you please provide some links where one gets analysis/info about IPOs. I check that in www.capitalmarket.com.

few listings that did well in the recent past
1. simplex project.
2. everonn systems.
3. allied digital.
4. vishal retail.
5. time technoplast.
6. nitin fire prote.

Now, if one looks at analysis made by capitalmarket.com, most of these scrips are said to be costly or have similar valuation [exluding everonn, nitin fire, vishal] as their peers. In that case, these scrips should not have such high prices on listing as that would make them costly in comparison to sector. But this did happen. The opposite is true in the case of IPOs that did poorly. Do you find any explanation to this kind of behavior.

Hi Everyone I think The Simplest Way To See Which Ipo Will Make Money, Just Watch Cnbc For The How Much Has Retail Investor Subscribed For The Issue. If It Is More Than 5 Times Then Ipo Will Have A Super Listing 9 Out Of 10 Times.
But A Word Of Advice Would Be To Book Your Profits On First Day Itself And Move On To Its Already Settled Peer Stocks
Regards

But the catch is 90% of retail subscription is done on the last day and one can know about the retail subscription only after end of the day, but one needs to apply before that. Its a catch-22 situation.

I am not IPO fan. I feel in IPOs our money is locked for too long and there is surety we will get allotment. Further no one sure about so called about “listing gain” There every day I scan good stock with right P/E. Also I have some favorite stocks whose price I check with high EPS. (which is more important in my point view) like “Hercules Hoist’ Monsanto, or even International Combustion Engine, etc. (there are many) then I buy. many I buy & sell same stock. Sometimes I may sell in the morning and buy in late session same stock. I am Ok with my return