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00:00Good evening and welcome. You are watching The Big Story on NDTV Profit. I'm Nupur Talwar
00:11Suri. Well, the IPO frenzy is pushing more investors to test their luck. But despite
00:16the enthusiasm, most applicants miss out on their chances of an allotment. Recently, we
00:21saw this with Bajaj Housing Finance's IPO, wherein only a few managed to secure the shares
00:26despite the offer being oversubscribed more than 60 times. Now, the IPO allotment process
00:32remains a matter of luck. But what are the steps that can be taken to boost the chances
00:37of getting an IPO allotment? What are the common mistakes that can be avoided? That's
00:42what we will be discussing today on The Big Story. And the three big questions that we
00:47are asking are, how can you legally game the system to ensure IPO allotment? What common
00:54mistakes do investors make that lead to rejections in the IPO process? And question number three,
01:00is it possible for some applicants to get an IPO allotment fraudulently? In fact, to
01:07answer these questions, we are now joined by Pranav Haldia. He is the Managing Director
01:11of Prime Database Group. Also joining us right now is Avinash Gorakshakar, Director of the
01:19Research Profit March Securities. Good evening, gentlemen. Thank you very much for joining
01:23us on The Big Story.
01:26Well, Avinash, to you first. Now, Avinash, we see, you know, this huge rush for IPOs
01:31and several of these have been oversubscribed. For instance, just recently, we saw Bajaj
01:36Housing Finance was oversubscribed multiple times. Now, what do you make of this frenzy
01:42for IPOs?
01:43Yeah, first of all, Nupur, good evening and thank you for inviting me. See, I think whenever
01:50you find a public issue, which is going to be heavily oversubscribed, like what happened
01:54in the case of Bajaj Housing, I think many investors first make the mistake of applying
02:00in larger kind of values or maybe in a bigger kind of lot size. So I think in such kind
02:05of IPOs, the first step which I think we advise our clients is to actually put a single application
02:11for a single PAN card account number because that increases the potential. And I think
02:15within the family, you can have multiple accounts with different PAN cards. So I think as far
02:21as possible, try to apply in different names with participants having their own Demat account,
02:26a separate PAN card, because unfortunately, if you apply in the same PAN card number,
02:33you know, bigger applications or several applications, there are chances that, you know, the application
02:38may get rejected. So, you know, that's the first, you know, I think, lesson which investors
02:43should use to actually get a better kind of allotment. And most importantly, you know,
02:48I think just to add a little more, you know, you know, relevance to the topic of how you
02:54can get allotment faster or maybe easier is to actually buy the promoter or the parent
02:59companies. You know, Bajaj Finance had offered a shareholder quota to the investors who wanted
03:04to apply in Bajaj Housing. So I think, you know, people obviously did not realize that
03:09earlier there was a record date for that. So if you buy the parent company share, the
03:13chances of allotment are much better.
03:16Absolutely. So those are some of the tips I'm sure people are watching will be looking
03:19at. We'll come to more of those tips in just a bit. But coming to you next, Pranav, you
03:25know, when you look at the data that's coming in for the IPO subscription, it's evident
03:29that both, you know, the main board as well as the SME board IPOs are getting a lot of
03:33attention from retail and other investors. Why is that happening to begin with? Tell
03:40us more.
03:42Well, you know, historically, you've seen this, that when the secondary market is, you
03:48know, in a bullish trajectory, the primary market follows suit. And what you also then
03:54find is that a majority of IPOs which hit the market, you know, provide tremendous listing
04:01gains. In fact, just talking about the current financial year, which is 24-25, on an average,
04:07you know, IPOs have given 35% listing gain. And this number zooms to 70% for SME IPOs.
04:14So, you know, the markets that we know run on greed and fear and the lure of quick money
04:20is too hard to miss. And when you see this kind of frenzy, you know, it's always followed
04:26by a lot of interest from retail and H&I investors. In fact, just adding a bit more, you know,
04:33SEBI came out with a study recently as well, which showed that a majority of individual
04:38investors were actually now applying to IPOs are coming in from a flipping point of view.
04:43So no one's really looking at, you know, what are the fundamentals of the company? What
04:47are the financials of the company? What is the governance of the company? Which sector
04:51is it in? What product does it do? But, you know, investing in literally every IPO, because
04:56in a bullish market like this, the chances of listing gains are tremendous. And, you
05:00know, you can get a good return in a single day. To add to that, you know, just the ease
05:06of the application process, you know, from the times when you used to fill out physical
05:12forms, you need to have a check attached. Now it's a matter of three or four clicks
05:17to apply to an IPO. Neither is your money leaving your account. So it's become extremely
05:22simple. And what you're finding is that, you know, your average investor is literally applying
05:27to every IPO, hoping for some allotment. And in case they get some allotment, they,
05:32you know, exit on the listing day. Right. Absolutely. Now, any thoughts, Pranav,
05:38you know, on how can one essentially maximize one's chances of getting an allotment? Because
05:44that's the question that everybody will be asking before the next big IPO.
05:49Well, you know, I think my panelists have already shared his insights, which are, you
05:54know, absolutely bang on. You know, as we used to joke that in such times, just find
06:00everyone, your wife, daughter, son, neighbor, whoever you can find and, you know, apply
06:07in their name. That's the only way to get, you know, some kind of allotment at all. In
06:13fact, you know, the other aspect to note is that given the change in SEBI rules three
06:18or four years back, now with the kind of oversupply that you find, the chances of getting
06:23an allotment are any which way slim. Even if you get an allotment, you only get a single
06:28lot. So actually in, you know, overall quantum of money, even if, you know, there is a 100%
06:34return on listing, you don't really stand to make that much amount of money. But if
06:39you want to increase your chances, then you should apply to multiple applications. And
06:44of course, that shareholder category is available as well.
06:48Right. Now, Avinash, there have been reports of people actually making a large number of
06:53applications. There are some numbers that are doing the rounds on social media that
06:57actually seem a bit ridiculous. For instance, you know, there was a report that suggested
07:01that people were making up to 18 applications. Now, this obviously, A, will raise a lot of
07:06red flags on the process. And, you know, tell us more as to how is this possible?
07:12I think, see, I think now the regulator is extremely strict on all this. And I think,
07:17you know, you cannot make fraudulent multiple applications. I think, you know, as long as
07:23all the members who have applied are part of the family, that is a perfect kind of thing.
07:29But if it is a neighbor or maybe it's a friend, typically, you know, you know, it's not possible
07:34that you can have a very large amount of multiple accounts. I think as my co-panelist said,
07:39you know, I think you need to have multiple accounts, but you need to have different
07:43accounting, you know, PAN card numbers. So I think sometimes it may be possible.
07:48But, you know, these kind of activities are monitored by SEBI in a very strict manner.
07:53And the entire process has become entirely computer driven. So, you know, there's hardly
07:57any malfunction or any, you know, fraudulent activity which is done on the side of the,
08:03you know, on the merchant banker. I think all the merchant bankers are aware that allotment
08:07is a very well laid down process. So I think, you know, the scope of fraudulent activities
08:12has also reduced considerably. But yes, definitely if number of multiple applications from the
08:17same person, you know, with maybe cross, you know, combinations of the first name and the
08:22second name are found out, then I think it definitely seems that it's a very well planned,
08:28pre-planned kind of strategy. And I think which the regulator will obviously find out.
08:32But I think this happens very rarely. I think today, you know, the system is very robust.
08:36We find that most of the applications are genuine. And yes, in certain cases, you know,
08:41you will have to obviously look at the fact that some applications may be fraudulent.
08:45But, you know, finally, at the end of the day, there is a genuine kind of bank card
08:49number to the application and there's nothing which the regulator can do.
08:53So I think, you know, you will have to pick and choose each case as it goes.
08:56But I don't think there's any fraudulent activity or, you know, kind of misuse of the system.
09:01It's only a matter of, you know, sometimes it's luck that despite putting 20 applications,
09:06you might not get a single application, you know, in your favor. So, you know, that's how it works.
09:11And also, Avinash, what are the common mistakes, you know, that one can avoid to make sure that
09:17there are not any rejections, because that's something that a lot of new investors will be looking at.
09:23And we do see a lot of new investors jumping the IPO bandwagon.
09:30I think, see, first of all, in one of the solutions, when you asked me,
09:35I told you that, you know, you want to buy the shares of the parent company much early.
09:38For example, you know, NTPC Green is a very big IPO, which is expected to come in.
09:43So I think a very simple way to actually get shares in NTPC Green is to buy the NTPC
09:48frontline flagship share, at least by a minimum quantity.
09:51And obviously, you could get benefit by way of the shareholders quota,
09:55which evidently will be given in this IPO.
09:58And the second mistake, which a lot of investors do is that they know that the issue is going to be
10:03oversubscribed 100 times, 500 times, but they still apply only one application and that too in a bigger quantity.
10:09So I think that needs to be avoided. You should put in the minimum amount in every single application
10:14and try to put in as many family members with multiple accounts.
10:17You know, that increases the chances for you to get an allotment in such kind of IPOs.
10:22Right. Anna Pranav, you were mentioning earlier that the rules have been changed significantly.
10:26Now, many people, of course, wonder whether, you know, how the changes,
10:31in fact, have benefited people who are applying for IPOs now or whether, you know,
10:36the older system was better because a lot of people seem to suggest that the newer system is based a lot upon luck.
10:45Well, you know, in my view, I think the process now is more democratic for sure.
10:49So the endeavor there from the regulator's side was that more number of people are able to get allotment,
10:56albeit even a single lot. So earlier, you know, you could be very lucky and get a huge allotment,
11:02but not many people are getting allotment. What this current process ensures is that more number of people get an allotment,
11:09but the size is, you know, the single lot which is given.
11:13Right now, Avinash, what are the trends that you are seeing in terms of, you know,
11:16whether people hold on to their allotments or, you know, do they want to make quick gains?
11:21Because that is also something that is being highly debated.
11:27I think, see, that entirely depends on the risk appetite.
11:30There are some people who only are interested in listing gains.
11:34So for them, Bajaj Finance, which was offered at 70 rupees, you know, in two days you get 175, 180 rupees.
11:41This is a very sizable gain. But I think, you know, my sense is that, you know, normally in the first few weeks,
11:48you get a euphoric price. And after that, you know, the stock starts reacting.
11:52Like today, Bajaj Housing saw some mild correction.
11:55So I think it's always better to take out your capital, you know, whatever you have invested.
11:59And, you know, the rest of the shares or quantity of shares can be held on for the longer term.
12:03Because Bajaj Housing, according to me, you know, is one of those companies which is not going to make a public issue quite frequently.
12:09They are well capitalized. So I think, you know, you could get a good chance to make a huge gain,
12:13provided you have a longer term kind of time frame in mind.
12:15So I think it all depends on the investment appetite.
12:18But 90 percent, as Pranav said, you know, my co-panelist, is that most of the people come in for only flipping activity.
12:26Like, you know, buy the stock in the IPO, sell it in the market and again rotate the same capital in some other IPO.
12:31So, you know, that's what actually happens for IPOs.
12:34So I think that's the trend which you have seen in most of the retail investors.
12:37Right, Pranav, any thoughts on that?
12:40Is that a trend that you are seeing in retail investors, you know, wanting to make sure that they get the gains of the listing process?
12:47Because and, you know, over the next few weeks, we do have a lot of them lined up.
12:52Well, you know, that was something which we always knew from an anecdotal point of view.
12:59But I think the SEBI report which has come out has, you know, absolutely nailed it and put it, you know,
13:05absolutely clarified in terms of what's really happening in the IPO market.
13:09And I think they're very clear that three out of four retail investors do exit, you know, the IPO within a week of listing.
13:18So, you know, like my co-panelist said that as an investor, you need to be very clear about what your strategy is.
13:25Because in a bullish market like the one that we have right now, the chances of listing gains are high.
13:30And you can see there's absolutely nothing illegal or wrong about, you know, investing into an IPO from a listing gain point of view.
13:37But then you should be very clear that in case that even if the stock lists at a discount, you should exit.
13:42Because you've not done any kind of analysis in terms of, you know, what the company is doing, what are the fundamentals, how are the financials,
13:50how is it, you know, performing for the last three, four years, who are the board of directors, who are the promoters.
13:55So irrespective of whether it lists at a premium or at a discount, you should exit.
14:00The other way to first invest into an IPO is the harder way, which is to actually study the DRHP,
14:06understand the company and say that, look, I'm going to park my money in this company for the last three years or five years.
14:12In fact, I was just looking at the data yesterday.
14:15And, you know, it's astounding that the IPOs which have listed in 2023-24, which is last year,
14:22if I look at the average return of those IPOs, it's an astounding 83 percent.
14:27The IPOs which got listed in 2022-23, which is the year before last, their current return is 118 percent.
14:34So what you're also finding is that apart from just the listing pop, IPOs are delivering over the longer term as well.
14:42This is something which investors may want to consider that it's not just about the listing game.
14:48You know, IPOs are delivering good value over the longer term.
14:51And I think one additional point which I would like to make is that, you know,
14:55the quality of companies that you're now seeing coming to the IPO market is far superior than what you had in the past.
15:01And I think the regulator also needs to be commended significantly for this.
15:05But a lot of these companies are now, you know, large in scale, have had, you know,
15:10prior investors in the form of private equity and venture capital.
15:14So you are assured that, you know, you know, some due diligence has already taken place on the company.
15:19Some good governance practices would already be in place.
15:22So I think, you know, on the quality of the companies, there is not as much of a concern, which is there.
15:28Of course, the valuation is something which needs to be looked at,
15:31whether it's with existing listed peers or, you know, in case of some of the newer technology companies which are coming,
15:37which actually don't have a peer, you know, seeing how institutional investors are behaving,
15:43how are the anchor investors behaving and then basing your decision on that basis.
15:48That's from a longer term perspective.
15:50Right. Avinash, you know, what we have seen is, as, you know,
15:55Pranav was also pointing out that investor education is something that we severely lack.
15:59You know, there are people coming in specifically.
16:02When I say investor education, I'm referring to the SME board IPOs.
16:07We've had, you know, people going in for these IPOs to make a quick buck, but they've also lost a lot of money there.
16:14So what is your advice to first time investors?
16:17What is it that they need to keep in mind?
16:21I think, you know, clearly you need to understand what is the business model of the company,
16:27what is the promoter bandwidth and most importantly, you know, what is the kind of scalability in that business?
16:32You know, there are many good SME companies which have come in and now, you know, a lot of marquee investors, you know,
16:37have started, you know, coming as anchor investors.
16:40So, you know, there's a lot of serious money which has come in.
16:42In fact, now the market cap of these SME companies is more than a lakh of crores.
16:46So, you know, it's serious money which is being made.
16:49But yes, I think investors should be very careful about what the businesses they are betting upon,
16:53what is the profile of the promoters and most importantly, is the business scalable.
16:57You know, recently, just to give some facts, a 12 crore IPO got a response of 4800 crores, you know, in the bidding process.
17:04And, you know, the company did not even have a profit of 2 crores.
17:07So, you know, these kind of IPOs actually spoil the mood in the SME market.
17:10People think that everything is, you know, wrong in the SME market.
17:14That's not the case.
17:15So I think such kind of things will keep on happening.
17:18But I think we need to have proper due diligence on the part of the merchant bankers.
17:22And obviously, you know, the regulator is doing a great job.
17:24But finally, the investor should know what business they are betting on.
17:28Right. Absolutely. Pranav, as well as Avinash, thank you very much, both of you, for taking out the time to join us on The Big Story.
17:38All right. So as both of them said, investors do need to be careful.
17:43Now, it is not just IPOs, but in fact, ever since COVID has hit, the financial landscape has seen a surprising shift.
17:50Now, it's no longer dominated by just the metros.
17:54The North and the East have been leading the charge in adding more investors.
17:58In fact, the number of North Indian investors on the National Stock Exchange has now skyrocketed,
18:03surging over four times to 35.7 million since FY20.
18:08Not far behind is the East, driven by the northeastern states Odisha and West Bengal,
18:14has nearly quadrupled its base, adding 8.9 million investors over the same period.
18:19Meanwhile, the West, that is home to the financial hubs of Mumbai and Gujarat,
18:24saw a more modest threefold rise to 30 million.
18:28Down south, the investor base has more than doubled, now sitting at 20 million.
18:33Now, rising incomes, better internet access and Aadhaar facilities are helping make the stock market participation more accessible to everyone,
18:42no longer making it the playground of just the metro elites.
18:50According to the National Stock Exchange, the number of registered investors in North India,
19:06especially since the last four years, have quadrupled.
19:09And I'm outside the Shivnath University here in Greater Noida,
19:12with a few of the students who themselves are registered investors.
19:17So guys, you can just start by telling me your name and your age.
19:20I'm Shivansh, I'm 22.
19:22I'm Pranav, I'm 21.
19:24I'm Dhviansh, I'm 21.
19:26I'm Devansh, I'm 21.
19:28I'm Ayush, I'm 20.
19:30So I'll start off with you guys, I'll just ask you, how did you start investing and when did you start investing?
19:37Okay, I'm very new to investing, I only made my first investment last month.
19:42And I'm using one of the online brokerage platforms.
19:46So how did you come across the investing part and who introduced you to it?
19:51My friend did.
19:53Anyone in your family or your friends in the inner circle that also invests?
19:57Most of my friends do, and my elder sister also does.
20:00Okay, right. So you tell me.
20:02So I got into investing a few years ago, around like in the COVID time.
20:07And my father was the one who was interested in the stock market, so that's how I got into investing.
20:11How long have you been investing?
20:13I've been investing since 2020.
20:16And in 2021, I made my own Demat account since I was an adult at that point.
20:21Anyone in your family or your friends that also invests?
20:24Yeah, my father is a really keen investor and he's very active in tracking the stock market.
20:29So any particular investment strategies or any other basic patterns that you follow when you're investing?
20:35So basically, I mostly used to look at intraday trading.
20:38So I used to just first, there was a thing, there was a lack of knowledge.
20:43So I didn't used to know what to do at the start.
20:45But then I started following some online and my dad used to mentor me.
20:49So basically, I just did whatever he taught me.
20:52Right. So how long have you been investing?
20:55I started investing in 2021 after the COVID recovery happened.
20:58So I couldn't take like, I couldn't capitalize on it.
21:01But yeah, I started investing.
21:03Any particular investment strategies that you follow?
21:06Mostly just fundamentals. I look at the fundamentals of a company and I buy and hold.
21:10I don't buy stocks that I don't want to hold for less than a year.
21:14So any particular websites or platforms that you follow for tips as well?
21:18Nothing for tips, but for my research, I use Screenr, Trendline and Value Picker.
21:23So any family and friends for you as well that invest?
21:27Not really. I mean, my family made some mistakes.
21:30That's why I got into the market and I wanted to correct them.
21:34So how long have you been investing?
21:36I started investing recently, only like five or six months ago.
21:40So any particular patterns or investment strategies that you follow?
21:45I usually buy and hold. I hold the stocks that I buy.
21:48I use Screenr and TradingView for my fundamentals.
21:53I do the technical analysis of the stock and then look at the fundamentals
21:58and then decide if I'm going to buy or not.
22:01Any family or friends in your circle that invest?
22:08My brother does and my uncle too. So they mentor me and tell me.
22:13I get my stock tips from them too.
22:15So again, any particular platforms that you follow for tips or any patterns?
22:20Nothing for tips, but I use TradingView and Screenr for analyzing the stocks.
22:26And finally to you now, how long have you been investing?
22:30I've been investing for a little less than three years now.
22:33So I started as soon as I turned 18.
22:35I don't have a strategy per se.
22:37I believe in investing in stocks that I believe fundamentally in.
22:41So I'll buy stocks that I can hold for about 10-20 years.
22:44And if I like the company, I'll invest with discipline every month a certain amount.
22:50My father invests, so I learned a lot from him.
22:53And about tips, I don't really believe in tips.
22:55So I just look at fundamentals.
22:57I use Screenr, I use TickerTaper, MoneyControl for news and that's probably it.
23:04There you can see the students from this university that have been active investors
23:08and some of the answers that they have given.
23:10With camera person Arun Singh Negi, this is Sriram Ganesh for NDTV.
23:15That's all we had time for in this edition of The Big Story.
23:18Thank you very much for joining in.
23:20And do stay with us on NDTV Profit for Mirniers.
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