IPO vs QIP Shares: Many companies plan to go public with IPOs in the stock market in the next few months. Investors are often drawn to the potential for higher returns from IPOs.
According to expert opinions, let’s examine this validity and consider which is more profitable: IPOs or QIP shares. This potential for high returns should instil optimism and hope in potential investors.
Several companies will raise around Rs. 30,000 crore through public offerings (IPOs) in the upcoming months. There is usually high demand for IPOs, and retail investors eagerly anticipate them.
Companies such as Bajaj Housing Finance, Haldiram, Prestige Estate, Ola Electric, Swiggy, and Warri Energy are expected to announce their IPOs. The markets, which have recently experienced some losses, are rallying again amidst fluctuations in global markets.
Unlisted companies seek to capitalize on the bull market, so many IPOs will likely enter the Indian primary market in the coming days.
Most IPOs that debut during bull markets receive high valuations. Those seeking alternatives to stocks in the equity market can consider QIPs offered by listed companies.
Most QIPs offer placements below the company’s stock price. While QIPs are not intended for retail investors, they can help them find a value pick for their portfolios.
IPO vs QIP Shares – Which is Better?
IPO Shares: In a bull market, promoters often offer public issues at high valuations due to positive sentiments in the secondary market. This can lead to higher share prices.
After the bull trend ends, these overvalued shares may experience a significant decline following their listing. This results in a sharp decrease in listing profits for medium to long-term investors, highlighting the risks of investing in IPOs during a bull market.
QIP Shares: A listed company initiates a QIP, and the funds collected go directly into the company’s books. In the case of IPOs, the raised funds may or may not go into the company’s books.
Additionally, after calculating the floor price, the company can provide up to a 5% relaxation to QIP investors. If the premium exceeds 10%, a scan of the company’s balance sheet and the previous quarter’s results is required.
Retail investors must take a medium-to-long-term approach before investing in QIPs. While they cannot directly invest in QIPs, this strategy can help them make the most of the opportunities offered by QIPs, requiring patience and astuteness among retail investors.
This emphasis on patience and astuteness should make retail investors feel empowered and knowledgeable.
Long-term Investments: QIP shares offer significant advantages over IPOs to retail investors with limited funds in a bull market.
QIP shares experience a rise in premium post-QIP announcement due to a strong response from QIP investors, the company’s balance sheet, and recent quarters’ results.
Retail investors should consider investing in QIP stocks, especially those taking a medium to long-term approach to IPO investments.
The above opinions and recommendations are those of individual analysts, experts, and broking companies and do not belong to this website. Before making any investment decision, it is advisable to consult and seek professional advice.