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Public Issue: 10 Best ways to choose a good Initial Public Offering

Updated on September 7, 2011

Public issue and Initial Public Offering is related with share marketing. It is worthy to know how one can study the statistics of a company to buy share through Initial Public Offering. Companies will provide Initial Public Offering. There are 10 good ways to find the company with best Initial Public Offering. This will determine the profit while buying a share.

Public Issue

Public Issue is the process of selling bonds or share of a company to the public.

Initial Public Offering

It is the first sale of share or bond by a private firm to the public. Initial Public Offering is often issued by smaller and new ones seeking finance support to expand.

Normally making money by taking part in Public Issue requires a little bit hard work. Never invest your money by hearing someone’s advice. Offer document should be carefully studied before investment. Many cases offer document is printed in small letters, if it is not satisfactory anyone can ask for a complete prospectus to the company representative.

10 Best ways to determine which one is providing better Initial Public Offering

Check whether Issue is done using fixed rate or book building. Fixed rate is normally less amount. Issues done using book building will consider the Issue rate as per the request given by the applicants.

Compare the Initial Public Offerings of multiple companies. When it is planned to buy the stock thoroughly examine the overall performance of the company including its growth rate and share in the market. Also ensure that the company is free from account frauds.

If the promoter is a genuine person and the company got international clients then it is a favorable deal. Know well about the promoter (his working experience). is a national web based registry where you get detailed information about companies.

Check whether the business is particularly depending only on a single client. If its major profit is coming from a single source then there is a possibility of risk in the stability of the company.

Find the previous deals made by the company with customers. Check the degree of sincerity shown by it in sharing the profit, bonus and rights with its customers.

Compare the major financial factors or ratios of multiple firms. Determine the EPS (Earning per share) made by the firm for each share. This can be determined by dividing total revenue with total no of shares. Return on Capital is another important factor. Find how much percent of the capital is turned into profit. EMBITDA: Determining the profit before calculating the rate and tax will give the efficiency of the company in market.

After Issue if the promoter is having shares left, then it can be considered as a positive factor.

Find the need of Issuing shares. It may be done to expand business, meet the financial crisis, day to day expenditure or buy another company. Anyway it is important to verify that a part of the money is invested in the business.

Verify that the company name is listed in BSE or in NSE. Those who are listed in regional stock exchanges may not show much business.

If listed group companies are present then check their share rates and difference in business.

Verify any problems with trademark, brand and copy-write of the firm. Also see whether all these are owned by it.

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