#Stock-Market  #Basic-of-SM  #Finance 

Offerings of Shares

  • IPO –> Initial Public offering
  • OFS –> Offer for sale
  • FPO –> Follow on(Further) Public Offer
  • Fresh issue
  • Right issue

Where shares come from

  • Authorize Capital (Eg: 1000 shares)
    • Un-issued capital + Issued capital
  • Issued Share (Eg: 300 shares)
    • Prmoters (Owners) (Eg: 200s)
    • Others investors (Eg: 100s)

IPO

  • When a company issues shares to the public for the first time
  • It launches an Initial Public Offering (IPO) by predetermining the share price.
  • They may be listed on BSE or NSE or both
  • IPO may be a combination of both Fresh issue + OFS
    • Fresh issue –> Fresh shares issued out of Un-issued capital
    • Shared issued from 700s(1000s - 300s)
  • Say : IP0 comes with 150 fresh issue (Remaining: 1000s-300s-150s)
  • Apply
    • Need to give application to company
    • Range price is issued by the company
    • Apply timing: 10 AM to 5 PM on Trading days
    • No charges required
    • IPO is handled by Merchant Banker
    • ASBA process is used for payment

Merchant Banker

  • Also called Book Runner, Lead Manager, Investment Banker
  • Helps in the entire IPO process
  • Try to understand the Nerve of the market
  • Go to Institutional Investor (Bank, MF, Insurance) and tell them about the company
    • Create Book Building (i.e get probable price)
  • M Banker does high-level banking works, Like:
    • Raise Fundings (Eg: IPO)
    • Merger
    • Acquisition

Steps for IPO proposal

  • Prospectus is submited to SEBI
    • Offered doc where all the major details of the company will be mentioned
    • Eg: 5 yrs Financial details etc
  • Types:
    • DRHP -> Draft Read hearing Prospectus
      • Promoter ask SEBI for IPO in DRHP
    • RHP -> Read hearing Prospectus
      • After approve by SEBI, General Public will get RHP

Price of IPO

  • Fix price Issue
    • One price is given, everyone bids on that price
  • Book Building Issue
    • Price-band is given to the Investors to apply for shares
    • Price band 290-300 (290- floor price, 300- ceiling/cap price)
  • NOTE:
    • Min subscription of 90% to get the IPO listed successfully
Price % of.bids Result
290 5 rejected
291 3 rejected
296 50 Entitled to get stock
295 40 Entitled to get stock – with Rs 1 refund
300 2 Entitled to get stock – with Rs 5 refund
  • At price >= 296 –> 90% citeria is fullfield
  • So, IPO price listing price will be 296

Application supported by the blocked amount (ASBA)

  • It is a facility through which amount does not get debited but just get frozen in the Saving Account itself

OFS

  • Promotors issuing their shares
  • Eg: Shared issued from 200s
  • How to apply?
    • Directly apply from your broker
    • Floor price given by company –> Min price for the offer
      • Place your order higher than OFS price
      • Maximum
    • Cut-off price –> at
    • NII 1st day and RII on 2nd day
    • Apply timing: Normal trading timing i.e 9.15 - 3.30

FPO

  • Company issuing fresh shares
  • Eg: Shared issued from 550 (Remaining: 1000-300-150)

Useful Terms

Issue Price

  • Price at what came on Stock market
  • Issue price of the Dmart IPO is ₹295 to ₹299 Per Equity Share

Listed Price

  • At what price it opened/listed on stock
  • ₹600.00 Per Equity Share (Dmart)

Book Value

  • Assets - External Libalities

Transfer Share

  • By RTA (Register and Share Transfer Agent)
    • Transfer DeMAT shares from company account to Investors account
    • In the primary market
  • By Clearing House
    • Transfer of shares from one investor to another

Escrow Account

  • Account with some defined purpose
  • Managed by -> Banker to the issue

other

  • Block/Bulk Deal
    • Large no of shares change Hands
  • Ring Trading
    • Illegal
  • Pledge -> Shares
  • Mortgage -> House