The IPO market has been very active in recent years. It is crucial that you understand the basics of an IPO before you jump on board.
You can enjoy a 15-day return on your investment by putting your money into the 'hot' offer and enjoying an unmatched ROI after listing! This is a common boast from brokers and IPO freaks alike in these booming IPO times. If you want to invest in IPO's, then you can take help from IPO firms.
In a rush to make quick money, it is common to overlook the fundamentals of a company. Many IPO freaks get so caught up in the Gray Market Premiums that it's hard to even understand the company and its activities, let alone the profitability or balance sheet.
Investors should take the time to review the IPO Grading document from credit rating agencies regarding the company's fundamentals.
It doesn't matter if your friend, broker, butler, or barber tells you that the company will be the next Infy. It is the job and responsibility of investment bankers and issue managers to ensure maximum subscription.
Be aware that even though a company may have great future prospects, a high price at the IPO stage would reduce the likelihood of appreciation.
A good way to determine what a fair price is for an IPO is to compare the company's EPS and the average P/E Ratio of peer companies. If you feel the price range is too high, it may be worth looking at secondary markets.