Why do companies come out with an IPO? How to evaluate any IPO?

In this video, "Why do companies come out with an IPO? How to evaluate any IPO?", Mr. Vivek Bajaj, co-founder, StockEdge, Elearnmarkets, discusses the reasons behind why a company comes out with an Initial Public Offering or IPO, and how an investor can evaluate any IPO in the stock market, with the right criteria of fundamental analysis.

An Initial Public Offering is an invitation to the public at large to subscribe to the newly issued shares of a newly listed public company, and invest in stocks at a large scale. To explain the concept of IPOs, Mr. Bajaj will give us a detailed example of a company's capital cycle and the events that lead to it issuing an IPO.

There are multiple stages in the funding of a business, with the last one being the issuing of the IPO. In this video, Mr. Bajaj will discuss each stage of the cycle and the various business funding sources for the capital cycle, which include Angel investors, Venture capitalists or VC funding, and private equity funds.

We will then discuss the entire process of the capital cycle, followed by the objectives of an IPO and why exactly an IPO is done and how it provides investment returns to each person who funds the business at various stages of the capital cycle.

Following this, we will discuss the benefits of investing in a company of the growth sector, followed by how the growth prospects, the PE ratio and basic fundamental analysis can help us decide if the company is worth investing in or not.

Finally, we will end the video with a discussion of when an IPO can perform well in the stock market and when it is more prone to underperformance.

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