Five Steps to Identify A Winning IPO...

• Step 1 - Find out who are the promoters of the company and how experienced are they. A similar exercise needs to be conducted for the management of the company as well. If these individuals have a good track record, the company is in good hands and so is your money.

• Step 2 - Read up a little about the industry in which the company operates – its potential upside and risks. If the industry is healthy, the company has a better chance of performing well.

• Step 3 - Take a look at various parameters of the company such as the number of years it has been in business, its size, market share, growth rate, major financial figures (e.g. revenue, profits, fixed assets, etc) and ratios (return on capital, dividend payouts, etc.). Compare these numbers vis-à-vis its peers. Also find out if there have been any legal cases against it in the past.

• Step 4 - Examine the objectives of the issue, keeping in mind its current areas of business, capacity utilisation rates, etc.

• Step 5 - Check if the issue price is fair and if there is scope for appreciation on listing by comparing the P/E of the company vis-à-vis the industry.