Want to invest in IPOs? See different grades of IPOs and what do they mean
The individuals who are interested in investing in initial public offerings (IPOs) must be aware of the different grades of IPOs.
Different Grades of IPOs: The individuals who are interested in investing in initial public offerings (IPOs) must be aware of the different grades of IPOs. The National Stock Exchange (NSE) has recently tweeted from its official Twitter handle to inform the prospective investors about the various grades of IPOs. In case of any queries and further details, these individuals can login to the official website of NSE at nseindia.com.
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In this context, one must be aware of what is an IPO. As per the official NSE website, a corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is the largest source of funds with long or indefinite maturity for the company.
The tweet from NSE said, "Considering investing in upcoming IPOs? It is important for you to understand the different grades of IPOs. The grade represents a relative assessment of the fundamentals of that issue in relation to the other listed equity securities in India."
It has to be noted that IPO grading is assigned by a Credit Rating Agency (CRA) which is registered with SEBI, to the IPO. The basis of the same is assigned on a five-point scale. A higher score indicates stronger fundamental and vice versa. The various grades of IPOs are as follows:
IPO grade 1: Poor fundamentals
IPO grade 2: Below-average fundamentals
IPO grade 3: Average fundamentals
IPO grade 4: Above-average fundamentals
IPO grade 5: Strong fundamentals
On Wednesday, RBI Governor Shaktikanta Das while addressing on review by Monetary Policy Committee, made an important announcement on "Increase in UPI Transaction Limit for Specified Categories" while addressing the RBI MPC policies. "To further encourage the use of UPI by retail investors, it is proposed to enhance the transaction limit for payments through UPI for Retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh. Separate instructions to NPCI will be issued shortly," RBI statement on Statement on Developmental and Regulatory Policies said.
In case of further details, the interested individuals can login to the official website of NSE at nseindia.com.
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