New Delhi: India's stock market is busy setting new records. And when the stock market sees such a boom, the initial public offer (IPO) also increases the market's excitement. In the month of August, 10 small and big companies brought public issues to the stock market for the first time and also succeeded in raising 17 thousand crore rupees. This was the largest gathering of people bringing IPOs in the stock market. There are signs that this excitement will increase further in the month of September.

Many companies are bringing IPO

In the week starting from 02 September, seven companies are going to bring IPOs for listing. Kotak Securities data shows that if SEBI's approval is received on time, then 75 companies are preparing to enter the stock market in the remaining seven months of the financial year. In this race of bringing IPOs and the boom in the stock market, questions have been raised on the current method of fixing the price of IPOs. Experts believe that along with increasing monitoring by regulatory agencies, common investors also need to be cautious.

Why are experts worried

Experts are especially worried about the way investors' interest in IPOs of small and medium companies has increased. A fortnight ago, an SME company with two showrooms and eight employees brought an IPO to raise Rs 12 crore from the market. Applications were received for shares worth 4000 times more than its proposed shares (total Rs 4600 crore). A report by stock broking firm Zerodha shows that in the first eight months of the year 2024, 162 SME companies have raised Rs 5700 crore from IPO. 20 companies of this category are coming to the market every month, whereas till two years ago, hardly two companies used to take advantage of the SME IPO platform.

Vigilance is necessary for investors

There is a different risk in investing in these companies because nothing is known about these companies in detail. The rules regarding transparency and information on these companies are also different from those for big companies. More investors are lining up because they feel that a big opportunity may slip away. Zerodha has advised investors to gather complete information about these companies before investing. BK Sabharwal, Chairman of Capital Market Committee of PHDCCI says that, “Whenever there is a rush of IPOs in the market, common investors should be more cautious.

Greed for more profit is not good

Especially when there is uncertainty about the price of the IPO. It is good that SEBI has asked SME investors to be cautious and advised them to gather as much information as possible about the companies and their promoters. Looking at the attitude shown by investors recently towards the IPOs of some companies without strong financial records, SEBI's warning seems to be correct. This incident shows that those who speculate and make profits are active.

In such a situation, it would be better for the common investors to make investment decisions carefully.'' Another famous stock market expert of the country, Sandeep Sabharwal, is cautioning investors not only about SMEs but also about the price at which IPOs are being brought by some other companies. He gives the example of Premier Energies, a company that recently brought an IPO, that this company had done private placement last year at a price of Rs 43 per share but the price band of its IPO was Rs 427-450.