IPOs from great promoters having superb track records / great business models will always give great returns. They would give great returns even in a bad market. Avoid promoters who are unknown names or earnings do not justify IPO pricing.
My investment is only Rs. 20000, other cost that is incurred / notionally incurred is interest paid to bank and notional interest on my Rs. 20000. The returns of Rs. 2070 should be evaluated from this figure and not Rs. 100000.
RE:another way of calculating
by Gobinda Majumdar on Apr 03, 2007 04:04 PM Permalink
You are absolutely right we must consider investment from our pocket not of the bank. At the same time we must not forget the risk we had taken by taking loan. As had there been a great fall in the market you will have to pay back the bank from your own pocket.
Actually when doing such calculations u shld subtract the opportunity cost of your investment (say 13% on Rs 20000 taken initially) from the net earnings and then calculate the rate of return on total Rs 100000!!! ..got it??
your comparision is primarily wrong. How can you compare an Idea Cellular IPO and Mind Tree IPO (ITES & Telecom) to the likes of Astral Poly Tec,Abhishek Mills, AMD Metplast IPO's.
return should be calculated on my investment and not on banks investment. I invested 20000 and earned around 3000 its still 15% return in a month...... wot more do u need...........
RE:poor calculation
by Gobinda Majumdar on Apr 03, 2007 04:12 PM Permalink
Once you take a loan from bank this entire money becomes your. In other words the same amount is added to your assets and as well as to your liability side. And now it is fair enough to compare the returns from your total assets and the reward that you are paying to your total liability.
RE:poor calculation
by abhishek tikmani on Apr 03, 2007 01:40 PM Permalink
ankit u may not be wrong..but explain me this - if u take entire 100000 from bank as loan and dont have to invest anything from ur pocket..then what would u call it - a return of Rs 3000 on 0 investment i.e. a return of ininity!!!
