Every time a big IPO comes to the market, the atmosphere gets heated. There is a flood of tips on WhatsApp, noise of GMP in Instagram reels, and people in the neighborhood are saying that this will double the money! But the question is, do the stock market giants do this? The answer is, absolutely not. Warren Buffett, known as the giant of investment, says that the stock market is a game in which there is no need to hit a shot on every ball. According to him, one should take a thoughtful step before investing in an IPO.

1. Understand the business, do not be influenced by the name only
The first mistake while investing in an IPO is running after the hype. Warren Buffett's advice is: Do not invest in a business that you do not understand. Many times, people apply without knowing the company just because it is in trend. But an IPO is not a lottery ticket. It is like you are buying a share in a shop on your street, will you invest money without knowing the profit?

2. Avoid insider moves
IPOs are like a game of cards in which the other person knows every card—except you don't. The company's promoters and early investors have all the inside information, while the common investor has only a glossy brochure. Buffett advises that "if you can't figure out who the weakest player in a game is, it might be you." So, read the DRHP (draft red herring prospectus) and understand how many shares the promoters are selling.

3. First, look at the track record, then invest
Buffett prefers to invest in companies whose profits and performance have stood the test of time. New companies may come with expectations, but they do not have a track record. You might remember the example of Paytm, where the noise during the IPO was as much as the decline later. Before investing, see whether the company is making profits or just making promises.

4. Choose what you know
If a new technology startup is coming up with an IPO and you don't understand its technology, then stop. Buffett believes that whatever you don't understand has hidden risk. You should invest in companies from sectors whose business model and demand you understand. Like FMCG, banking, retail, etc. This rule applies not just to investment, but to every decision in life.

5. Focus on brand value and monopoly
Buffett likes companies that have a strong monopoly or moat - that is, a specialty that differentiates them from competitors. Every new company claims that it is unique, but does it really have something that is not easy to copy? If not, then that company cannot be called a horse for the long race.

6. Don't be tempted by the profits on listing day
IPOs are often designed in such a way that the promoters benefit, not the investors. Warren Buffett says, Price is what you pay, value is what you get. Bankers set prices in such a way that more money can be extracted. In such a situation, if the company is overvalued, then there will not be much profit left for you. You should wait for the right company at the right price.

7. Monitor after listing
Buffett's real mantra is patience. He does not invest in every IPO, but tracks the company for some time after listing. You, too make a post-IPO watchlist. Watch the company's profit and management for a few quarters. If everything is fine, then only invest.

Be a horse for the long race, stay away from shortcuts
India's IPO market is like a T20 match, fast, exciting and uncertain. But Warren Buffett's strategy is like a test match, patience, thinking and the power to stand the test of time. If you also want to stay in this game of investment for a long time, then adopt the principles suggested by him. Understand the business, give it time, and don’t assume everything that glitters is gold.

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