Last Updated on December 26, 2023 by BFSLTeam BFSLTeam
Table of Content
An Overview
Investing in IPOs presents an exhilarating opportunity for investors: the prospect of owning, from inception, a fragment of a potentially prosperous company’s stock. Companies employ IPOs as a medium to accrue capital—a first time share offer to the public—significantly enhancing their financial foundation.
How to Apply for an IPO Online?
In today’s digital age, applying for an IPO online is the most convenient and popular method. Follow these steps:
- Step 1: Open a Demat and Trading Account
To apply for an IPO online, you must have a Demat and Trading account with a registered stockbroker. If you don’t have one, here’s what to do:
- Choose a reliable stockbroker and complete the account opening process.
- Submit the required documents, including your PAN card, address proof, and bank account details.
- Step 2: Choose the IPO
Once your account is active, log in to your trading account. You can now select the IPO you want to apply for. Most stockbrokers provide a list of upcoming IPOs with details.
- Step 3: Place Your Bid
After selecting the IPO, you will see an option to place your bid. Here are some key points to consider:
- IPO Price: The company sets the IPO price. Decide how many shares you want to apply for and at what price per share.
- Bidding Options: There are three bidding options: Retail, Non-Institutional, and Institutional. Retail investors usually get a reserved portion with a discount.
- Bank Account: Ensure your linked bank account has sufficient funds for the bid amount.
- Step 4: Payment
Once you’ve placed your bid, you’ll need to authorise the payment. You can do this through net banking or the Unified Payments Interface (UPI) method. Make sure your payment is successful.
How to Subscribe for an IPO Offline?
If you prefer the traditional route, you can apply for an IPO offline. Follow these steps:
- Step 1: Collect Physical IPO Application Form
Visit your nearest bank or financial institution that offers IPO application forms. You can also obtain the form from the company’s registrar or share transfer agent.
- Step 2: Fill the Application Form
Carefully fill out the physical application form, providing all the necessary details, including your Demat account information.
- Step 3: Payment
Attach a bank draft or cheque for the IPO’s bid amount to the application form. Ensure the payment is in favour of the “Registrar to the IPO” or as specified in the form.
- Step 4: Submit the Application
Submit the completed application form and payment to the bank, financial institution, or collection centres designated by the company.
- Step 5: Check Allotment Status
Once the IPO subscription period concludes, you can check the allotment status through the registrar’s website or in the newspapers. If your bid is successful, you’ll be allotted shares.
Tips and Important Points to Remember
- IPO Timelines: Keep track of the IPO opening and closing dates, as well as the listing date.
- Demat Account: Maintain sufficient funds or stocks in your Demat account to cover the IPO bid amount.
- IPO Size: Pay attention to the IPO size and the number of shares available for retail investors. Sometimes, popular IPOs may get oversubscribed quickly.
- Cancellation: If you wish to withdraw your IPO application, you can do so within the stipulated time frame.
- Listing Gains: IPOs can often witness significant price fluctuations on listing day. Consider your investment strategy in advance.
- Tax Implications: Be aware of the tax implications of IPO investments, including capital gains tax.
Wrapping Up
Partaking in the growth of promising companies through IPO investments can be exhilarating; whether you choose an online or offline application, however, a crucial understanding of the process is necessary for making informed investment decisions. Remember these steps: they are outlined in this guide – and before plunging into the world of IPOs, conduct exhaustive research. Follow these steps and stay informed; by doing so, your chances of successfully subscribing to an IPO – and potentially reaping early investment rewards – can increase significantly.
FAQs
– Monitor upcoming IPOs and choose the one you want to invest in.
– Fill out the IPO application form provided by your broker.
– Wait for the allotment and receive shares if your application is successful.
Fill out the IPO application form provided by your broker and submit your application before the IPO’s closing date.
Indian residents and eligible NRIs (Non-Resident Indians) can apply for IPOs.
The minimum investment amount can vary from one IPO to another.
Check if the IPO offers a direct application option through the company’s website or bank. Make sure you meet eligibility criteria if applying directly and complete the application as instructed by the IPO issuer.
