How to Apply for an IPO? Step by Step Guide
IPO is a process where private companies offer its share to the general public for the first time. Lets understand how to apply for an IPO in easy way.
Initial public offering is a process where private companies offer its share to the general public for the first time. Through IPO private companies goes public and after the private company gets listed in the recognized stock exchange.
Before any IPO, SEBI validates the IPO prospectus whether the details related to company is true and fair, the information provided is sufficient to help investors taking decision before applying IPO.
There are certain entry norms regulated by SEBI that allows company to enter an IPO. The price of issue needs to be disclosed 5 working days prior to opening of issue. The price of issue is decided by the issuer in consultation with merchant banker considering several parameters.
The period of issue cannot exceed 10 working days. Once the issue is closed the investor can get information about final price and allocation ratio by registrar who publishes a document to stock exchange and investors.
We understood what is IPO but,
How can we apply for an IPO?
There are various modes through which you can apply for an IPO. You can get application form for applying with all syndicate members, collection centres, the broker to issue, stock exchange website. Thesewere the offline mode for applying in an IPO.
The digital India had open various option to invest in IPO through online mode.
The first option is through ASBA (Application supported by blocked amounts). One can find the ASBA facility in e-services or net banking option. Through ASBA facility you can track all the IPO’s.
Step 1) Login to net-banking using your ID password.
Step 2) you will find the IPO’s and right issues open.
Step 3) the list of IPO’s will appear, click on Apply you want to invest in.
Step 4) It will ask you about the information like the price, lot size, basic details like PAN number, Bank account number.
Step 5) once you fill all the details you will be asked to confirm the amount blocked and you are done with the IPO.
* Before proceeding towards any IPO always read the terms and conditions.
The next online mode you can apply is through UPI,
Step 1) You need to login to your trading account.
Step 2) Select the IPO you want to invest, enter the price and lot size you want to apply.
Step 3) Fill the application form and UPI ID. The dialog box will ask you to block your funds.
Step 4) Approve the request and you are done with the IPO.
If you are applying in IPO you have to open Demat account so that your shares are stored in electronic form. The next account which is mandatory is trading account so that you can invest in IPO and the last account you must have is bank account so that you can make payment for shares.
Once you have applied in IPO the amount will get blocked, you will not be able to use or withdraw the amount. Once you are allotted with shares, the amount will be debited from your bank account and if the shares are not allotted that money can be used.
This year we are going to get good number of IPO, last year more than 10 companies got public. This year already 18 companies got public. Shyam Metallics, Sona Comstar, Dodla Dairy, KIMS, India Pesticide to hit the market in June 2021.
The upcoming IPO’s may be Zomato, Paytm, Nykaa, Bajaj Finance, GoAir, LIC, Adhar Housing Finance, Puranik Builders, Montecarlo, Mukesh Trends Lifestyle, Samhi Hotels, Rolex Rings, Fincare Small Finance Bank, Nuvoco Vistas, India Pesticides, Aditya Birla Sun Life Asset Management Company, Apeejay Surrendra Park Hotel, Studds Accessories, Devyani International, CarTrade Tech and still counting.