How to Apply for an IPO Online?
Investing in IPO online has become a popular practice among investors. This is possible due to the availability of brokerage platforms online. It allows investors to stay updated about the upcoming IPOs and invest in them. Moreover, investing in IPOs online allows investors to diversify their portfolios. However, one needs to understand the procedure of applying for an IPO online. This will help you make informed decisions that align with your financial goals. This blog will help you understand what is an IPO, the steps to apply online and offline, its advantages, types, and eligibility.
Key Highlights
- Applying for an IPO online is a convenient choice for investors due to effortless access to online brokerage platforms and real-time information on upcoming IPOs.
- It is easy to apply for an IPO online by simply following the steps by using trading applications or websites. Thus, making it easy for every type of investor.
- Having easy access to many companies going public offers more investment opportunities, which helps diversify your portfolio.
- Applying for an IPO online saves time and effort compared to offline methods. You can also earn interest on the application of IPO until the shares are allotted.
Table of Contents
What is an IPO?
An initial public offering (IPO) is the process by which a private company becomes public. In a private company, shares are owned entirely by the company’s proprietors or stakeholders. When the owners decide to go public, they list their company on stock exchanges like BSE or NSE. In this process, a part of these companies’ share capital is available for investment. Additionally, investors may purchase shares of a company during the IPO subscription period and wait for them to be listed on the stock exchange. If the listing price is higher than the offer price, an investor earns.
Step-by-Step Guide to Apply for an IPO Online
The procedure of applying for an IPO online is simple and easy. So, to help you practice it without any hassle, here are the steps you need to follow:
Step 1: Log into your trading app or website.
Step 2: Click on the ‘IPO’ option on the homepage.
Step 3:Select the IPO you want to apply for.
Step 4: Review the IPO details, such as maximum quantity, investment amount, and company information.
Step 5: Click ‘Apply Now’ to proceed.
Step 6: Enter the number of lots you wish to buy and your bidding price.
Step 7: Provide your UPI ID for payment.
Step 8: Confirm your bid and approve the payment request in your UPI app.
Step 9: Once done, your IPO order is placed.
Step 10: Check the status of your IPO application in the ‘Order Book’ section.
Where Can I Apply Offline?
If you don’t want to apply for an IPO online, you can also apply for it through the offline method. Here are the steps to do the same:
Step 1: Visit your broking firm or bank’s closest branch.
Step 2: Fill out the ASBA (Application Supported by Blocked Amount) application form.
Step 3: Provide required KYC (Know Your Customer) details.
Step 4: Submit the completed form to the bank or broking firm.
Step 5: For the IPO application amount, your funds will be blocked.
Step 6: Once shares are allocated, only the amount corresponding to those shares will be debited from your account.
What Advantages Do Online IPO Applications Offer?
Applying for an IPO online has many benefits that make the process easier and more efficient. Let’s discuss the benefits in brief:
- Save time by not running to the broker’s or bank’s offices.
- The process of applying for online IPOs is smooth and hassle-free.
- The application amount will continue to accrue interest until shares are allotted; this is only true if the money is kept in a savings account.
- The entire process is transparent.
Types of IPO
Different companies use different types of IPOs to initiate the process of offering their stock to the general public. Each type comes with its pricing strategy and method which investors choose according to their interests. Understanding these helps in deciding whether one should participate in an IPO Hence, let us briefly discuss them below:
Fixed Price Offering
A fixed-price IPO is when a company decides in advance the price at which it will sell its shares. This is very clear to all investors during an IPO. After an IPO is completed, anyone can comment on how much certain groups of people want the shares. Buying stocks indicates paying completely when one buys them at this time.
Book Building Offering
In a book-building IPO, a firm offers a range of prices instead of just one specific amount per share given out. The range is defined by investors who preserve their bids until the last proposal is made. Investors have to specify how many shares they want and the price limit for each stock held. There is a floor price at the lowest point while there is a highest level – cap price. The final price for all stocks sold is formed based on gathered proposals from various users in the market.
What is Required to Submit an IPO Application?
Submitting an IPO application requires meeting some requirements. This way, the application process would not only go smoothly but also increase the prospects of investing in an IPO. So, let’s discuss the requirements in brief:
Demat Account
A dematerialised account stores your shares in electronic form. To invest in an IPO, you need a demat account.
Bank Account
To pay for the shares you apply for in an IPO, it is necessary to have a bank account. The settlement is done through the Application Supported by Blocked Amount (ASBA) facility.
Trading Account
To invest in an IPO online, it’s important to have a trading account. This can be done through a brokerage firm or any company that provides stock trading services.
Eligibility Criteria to Invest in IPO
Before making any investments in an IPO, one must know the criteria for eligibility. Understanding these conditions enables one to successfully participate in IPOs. So, let’s discuss the eligibility criteria in brief:
- To apply for an IPO in India, you must be a Qualified Institutional Buyer (QIB), Non-Institutional Investor (NII), retail investor, or an employee of the company. You also need a Demat account to receive the IPO shares once they are allotted.
- A PAN (Permanent Account Number) is required to apply for an IPO and to open a Demat and trading account in India. It is an essential document for verifying your identity and conducting trading activities.
- Your bank account should be linked to your Demat and trading account, and it must have enough funds to cover the IPO application amount.
Conclusion
Applying for an IPO online is a simple and easy process offering many advantages to investors. Online IPO investing allows investors to save time and diversify their portfolios. Moreover, you can achieve your financial goals by following the guidelines and understanding the stages of IPOs. Furthermore, you can apply for an IPO using either online or offline methods. However, it is important to know their pros and have the proper accounts before making any attempts. Therefore, consider all these points before investing in an IPO and make informed decisions.
FAQs on Applying for an IPO Online
No, according to SEBI regulations, a single investor cannot submit multiple applications. If he/she does so, there are chances of all your applications getting rejected.
You can receive fewer shares or no shares at all when you apply for an oversubscribed IPO. However, the money for the shares you didn't receive will be refunded to your account.
An investor should only apply once for an IPO to ensure fairness among all investors.
To check the status of your application, you need to go to your Demat account. Shares are usually allotted within a few days of applying. So, if you have received any, they will be reflected in your Demat account.
Once an IPO application has been submitted, it cannot be modified or cancelled. Therefore, ensure that you have provided accurate details to avoid problems later on when allotment takes place.