Being an investor, you must know the ways how to apply for an IPO as IPO can be a great mechanism to generate a good return in a short time. You must have listened to the word IPO many times if you are an active investor or continuously watching the stock market. IPO means initial public Offer and as its name says it is the process of offering shares of any company by the promoters of any private corporation to the general public for the very first time.
IPO can be a great mechanism to generate a good return in a short time provided you are acquainted with the process of selection of IPO so as to make a good decision. So, the entire process of how to apply for an IPO is discussed in this article:
How to apply for an IPO
As investors, you can apply for IPO online and offline in both ways. In IPO, the share is allotted in lots and the lot is nothing but a bunch of shares. Now, how many shares a lot contains is not fixed because the price band of every IPO is different. Nowadays, whenever you are applying for IPO, an amount ranging between 14500 – 15000 is blocked for one lot and if the price fixed for one share is less, that means the lot will have more shares and vice versa. Suppose the price band fixed for the share is 90-100, in that case, a lot will contain 150 shares.
Online application for IPO:
- To apply or bid for an IPO, the first and foremost requirement is to have a Demat account / Trading account with the online application plus transaction or banking facilities. Most of the nationalized banks (SBI, ICICI, etc) and popular stock brokers like Groww, and Zerodha provides this facility. After opening an account with any of them you should follow these steps:
- Login to your trading password
- Select the IPO section and select the IPO with which you want to invest
- Check for the lot size, Band price and amount to be blocked by the banker for that particular IPO
- Transfer the amount equal to the IPO lot to your Demat account from your saving account
- Select the Price of bidding and the number of shares you want to purchase, it is best to choose to cut off the price to increase the chance of allotment
- Press Submit button and your bid will be accepted
- Wait for the allotment day, and if successful you will be allotted the shares you applied for
- The shares will be credited to your Demat account by depository services like CSDL & NSDL
- Allotment of shares will be intimated to you by Depository services and stock exchange by mail and text messages.
- Your Broker will also intimate the allotment of shares to you once the shares get credited to them by the depository. It will also send you the statement containing your details about the shares credited to your account.
- Accordingly, you can check the shares on your dashboard on the website or application of the broker after logging in
- Once listed at the exchange, you are ready to do trading with those shares
- If unsuccessful and you are not allotted shares, in that case, your blocked amount will be released by the banker. If the amount is debited from your trading account, it will be credited back to your account within 3-5 days through ECS.
The whole process of applying for an IPO online is very easy and convenient and it hardly takes 2 minutes for bidding. You can cancel your IPO application within the bidding dates at any time and money will be unblocked within a day or two by the bank.
IPO is issued by the company and not by the stockbrokers like Groww and Zerodha. SME IPOs are not available online. You must choose to bid at a cut-off price to maximize your chance of allotment, and choosing a cut-off price will automatically take the discount offer into consideration if IPO is listed at a discounted price.
Offline application of IPO
Another way how to apply for an IPO is the same old-fashioned and traditional way to fill out the form offline. Here, You have to get the application form from the nearest collection center and submit it back to the same window post filling it out manually. If you are not able to get the IPO from the center, you can download it from the NSE/BSE website and print it for further usage. Then submit it at the collection center and wait for the allotment of the IPO. In, offline mode, you will be asked to write the bid price, discount & net price. You have then to take the net price into account for calculation purposes.
Here, an investor just needs a Demat account unless he decides to sell the shares which have been allotted through IPOs. Steps to apply for IPO in offline mode are listed below for ready reference:
- Visit the nearest broker and get the IPO application form.
- Fill in all the required information like PAN no (if applying for shares of value more than 50,000), and Demat account details, and submit the application form along with the canceled cheque to your broker.
- An acknowledgment form will be provided by the broker for your application. If you are applying for more than Rs. 50,000, you have to attach a photocopy of your PAN card with the IPO application form.
- Alternatively, you can apply for IPO by submitting an application directly to the bank. Steps to apply for an IPO through a bank are listed here:
- Download the Application form from BSE/NSE website.
- Fill in all the required information like the name of the applicant, PAN number, Demat account number, bid quantity, bid price, and other relevant details.
- Submit the application to your nearest ASBA participating bank branch.
You can check on NSE or BSE website whether your bank is part of ASBA participating bankers to that IPO or not. Mostly all major banks are part of this. You can find the list of available ASBA participating banks’ branches on the IPO detail page of the NSE website or BSE website.
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