How To Apply IPO Online?

Apply IPO can be a lucrative opportunity for investors. IPOs have the potential to provide substantial returns in a relatively short time. However, it’s essential to understand the IPO buying process before you dive in. In this article, we’ll provide a detailed guide on how to buy an IPO, offering you the knowledge and insights you need to make informed investment decisions.

How to apply IPO online and offline? 

You can apply for an IPO through both online and offline methods. If you prefer the offline route, you’ll need to submit a physical application form to your IPO banker or broker to kickstart the application process.

Conversely, when opting for the online method, you’ll use the trading platform provided by your banker or broker. Applying online is generally more straightforward than the offline process because most of your information is automatically populated from your Demat Account. This not only saves you time but also streamlines the application process.

How to apply for IPO?

Choosing the right IPO 

Selecting the right IPO is a critical initial step. It’s important to remember that not all IPOs are equal. Therefore, careful consideration is essential before deciding to invest in one. Two key factors should guide your decision: personal factors and company-related factors.

Personal Factors:

  • Investment Criteria: Clearly define your investment criteria. This includes your investment capacity and risk tolerance. Your long-term financial goals should also play a role in your decision.

Company Factors:

  • Company Research: Thoroughly research the company launching the IPO. Examine their prospectus attentively. Assess their past performance and gain insight into their expansion plans.

Arranging for funds 

Before making any investment, it’s essential to have your finances in order. You can use your savings or borrowed capital to fund your IPO investment. However, it’s crucial to be prudent about the money you invest, as IPOs inherently carry a high level of risk. In the event that the company faces financial challenges or losses, there is a possibility that you may lose your invested capital. Therefore, only invest funds that you can afford to put at risk.

Opening a Demat and Trading account 

A Demat Account keeps a digital record of all the shares you purchase, while a trading account enables you to buy and sell shares in the stock market. Having a Demat account allows you to buy shares, while a trading account is necessary for both buying and selling shares. To streamline your investment activities, it’s recommended to open both a Demat and Trading account simultaneously. This way, you’ll have the necessary infrastructure to manage your investments more efficiently.

How to purchase IPO shares – the application process 

You can acquire IPO shares using your Demat or bank account. Some banks offer the convenience of opening trading, Demat, and bank accounts together. Once your trading and Demat accounts are active, you can easily invest in IPOs.

With ASBA (Application Supported by Blocked Account), you can purchase IPO shares without the hassle of writing cheques or obtaining Demand Drafts. ASBA is a facility introduced by SEBI to simplify the IPO application process.

ASBA allows banks to block the required funds in your account for share purchases. These funds are held from the application date until the share allotment date. In cases where you receive fewer shares than you applied for, only the amount for the allocated shares will be debited from your account, not the entire blocked amount.

For example, if you applied for shares worth 1 lakh INR and were allocated shares worth 40,000 INR, only 40,000 INR will be deducted from your account.

Bidding and Allotment of shares 

To purchase shares in an IPO, you must submit a bid beforehand. Keep in mind that you can only bid in the lot size specified in the IPO prospectus. The lot size represents the minimum number of shares you can bid for when applying for an IPO. The company establishes a price range within which you can place your bid. It’s important to note that you can revise your bid at any time.

If your bid is successful and you receive a full allotment of shares, you will be issued a CAN (Confirmatory Allotment Note) within six working days.

Once the shares are allocated to you, they will be credited to your Demat account. After that, you’ll need to wait for the company’s shares to be listed on the stock exchange before you can start trading.

Now that you have all the information you need on how to invest in an IPO, you can begin your investment journey.

Leave a comment

Exit mobile version