An Initial Public Offering (IPO) is when a company sells its shares to the public for the first time and lists on the stock exchange. Indian IPOs often attract enormous demand, and listing-day gains make headlines. Applying is simple — judging whether to apply needs more thought.
What you need to apply
- A demat and trading account (what is a demat account).
- A bank account with UPI or net banking (ASBA).
- PAN linked to your demat account.
How to apply using UPI (most common)
- Open the IPO section in your broker's app.
- Select the IPO and choose your investor category (individual investor for most people).
- Enter the number of lots and your bid price (usually the cut-off price).
- Enter your UPI ID and submit.
- Approve the UPI mandate in your UPI app. The amount is blocked, not debited.
- If you get an allotment, the money is debited and shares are credited to your demat account. If not, the block is released.
How to apply using ASBA (net banking)
Log in to your bank's net banking, open the IPO/ASBA section, select the IPO and enter your demat details and bid. The amount is blocked in your bank account until allotment.
Key terms
- Price band: the range within which you can bid.
- Lot size: the minimum number of shares per application.
- Cut-off price: applying at cut-off means you accept the final issue price.
- Subscription: how many times the issue is applied for, by category.
- Allotment: in oversubscribed issues, individual investor allotment is often by lottery.
Timeline
SEBI moved IPO listing to T+3 — shares list on the third working day after the issue closes. Allotment status is usually available a day or two after closing on the registrar's website and exchange sites.
How to judge an IPO
Look beyond the excitement:
- Business quality — what does the company do, and is it growing profitably? (fundamental analysis)
- Use of proceeds — is the money for growth, or mainly for existing shareholders selling (offer for sale)?
- Valuation — compare P/E and other ratios with listed peers (PE ratio explained).
- Financial health — debt, cash flow and margins over three years.
- Promoter background and risks — read the risk factors section of the prospectus (DRHP/RHP).
About GMP (grey market premium)
The grey market premium is an unofficial, unregulated indicator of expected listing gains. It is easily influenced and often wrong. Do not base decisions on GMP alone.
Listing gains vs long-term investing
Some investors apply only for listing-day gains; others hold for years. Many IPOs that list strongly later fall below the issue price, and some that list weakly do well over time. Decide your plan before applying.
Taxes
If you sell within 12 months, gains are short-term capital gains; beyond 12 months, long-term capital gains rules apply. Read capital gains tax on shares.
Key takeaways
- Apply through your broker's app using UPI, or through net banking (ASBA).
- The amount is blocked, not debited, until allotment.
- Listing happens on T+3 after the issue closes.
- Judge an IPO by business, valuation and use of proceeds — not by GMP or hype.
Frequently asked questions
Can I apply for an IPO without a demat account?
No. You need a demat account to receive shares.
How can I increase my chance of allotment?
In heavily oversubscribed issues, individual investor allotment is largely a lottery. Applying from different family members' own accounts (each with their own PAN) is allowed; multiple applications from one PAN are not.
Is it safe to apply for every IPO?
No. Some IPOs are richly valued and fall after listing. Evaluate each issue.
What happens if I do not get an allotment?
The blocked amount is released to your bank account.
BullishBrush শুধুমাত্র শেয়ার বাজারের শিক্ষা দেয়। আমরা SEBI-রেজিস্টার্ড ইনভেস্টমেন্ট অ্যাডভাইজার বা রিসার্চ অ্যানালিস্ট নই এবং কোনো কেনা-বেচার পরামর্শ বা টিপস দিই না। শেয়ার বাজারে বিনিয়োগ বাজারের ঝুঁকির অধীন; বিনিয়োগের আগে সব নথি মনোযোগ দিয়ে পড়ুন। অতীতের ফলাফল ভবিষ্যতের নিশ্চয়তা নয়।