3 Dec, 2024
4 mins read
What if you could invest in tomorrow's market leaders today? IPOs offer investors a chance to participate in a company's growth journey as it transitions from private ownership to public trading. With digital platforms simplifying the process, investing in IPOs online is now more accessible than ever.
This guide will walk you through the steps to invest in an IPO online, highlight the benefits of IPO investments, and provide essential tips for making informed decisions.
An Initial Public Offering (IPO) is when a private company sells its shares to the public for the first time, becoming a publicly traded entity. IPOs allow companies to raise funds for expansion while offering investors an opportunity to invest in promising businesses early in their growth phase.
Early Access to Growth: Invest in a company’s potential growth story from the beginning of its public journey.
Potential Returns: Many IPOs, such as those of IRCTC and Nykaa, have historically delivered strong listing gains.
Portfolio Diversification: IPOs allow you to invest in new sectors and industries, enriching your investment portfolio.
Transparency: IPOs are regulated by SEBI, ensuring adherence to strict disclosure and operational norms.
Step 1: Open a Demat and Trading Account
A Demat account is essential for holding shares electronically, while a trading account is required to execute transactions.
Most brokers provide a combined service for seamless IPO applications.
Step 2: Complete KYC
Ensure that your KYC details, including your PAN card and bank account, are linked to your Demat account.
Step 3: Select an IPO
Visit your broker's platform to view upcoming IPOs. Analyze the company's prospectus, known as the Draft Red Herring Prospectus (DRHP), for details about the business, risks, and financials.
Step 4: Apply Online
Navigate to the IPO section on your broker's platform or use the ASBA (Application Supported by Blocked Amount) facility via your bank.
Enter your bid details such as the number of shares and the bid price. Ensure your UPI ID is provided for payment authorization.
Step 5: Approve the UPI Mandate
After submitting the application, approve the payment request on your UPI app. The amount will remain blocked in your account until the shares are allotted.
Step 6: Allotment and Refund
If shares are allotted, the blocked amount is debited, and the shares are credited to your Demat account. Otherwise, the amount is unblocked.
Step 7: Wait for Listing
After allotment, the shares will be listed on the stock exchange. On the listing day, the stock price may differ from the IPO price based on market demand.
Oversubscription: High-demand IPOs may see oversubscription. Applying at the cut-off price improves allotment chances.
Market Sentiment: Broader market conditions can influence IPO performance. Stay updated on market trends.
Risk Management: Avoid concentrating all your funds in a single IPO. Diversify your investments to mitigate risks.
Apply for the IPO: Log in to your trading account, select the IPO, and enter the bid details.
Enter UPI ID: Provide your UPI ID during the application process.
Approve Mandate: Open your UPI app to approve the mandate. The application amount will be blocked in your bank account.
Funds Blocking: The blocked amount remains in your account and earns interest until the allotment is finalized.
Allotment/Refund: If shares are allotted, the amount is deducted. For unsuccessful bids, the blocked amount is released.
Log in to Net Banking: Go to your bank’s net banking portal and navigate to the IPO/ASBA section.
Select IPO: Choose the IPO you wish to apply for and enter the bid details.
Block Funds: Your bid amount is blocked in your bank account. You do not need to transfer funds.
SEBI-Regulated Process: The bank sends your application to the exchange while holding the blocked amount.
Allotment/Refund: If shares are allotted, the amount is debited. Otherwise, the funds are unblocked automatically.
Both methods ensure a secure and seamless payment process for retail investors.
Investing in IPOs online is now a simple and transparent process. With a little research and the right tools, you can take advantage of opportunities to invest in promising companies. Start your IPO investment journey today and explore the potential of growing your portfolio with emerging market leaders.
Calculate your Net P&L after deducting all the charges like Tax, Brokerage, etc.
Find your required margin.
Calculate the average price you paid for a stock and determine your total cost.
Estimate your investment growth. Calculate potential returns on one-time investments.
Forecast your investment returns. Understand potential growth with regular contributions.
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