How to Apply for an IPO Online

Everything you need to know about applying for an IPO online, from opening a Demat account to submitting your application.
OPEN ACCOUNT
How to Apply for an IPO Online
OPEN ACCOUNT
3 min
29 Oct 2024

Initial Public Offerings (IPOs) present a unique opportunity for investors to participate in the growth story of a company right from its inception on the stock market. However, the process of applying for an IPO might seem daunting to many. This article aims to demystify the process and provide a comprehensive guide on how to apply for an IPO online in the Indian securities market.

What is an IPO?

An IPO, or Initial Public Offering, is the process through which a privately held company offers its shares to the public for the first time, thereby becoming a publicly traded entity. It is often seen as a milestone for a company as it transitions from being privately owned to be traded publicly on the stock exchange.

What do you need to apply for an IPO?

To apply for an IPO, you typically need the following:

  • Demat account: A Demat (Dematerialised) account is essential for holding shares in electronic form.

  • PAN card: A Permanent Account Number (PAN) card issued by the Income Tax Department of India is mandatory for investing in securities.

  • Bank account: A bank account linked to your Demat account for the transfer of funds.

  • Trading account: A trading account with a registered stockbroker to facilitate the buying and selling of shares.

Pro tip

Invest in equities, F&O, and upcoming IPOs effortlessly by opening a Demat account online. Enjoy a free subscription for the first year with Bajaj Broking.

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How to Apply For IPO Online - Through Internet Banking

If you have active Internet banking, follow these steps:

  1. Log in to your Internet banking account with your username and password.
  2. Look for the ASBA tab and click on it.
  3. Click on 'Apply IPO' and select the company you want to invest in.
  4. Enter your PAN and name.
  5. Choose how many shares you want to buy and the price you’re willing to pay, then click Submit.
  6. Submit your application before 2 PM on a working day to get it processed that day.

How to Apply For IPO Online - Through Broker

Alternatively, you can apply for an IPO through your broker:

  1. Log in to your broker's online account. If you don’t have an account, register using your email and phone number.
  2. Find the IPO tab and go to the current IPO section. Choose the IPO you want from the list.
  3. Enter the number of shares (lot size) you want to bid for and select your bid price. To improve your chances of getting shares, consider bidding at the cut-off price or the highest price in the price range.
  4. Enter your UPI ID and click the submit button. You’ll need to approve the transaction in your UPI app.
  5. Wait for a notification in your UPI app. The money for your application will be blocked until the IPO allotment date.

If you prefer not to apply online, you can opt for the offline method:

  1. Visit a branch of your bank or brokerage firm.
  2. Fill out the ASBA application form and provide your KYC details.
  3. Your funds will be blocked in your bank account. Once shares are allotted, the corresponding amount will be debited from your account.

Both online and offline methods have their advantages and cater to the preferences of different investors. Choose the one that suits you best based on convenience and ease of access.

Both online and offline methods have their advantages and cater to the preferences of different investors. Choose the one that suits you best based on convenience and ease of access.

Why should you invest in IPOs?

Investing in IPOs can offer several advantages:

  • Potential for high returns: IPOs of promising companies often experience significant price appreciation in the initial days of trading.

  • Opportunity to invest early: IPOs provide investors with a chance to invest in companies during their early stages of growth.

  • Diversification: Adding IPOs to your investment portfolio can help diversify risk and potentially enhance overall returns.

How do you invest in IPO shares?

Investing in IPO shares involves the following steps:

  1. Research: Conduct thorough research on the company's business model, financial performance, industry trends, and future prospects.

  2. Assess risk: Evaluate the risks associated with investing in the IPO, including market volatility and company-specific risks.

  3. Apply for IPO: Once you have identified a suitable IPO, you can apply for shares through your broker or online through internet banking.

  4. Allotment: After the IPO subscription period closes, the allotment process begins, and shares are allocated to successful applicants.

  5. Listing and trading: Upon allotment, the shares are listed on the stock exchange, and investors can begin trading them in the secondary market.

Is there any eligibility criteria for IPO application?

To invest in an Initial Public Offering (IPO), you must meet the following eligibility criteria:

  1. SEBI Approval: You must be an approved investor category as per SEBI guidelines. This includes:
    • Qualified Institutional Buyers (QIBs)
    • Non-Institutional Investors (NIIs)
    • Retail Individual Investors
    • Employees
  2. Demat and Trading Account: You need to have a Demat and trading account with a recognized Depository Participant (DP) like 5paisa.
  3. PAN Card: A Permanent Account Number (PAN) is mandatory for all investors.
  4. Linked Bank Account: Your bank account must be linked to your Demat account to facilitate the transfer of funds.
  5. Sufficient Funds: Ensure you have sufficient funds in your bank account to cover the IPO application. The amount will be blocked until the allotment process is completed. If you are allotted shares, the funds will be transferred to the company. If not, the blocked amount will be released.

Accounts required to apply for an IPO online

To apply for an IPO online, investors need to have a Demat account, a trading account, and access to internet banking services provided by their bank.

What are the benefits of online IPO application?

  • Time-saving: No need to visit the broker's office or bank, saving valuable time.

  • Convenience: The process is seamless and can be completed from anywhere, offering greater ease.

  • Interest on funds: If the application is made through a savings account, the amount remains in the account and continues earning interest until the IPO allotment date.

  • Transparency and control: The online process is transparent, allowing you full authority and control over the application.

Conclusion

Investing in IPOs can be a rewarding opportunity for investors to participate in the growth journey of promising companies. By understanding the process of applying for an IPO online and the necessary requirements, investors can make informed decisions and capitalise on the potential benefits offered by IPO investments in the Indian securities market.

Related Articles:

What are the Different Types of IPO

How is an IPO Valued

What is IPO Allotment Process

How to Check your IPO Allotment Status

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Frequently asked questions

How to apply for an IPO online?

To apply for an IPO online, you need a Demat and trading account. Log in to your trading platform or banking app, select the IPO section, and choose the desired IPO. Enter your details, including the number of shares and bid price, and confirm your application. The amount will be blocked in your account until the allotment. If shares are allocated, funds are deducted; otherwise, the blocked amount is released.

How to buy IPO stocks online?

To buy IPO stocks online, first, ensure you have a Demat and trading account. Log in to your trading platform, locate the IPO section, and choose the desired IPO. Specify the quantity of shares and your bid price, then complete the application. After allotment, if you receive shares, they will automatically be credited to your Demat account. You can then trade these shares once they are listed on the stock exchange.

Is IPO money refundable?

Yes, if you do not receive an allotment in the IPO, the blocked amount in your account is released. The funds are not deducted unless shares are allotted to you. If you’re unsuccessful in securing shares, the blocked amount is unblocked and made available in your account, typically within a few days of the allotment process. This ensures that no money is permanently withheld if you do not receive the IPO shares.

How to invest in IPO for beginners?

Beginners can invest in IPOs by first opening a Demat and trading account. Research the company offering the IPO, review its financials and growth prospects, then apply through your broker’s platform or bank app. Select the number of shares and bid price, and confirm the application. It’s advisable to start with well-established companies and ensure you understand the risks involved, as IPO investments can be volatile in the short term.

Is buying IPO a good idea?

While IPOs can be a lucrative investment opportunity, it's important to approach them with caution. Not all IPOs are successful, and there are several factors to consider before investing:

  • Thorough Research: Conduct a comprehensive analysis of the company's financials, business model, management team, and industry prospects.
  • Read the Prospectus: Carefully review the company's prospectus to understand its business plan, risks, and financial performance.
  • Reliable Underwriters: Consider investing in IPOs backed by reputable underwriters with a strong track record.
  • Avoid Hype and Bias: Be wary of excessive hype and media buzz surrounding an IPO. Focus on the company's fundamentals rather than emotional appeals.
  • Wait for the Lock-in Period: After the IPO, there's often a lock-in period during which early investors cannot sell their shares. Waiting for this period to end can provide a clearer picture of the company's post-IPO performance.
When can I buy an IPO stock?

You can invest in IPOs in two ways:

  1. Primary Market: Participate directly in the IPO process and purchase shares directly from the company.
  2. Secondary Market: Buy shares of the company after the IPO on a stock exchange, like the NSE or BSE.
Can you buy an IPO before it goes public?

Yes, you can invest in pre-IPO shares. This allows you to buy shares of a company before it goes public, potentially offering higher returns. However, pre-IPO investments are typically available to institutional investors and high-net-worth individuals. To access pre-IPO investments, you may need to work with a broker or financial advisor who specializes in such deals.

How can I buy IPO offline?

While online applications have simplified the IPO process, you can still apply offline. Here's how:

  1. Obtain the Application Form:
    • Get the IPO application form from your broker or download it from the NSE or BSE website.
  2. Fill in the Details:
    • Complete the form with necessary information such as your bank details, Demat account details, PAN card number, and the desired number of shares at the cut-off price.
  3. Submit the Application:
    • Submit the filled application form to your broker or a bank that offers the ASBA (Applications Supported by Blocked Amount) facility.

By following these steps, you can participate in the IPO process even without online access.

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