How to Apply for an IPO Online in India: Complete Guide

Applying for an Initial Public Offering (IPO) in India has become easier with online application methods such as UPI and ASBA. However, understanding the process is important before submitting an application.

An IPO allows a company to offer shares to public investors. For retail investors, an IPO can provide an opportunity to participate in a company's public offering.

Before applying, investors should understand the company's business, financial position, IPO valuation, application process and associated risks.

What Is an IPO?

An Initial Public Offering, commonly known as an IPO, is the process through which a privately held company offers shares to public investors.

Companies may raise capital through an IPO for purposes such as expansion, acquisitions, debt repayment, working capital or other corporate requirements.

Why Do Companies Launch IPOs?

Companies may choose to go public to raise capital from investors and gain access to public markets. The funds raised may support future business plans and expansion.

Depending on the structure of an issue, an IPO may include a fresh issue of shares, an offer for sale, or a combination of both.

How Does an IPO Application Work?

Applying for an IPO generally involves researching the issue, checking the application details, selecting the required quantity and submitting the application through an eligible channel.

Step 1: Research the Company

Start by understanding the company's business model, products or services, financial performance, industry position and major risks.

Step 2: Check the IPO Details

Check the issue period, price information, lot size, minimum application requirements and other relevant details.

Step 3: Decide Your Investment Amount

Decide how much you are comfortable investing. Avoid making an application only because an IPO is receiving significant attention.

Step 4: Submit the Application

Follow the application process provided by your broker, bank or supported intermediary and review all details before submission.

How to Apply for an IPO Using UPI

UPI is one of the application methods available to eligible retail investors for supported IPO issues. After an application is submitted, a UPI mandate request may be generated.

UPI IPO Application Process

1. Select the IPO you want to apply for.
2. Enter the required application information.
3. Provide the applicable UPI ID.
4. Submit the application.
5. Check the UPI mandate request.
6. Review and authorise the mandate.
7. Wait for the applicable allotment process.

What Is ASBA?

ASBA stands for Application Supported by Blocked Amount. It is a mechanism through which eligible investors can apply for certain issues while the application amount remains blocked in their bank account, subject to applicable rules and processes.

What Happens After Applying for an IPO?

After the IPO application period closes, the issue goes through its applicable allotment process. Investors can then check whether shares have been allotted to them.

If Shares Are Allotted

If an investor receives an allotment, the shares are credited according to the applicable process. After listing, the shares may become available for trading on the relevant stock exchange.

If Shares Are Not Allotted

If an investor does not receive an allotment, the blocked application amount is generally released according to the applicable process and timelines.

Things to Check Before Applying for an IPO

• Understand the company's business model.
• Review its financial performance.
• Study the company's major risks.
• Understand the IPO valuation.
• Read the relevant offer documents.
• Check the IPO opening and closing dates.
• Understand the lot size and application requirements.
• Consider your personal risk tolerance.

Common Mistakes to Avoid When Applying for an IPO

Applying Without Research

Applying for an IPO simply because it is popular can lead to poor decisions. Popularity does not replace research.

Focusing Only on Listing Gains

Future market prices are uncertain. Investors should evaluate the company, issue details and risks rather than relying entirely on expectations of short-term gains.

Ignoring Valuation

A company may have a strong business while its valuation still requires careful consideration. Valuation should be assessed alongside fundamentals and risks.

Investing More Than You Can Afford to Risk

Market investments involve risk. Investors should consider their financial situation and avoid using money needed for essential expenses.

IPO Application Checklist

Before submitting an IPO application, review the important details carefully. Confirm that the application information is correct and that you understand the amount involved.

Frequently Asked Questions