How to Buy IPO Online in India?

An Initial Public Offering (IPO) marks a pivotal moment for a private company as it opens its doors to public investors by offering shares for the first time. In India, the process of buying shares in an IPO has been simplified and made accessible online, enabling investors to participate in the stock market’s growth stories with ease.

It is important to conduct thorough research before investing in an IPO or a listed IPO. This article will guide you about IPO and take you through the steps for buying an IPO online in India.

Understanding Initial Public Offer (IPO) in India

An Initial Public Offering (IPO) is when a privately held company sells its shares to the general public, enabling them to own a part of the company. The primary goal for a company issuing an IPO is to gather funds for purposes such as growing the business, paying off debts, or supporting daily operations.

In India, the Securities and Exchange Board of India (SEBI) oversees the IPO process. An IPO helps the company secure capital from public investors and leads to its listing on the stock exchange. A listed IPO provides a way for its shareholders to buy and sell their shares.

Process of Investing in IPO Online in India

Investing in an Initial Public Offering (IPO) in India involves a series of steps that you can follow:

  • Open a Demat and Trading Account:

Firstly, you need a Demat account to hold the shares and a trading account to buy and sell shares on the stock exchange. These accounts can be opened with a broker or a financial institution that offers these services. Ensure your accounts are linked to your bank account for seamless fund transfers.

  • Research Upcoming IPOs

Keep an eye on upcoming IPOs by checking announcements on the Securities and Exchange Board of India (SEBI) website, financial news portals, or through your broker’s platform. The IPO prospectus, known as the Red Herring Prospectus (RHP), contains detailed information about the IPO, including the company’s background, financials, and capital-raising objectives.

  • Evaluate the IPO

Conduct your due diligence on the company’s financial health, growth prospects, and market potential for its products or services. Then, review the RHP thoroughly to understand the risks involved.

  • Apply for the IPO

Once you’ve decided to invest in an IPO, you can apply through the Application Supported by Blocked Amount (ASBA) process. This facility allows you to block the IPO application amount in your bank account without debiting it until shares are allotted to you.

  •  Bid on Shares

During the IPO application process, you’ll need to add a bid on shares. The company, along with its underwriters, sets a price band for the IPO. You can bid within this range and specify the number of shares you wish to purchase. You can also apply at the cut-off price, indicating you’re willing to buy shares at whatever price is decided at the end of the bidding process.

  • Wait for Allotment

After the bidding process closes, the allotment process begins. If the IPO is oversubscribed, shares may not be allotted to you, or you may receive fewer shares than you applied for. The blocked amount in your bank account will either be partially debited or released based on the allotment.

  • Allotment

After the bidding process closes, the allotment process begins. If the IPO is oversubscribed, shares may not be allotted to you, or you may receive fewer shares than you applied for. The blocked amount in your bank account will either be partially debited or released based on the allotment. Once the allotment is done, the shares are then listed on the stock exchange for trading. The IPOs are then referred to as listed IPOs.

Endnote

Participating in an IPO in India offers you a unique opportunity to get involved with a company from the ground up, potentially reaping the rewards as the company grows. However, it is advisable to seek the guidance of a share market advisory firm while making investment decisions.

Additionally, remember to continuously monitor the SEBI website and financial news for updates on upcoming IPOs and any regulatory changes that might affect the IPO process or your investment.

Reference Links:

https://groww.in/blog/how-to-invest-in-an-ipo-online#:~:text=The%20process%20of%20investing%20in,and%20provide%20your%20UPI%20ID.

https://www.indiainfoline.com/knowledge-center/ipo/how-to-buy-ipo-online

https://www.hdfcbank.com/personal/resources/learning-centre/invest/how-to-buy-ipo

https://www.indmoney.com/articles/personal-finance/how-to-invest-in-an-ipo-online

https://www.bhimupi.org.in/upi-live-ipo

https://kuvera.in/blog/a-step-by-step-guide-how-to-apply-for-an-initial-public-offering-ipo-in-india-2023/

https://www.shareindia.com/knowledge-center/ipo/how-to-apply-for-an-ipo

https://www.nirmalbang.com/knowledge-center/subscribe-an-ipo.html

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