Guide on How to Apply for an IPO

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Investors and traders are always looking for opportunities in the stock market to help them grow their money. Since the COVID-19 pandemic, IPOs or Initial Public Offerings have proven to be one of the most profitable ventures for both traders and investors. For example, Adani Wilmar, which was listed at around ₹225 on 10 February 2022, rallied and reached a high of ₹878 by April. This example is perhaps an extraordinary case. However, IPOs like Campus Activewear Limited, Electronics Mart India Limited, and Vedant Fashions Limited, launched this year, have generated at least 40% returns to their subscribers.

So, investors who invested in such IPOs for the short to medium term were able to double or, in some cases, even triple their money. At the same time, traders and speculators were able to walk away with lucrative IPO listing day gains. So, if investing in IPOs sounds like an interesting prospect to you, this article is a helpful one for you. But before looking at how to apply for an IPO, let us learn what an IPO is.

What Is an IPO?

To put it simply, an IPO is the process by which a private company becomes a publicly traded company on the stock market. By doing so, the company gives retail investors an opportunity to become investors in the company for the first time. The primary purpose for the company to come out with an IPO is to raise funds to promote further growth and, in some cases, even repay corporate debt.

Who Is Eligible to Invest in an IPO?

Before moving on to the process of how to apply for an IPO, let us go through the eligibility criteria you need to fulfill to invest in an IPO. In India, QIBs (qualified institutional buyers), NII (non-institutional buyers), individual retail investors, and company employees can apply for IPOs.

To apply for an IPO, you must be an adult and have a PAN card issued by the Income Tax Department. Along with that, you must also have an active Demat account. If you do not have a Demat account, consider opening one with Share India, as Share India offers a free Demat account and trading account. It is not mandatory to have a trading account to invest in an IPO; however, you will require one when you have to sell your shares. Then, link your bank account with your Demat account and ensure that you have sufficient funds in your bank.

How to Apply for IPO Online

In the previous section, it was mentioned that you do not necessarily require a trading account to apply for an IPO. However, having a trading account keeps the process of applying for an IPO fairly straightforward. With a trading account, you can apply for an IPO online with a few clicks. So, open a trading account if you do not have one, and the following paragraph will tell you how to apply for an IPO.

Your trading account should have an IPO section. Select that section and see if there are any IPOs open for subscription. If there are IPOs available for subscription, choose one that you would like to invest in. However, do not skip the research part, as it is a must before investing in any company. Only invest in the IPO if you think it can help you achieve your investment goal, be it short-term goals or long-term goals.

Now, there are three investor categories: Institutional, HNI (high net-worth individuals), and retail. If you plan to invest less than ₹2 lakh, select the retail category. Next, you enter the number of lots you want to bid on (each lot contains a specific number of shares). As most IPOs nowadays are book-building IPOs, you will have to place a bid at a price within the given price band. Basically, in book-building IPOs, the price is not fixed. On the other hand, in fixed-price IPOs, the company fixes the IPO price. To increase your chances of getting the IPO, bid at the upper band price.

Proceed with the application, and you will be prompted to block funds for the IPO. Enter your UPI ID and approve the blocking of funds until the IPO allotment date. Approve that, and your order will be sent to the exchange. Then, you wait until the allotment date, and if you are allotted the IPO, the blocked funds will be deducted from your account.

How to Apply for an IPO Offline

If you wish, you can also apply for an IPO offline by visiting the nearest branch of your broker. In that case, you go to your broker and fill out the IPO application and the ASBA (application supported by blocked amount) application. Besides that, you also have to provide essential KYC details. After that, funds will be blocked for the IPO. However, most people today prefer applying for an IPO online, as that is very convenient compared to the offline process.


Now that you know the process of applying for an IPO online as well as offline, you should be on the lookout for upcoming IPOs. Yes, it is beneficial if you put in the effort to stay updated with the announcements and developments in the stock market. However, this does not imply you apply for each and every IPO open for subscription. You must research the company thoroughly before you decide to apply for the IPO. Evaluate the company on parameters such as sustainability of the core business, profit and loss records, and valuation, even if you are planning to hold the IPO for the short term. Some previously launched IPOs that were overvalued have plummeted since getting listed.

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