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How to Apply For an IPO?

•6 min read•by Angel One
Learn how to apply for an IPO and invest in the stock market. Understand the eligibility criteria and the application process of an initial public offering. Start your investment journey today.
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Initial Public Offering (IPO) is the process by which companies raise funds from the market. Businesses require funds for a variety of reasons, like an expansion of the business, debt repayments, an exit strategy for early investors, etc. All these funding requirements can be met through an IPO. As an investor, all you need to understand is how to apply for an IPO and, more importantly, how to do it online.  

Key Takeaways 

  • To apply for an IPO, you need to have a demat account and a trading account. You must also be an adult with a valid PAN card.  

  • You can apply for an IPO through a bank or a broker’s platform with a UPI mandate, which instantly blocks the bid amount.  

  • The funds for your IPO bid are blocked until allotment through the ASBA facility introduced by SEBI. 

  • If the shares are alloted, the funds are debited from the bank account and the shares are credited to your demat account. If the bid was unsuccessful, the bid amount is unblocked.   

Also read more about what is IPO here  

Steps To Apply For An IPO 

You can bid for IPOs through the offline method or online methods:  

  • In the offline method, you need to fill out the physical form and submit it to the IPO banker or to your broker.  

  • When you opt for the online option, you can apply directly through your broker’s website or mobile application.   

The advantage of the online IPO is that most of your data is automatically populated from your trading or demat account, thus reducing the clerical effort from your side. That largely simplifies the online IPO application form fill-up process.  

How To Apply For An IPO Online Through Angel One? 

  • Log in to the Angel One App or website and click on ‘IPO’ on the homepage. 

  • Select the IPO you are interested in. 

  • Go through the IPO details like maximum quantity, maximum investment, about the company, etc. 

  • Click on ‘Apply Now’ to apply and enter the number of lots and bidding price along with your UPI ID. 

  • Confirm your bid and accept the payment mandate sent to your UPI App for successfully completing the IPO application.  

That’s it! Your IPO order is placed. You can check the status of your IPO in the ‘Order Book’ section. 

 

Who Is Eligible To Invest In An IPO? 

Here are the following eligibility criteria you need to meet before investing in an IPO live subscription:   

  • Any adult who is competent to enter into a legal contract is eligible to apply for the IPO of a company. 

  • You must have a PAN card issued by the Income Tax department and you also have a valid demat account. 

  • Having a trading account, apart from a demat account, is necessary if you want to sell the shares on the listing.   

That’s exactly why brokers will advise you to open a trading account along with a demat account when you apply for an IPO for the first time.  

Remember these pointers when you apply for an IPO: 

  • Once an investor submits a bid for an IPO, the company and underwriters review the bids received.  

  • The allotment process follows. 

  • Once the shares are allotted, the investor's bank account is debited for the allocated shares, which are then credited to the investor's demat account.   

New Offer vs Follow-On Public Offer vs Offer-For-Sale 

While applying for an IPO, it is essential to know about a few related key terms that you may have come across:  

  • New Offer: If a company is raising funds in the IPO market for the first time and getting its stock listed, it is a new offer. This offer leads to a listing and the expansion of the capital base of the company.  

  • Follow-on Public Offer (FPO): A company is already listed on the stock exchanges but is looking at the IPO market for raising additional funds.  

  • Offer-For-Sale (OFS): Here the existing promoters and anchor investors hive off part of their holdings through an IPO. Most of the disinvestments undertaken by the government are in the form of offers for sale. In an OFS, the share capital of the company does not increase but it is only the ownership pattern that changes. An OFS is often used by companies to also list the company in the bourses.  

Types of IPO 

There are two types of IPOs - Fixed Price IPOs and Book Built IPOs.  

Fixed Price IPO 

  • The company fixes the IPO price in advance as the sum of the par value and the premium.  

  • You can only apply for the IPO at that price.  

Book Built Issue 

  • The company will only provide an indicative price range for the IPO and the final price of the IPO will be discovered through the book-building process. 

  • The basis of allotment is finalised within 10-12 days and the demat credit also happens within a couple of days after that.  

  • Once the shares are in your demat account and the stock is listed on the exchanges, you are free to sell the shares. 

  • You need a trading account, apart from the demat account for IPO, to sell these shares. 

Check out the Beginners Guide to IPO Investing here.  

​​How to Apply for An IPO Using ASBA? 

Before you understand how to invest in IPO in India, it is important to learn about a new facility offered by SEBI called the ASBA (Applications Supported by Blocked Amount). Follow these simple steps and apply for IPO online or offline: 

  • Log in to your respective bank’s net banking portal or mobile application. 

  • Select the ‘Demat Services or ‘IPO Application’ option. 

  • Choose the IPO you plan to invest in from the given list of open offers. 

  • Fill in the details such as your PAN, the number of shares you plan to bid for, demat account number, etc. 

  • Submit your bid and provide the mandate approval sent by your bank to block the required amount. 

  • After the application gets accepted, you will receive an application ID. Following this, the bank blocks the specific amount until the allotment process is complete. 

  • In case you do not get the allotment, the bank unblocks the bidding amount, which gets reflected in your bank account. 

Now that you understand how to buy IPO shares online using ASBA, know that you can even opt for the offline method. All you have to do is download the physical ASBA form and fill in the required details. Then, submit to your respective bank branch.  

How to Apply for An IPO ​​Using UPI? 

If you are thinking how to apply for IPO using UPI, know that the process is simple and straightforward.  

  • Visit your broker’s online platform and choose the IPO you want to invest in. 

  • Provide details, such as the number of shares and the bidding amount. 

  • Enter the UPI ID that is linked to your account for processing the payment. 

  • Submit the application once you have filled in the required information. 

  • Get the UPI mandate request on your UPI app and authorise it to block the funds. 

  • Wait for the shares to get allotted, and if so, your blocked amount is debited. If not, the amount is credited back to your account. 

  • Get the confirmation from your broker and the exchange regarding your application status.  

This method handles the entire transaction digitally in a seamless manner, helping to increase the efficiency of IPO applications. The UPI option also reduces paperwork hassle.   

What Are The Benefits Of Online IPO Application? 

While you are familiar with how to buy IPO shares using different options, knowing the advantages of online application is equally essential. Here’s all that you need to understand: 

  • Opting for IPO online helps save your valuable time and energy, as there is no need to visit a bank or broker’s office. 

  • The online process is seamless and convenient, enabling you to complete the process effortlessly from anywhere. 

  • If you have applied for an IPO through your savings account, you can earn interest on the blocked amount until the IPO allotment. 

  • When you choose the online process, you get complete control and authority on the application, offering transparency.   

Before you choose how to get IPO, remember that the online process comes with umpteen benefits. For instance, not only does it offer convenience, but you get to earn interest on the blocked funds if you opt to apply via a savings account.  

Conclusion 

Before you initiate the process of IPO live subscription, remember to check the online options of ASBA and UPI. After considering the benefits of these methods, choose the one that best fits your requirements. This helps you complete the application process hassle-free.   

Remember that the IPO apply time varies between 10 AM and 5 PM on all working days within the subscription period. If you opt for the ASBA option, you have to consider the cut-off time to place a bid. That said, some brokers and banks may allow you to place a bid any time within the IPO window.  

Now that you understand how to invest in IPO in India and the need for a demat account for IPO subscription, it is crucial to evaluate the companies carefully. Note the advantages and potential risks associated with them. Open a demat account for free on Angel One and get started with your investment journey. 

FAQs

It is a good investment option, but you must know that not every IPOs are worth investing. Here are a few things to remember while considering an IPO. Do a complete background check Read the prospectus carefully Pick companies that are backed by reliable underwriters Get clarity over vividness bias. IPOs can create an illusion of strong performance, long-term success, and such. Get the facts before investing Wait for the lock-in period to get over

Offering price or issue price is the price at which IPOs are floated in the primary market. In simple words, the company sells its respective shares to investors at this price for the first time. 

 

You can buy IPOs when they are launched in the primary market, or when they are traded like stocks in the secondary market.
Yes, you can. One advantage of it is that you can buy shares at a fixed price. You can ask your broker to find an advisory firm that specialises in pre-IPO sales.
Finding potential IPOs to invest can be a challenge. But if you are interested, you can find hints in equity market websites, by searching in Google News with search words like IPO, or by following broking houses’ websites.
No, you can’t apply for IPOs multiple times. If it is discovered that you have applied multiple times with the same name, PAN number, and same DEMAT account your application will get rejected.
No, it isn’t mandatory, but you can now apply for IPO using UPI id. UPI is accepted as a new medium of applying for IPO by SEBI.
The current formula to allot IPOs is to divide the total number of shares available to retail individual investors (RIIs) by minimum bid lot. If you have found a potential deal, you can increase your chances by adopting the following steps. Large bids are ineffective unless more than Rs 200,000 in volume Use different DEMAT account to submit multiple applications Choose cut-off bids over price-bids to increase your chances Don’t file applications at the last moment Avoid your application getting rejected for names mismatch, spelling mistakes and other technical errors
The online process has made it easier and fast to apply for IPOs, but if you still want to apply offline here is what you need to do. Get IPO application form from a broker or download it from NSE/BSE website Fill in the form with required details such as – bank details, DEMAT details, Pan Card No., and cut-off price Submit the application with your broker or a bank with ASBA (Applications Supported by Blocked Amount) facility

Yes, the money is refundable if your application process remains unsuccessful or shares have not been allotted to you. In another instance, where you cancel the bid before the IPO closes, you still get the money that you have invested in. 

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