How do I apply for an IPO in India?

By PriyaSahu

An Initial Public Offering (IPO) is a great opportunity for investors to purchase shares in a company before it becomes publicly listed. In India, the process of applying for an IPO has become easier thanks to advancements in digital platforms. In this guide, we’ll walk you through the step-by-step process to apply for an IPO in India.



1. What You Need to Apply for an IPO?

Before you can apply for an IPO, there are a few things you need to ensure you have in place:

  • Demat Account: You need a Demat account to hold your shares in electronic form. This is a must for trading in the stock market and applying for IPOs.
  • Bank Account: You’ll need an active bank account that is linked to your Demat account. The bank account will be used for payment during the IPO application process.
  • Trading Account: A trading account is necessary to buy and sell stocks. If you don’t already have one, you can open it with your stockbroker.
  • UPI (Unified Payments Interface) ID: UPI has become the preferred mode of payment for IPO applications. Ensure you have a valid UPI ID linked to your bank account.

2. Steps to Apply for an IPO in India

Applying for an IPO in India is relatively simple and can be done through online platforms or even through your stockbroker. Here’s a step-by-step guide:

Step 1: Check for IPO Availability

The first step is to check for IPOs that are open for subscription. You can do this by visiting the official websites of stock exchanges like the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE), or you can use a trading platform to stay updated with upcoming IPOs.

Step 2: Complete Your KYC Process

To apply for an IPO, you need to complete your KYC (Know Your Customer) process with your stockbroker or online platform. This involves providing documents such as your PAN card, address proof, and a photograph to verify your identity.

Step 3: Login to Your Trading Account

Once your KYC is complete, log in to your trading account. You will need to have the required funds in your linked bank account to apply for the IPO.

Step 4: Choose the IPO to Apply For

On your trading platform, navigate to the IPO section. Here, you will find a list of IPOs that are currently open for subscription. Choose the IPO you wish to apply for.

Step 5: Fill the Application Form

You will need to fill out an application form, where you will select the number of shares you want to apply for and the price band (if applicable). In most IPOs, there is a price range, and you can bid within this range. You’ll also need to select the type of bid (retail or non-retail).

Step 6: Payment via UPI

Once the application is complete, you will receive a UPI ID linked to your application. Confirm the payment using your UPI app (like PhonePe, Google Pay, or Paytm). The amount will be blocked in your bank account until the allotment is confirmed.

Step 7: Wait for Allotment

After the IPO subscription closes, the allotment process begins. If you are allotted shares, they will be credited to your Demat account. If you are not allotted any shares, your money will be refunded to your bank account.



3. Important Things to Keep in Mind

While applying for an IPO is simple, there are some important things you should keep in mind:

  • Check the Company’s Financials: Always review the company’s financial statements, business model, and IPO prospectus (DRHP). This will give you a good understanding of the company's future prospects.
  • Know Your Risk Appetite: IPOs can be volatile in the initial days of trading. Ensure you are comfortable with the potential risks involved before applying.
  • Allotment Criteria: IPOs are often oversubscribed, meaning there may be more demand than available shares. In such cases, shares are allotted on a pro-rata basis.
  • Tax Implications: Gains from IPOs are subject to capital gains tax. Short-term capital gains (if shares are sold within one year) are taxed at 15%, while long-term capital gains (if sold after one year) are tax-free up to ₹1 lakh per year.

4. Conclusion

Applying for an IPO in India is a straightforward process, but it requires proper preparation. Ensure that you have all the necessary accounts in place, review the IPO prospectus carefully, and be aware of the risks involved. IPOs can be a lucrative investment, but like any investment, they come with their own set of risks.



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