📈 What is IPO and How to Apply IPO in Stock Market – A Complete Guide for Beginners
Have you ever heard about companies launching their IPO and people dashing to apply for it? If you’ve been curious about what’s an IPO and a way to apply for an IPO in the inventory market, you’re inside the proper place!
In this novice-friendly blog, I’ll provide an explanation for everything you want to know about IPOs in simple language—what they may be, why they matter, and the way you could follow for one to probably earn excellent returns.
🟡 What is IPO?
🔹 Full Form of IPO
IPO stands for Initial Public Offering.
🔹 What Does IPO Mean?
When a non-public agency comes to a decision to promote its shares to the overall public for the first time, it does so through an IPO. By doing this, the employer will become publicly indexed on an inventory alternate like NSE or BSE.
Think of it as the employer inviting you to end up an element-proprietor by shopping for its stocks.
🏢 Why Do Companies Launch IPOs?
Companies need finances to develop, enlarge, or repay debt. Here’s why they pass public thru an IPO:
✅ 1. Raise Capital
To amplify their commercial enterprise, launch new merchandise, or enter new markets.
✅ 2. Increase Credibility
Being listed at the stock marketplace builds the enterprise’s public photograph and accept as true with.
✅ 3. Provide Exit to Early Investors
Founders or early traders may also want to promote their stocks and take income.
🧠 Types of IPOs
There are specifically styles of IPO pricing techniques:
🔸 Fixed Price Issue
In this kind, the organisation charges a hard and fast charge for every share. Investors recognise the charge even as making use of.
🔸 Book Building Issue
Here, a fee range is given (e.G., ₹one hundred–₹one hundred ten), and buyers vicinity bids. The final charge is determined based totally on call for.
🛣️ How Does IPO Work in Stock Market?
Let’s break down the adventure of an IPO:
1. Company Plans IPO
The organisation decides to raise the budget and hires service provider bankers to deal with the system.
2. DRHP Filing
The business enterprise documents a Draft Red Herring Prospectus (DRHP) with SEBI. It carries financials, enterprise info, and dangers.
3. SEBI Approval
SEBI reviews the documents and approves the IPO.
4. Price Band and Dates
The company proclaims the rate band and IPO dates (open and near).
5. Bidding and Application
Investors practice for shares through their brokers or UPI-primarily based apps.
6. Allotment
Based on demand, shares are allocated. If oversubscribed, allotment happens through lottery.
7. Listing
The agency’s shares get indexed on the inventory trade (NSE/BSE), and you could purchase/sell them in the open market.
📋 Eligibility to Apply for IPO
Anyone with the subsequent can apply:
- PAN Card
- Demat Account
- Bank Account
- UPI ID (if applying online)
No one wants to be a trading professional—simply simple documents and some clicks!
📥 How to Apply IPO in Stock Market – Step-with the aid of-Step Guide
Now that you understand what an IPO is, allows understand the way to follow an IPO in the inventory marketplace.
💻 1. Through Online Brokers (Zerodha, Groww, Upstox, and so forth.)
Step 1: Login on your broking’s app or internet site
Step 2: Go to the “IPO” phase
Step three: Select the IPO you need to use for
Step 4: Enter range of plenty (quantity)
Step five: Enter your UPI ID and put up
Step 6: Approve UPI request on your app (Paytm, PhonePe, GPay)
Step 7: Wait for allotment and list
🏦 2. Through Bank ASBA (Application Supported via Blocked Amount)
This is to be had in Net Banking of many banks like SBI, ICICI, HDFC.
Step 1: Login to Net Banking
Step 2: Find the “IPO” or “ASBA” section
Step 3: Select IPO, enter amount and PAN
Step 4: Submit the software
Step five: Funds are blocked and debited most effective if shares are allotted
📝 Important Terms While Applying IPO
🔹 Lot Size:
Minimum wide variety of shares you could apply for. Example: 1 lot = 35 stocks
🔹 Cut-off Price:
Retail traders can follow the cut-off fee to boost the threat of allotment.
🔹 Grey Market Premium (GMP):
The unofficial market premium of the IPO before it lists. A high GMP suggests robust demand.
📊 Example: How to Apply for IPO (Easy Explanation)
Let’s say a company referred to as “TechGrow Ltd” launches an IPO:
- Price Band: ₹a hundred–₹110
- Lot Size: 1 lot = forty stocks
- Minimum Investment: ₹4,four hundred (₹110 x forty)
You log into your Grow app, visit the IPO section, observe for 1 lot on the reduce-off fee, and approve UPI.
If stocks are allotted, you’ll get them in your Demat on list day!
🤔 What Happens After IPO Application?
📅 1. Wait for Allotment
Usually takes 5–6 working days after the IPO closes.
💸 2. Refund
If you don’t get shares, your blocked amount is launched routinely.
💼 three. Listing Day
Shares start buying and selling on NSE/BSE. You can sell or keep based on your method.
⚖️ Should You Invest in an IPO?
✅ Pros:
- Opportunity to buy early in a agency’s adventure
- Can earn properly listing gains
- No brokerage costs all through IPO
❌ Cons:
- Allotment isn’t assured
- Market chance exists after list
- Overhyped IPOs can underperform
📌 Tips Before You Apply for IPO
🔎 1. Read the DRHP
Understand business enterprise’s enterprise, risk factors, and financials.
💬 2. Check GMP & Subscription
See how the IPO is performing in the grey market and how many people are making use of.
🔍 3. Look at Company Fundamentals
Check sales, earnings growth, future potential, and competition.
🧠 four. Don’t Follow the Crowd Blindly
Just because every body’s making use of doesn’t imply you have to too. Make knowledgeable selections.
📈 Best Platforms to Apply for IPO Online
Here are some top platforms that allow easy IPO application:
| Platform | UPI Supported | Net Banking | Demat Required |
|---|---|---|---|
| Zerodha | ✅ | ❌ | ✅ |
| Groww | ✅ | ❌ | ✅ |
| Upstox | ✅ | ❌ | ✅ |
| ICICI Bank | ✅ | ✅ | ✅ |
| HDFC Bank | ✅ | ✅ | ✅ |
| Paytm Money | ✅ | ❌ | ✅ |
🧾 Quick Summary: What is IPO and How to Apply IPO in Stock Market
TermMeaning/ActionIPOInitial Public OfferingPurposeTo improve budget and list on stock marketHow to ApplyThrough broking apps or bank ASBAMinimum Investment1 lot (varies consistent with IPO, round ₹four,000–₹15,000)Listing GainsProfit made on list day (no longer guaranteed)AllotmentLottery gadget if oversubscribed
🏁 Final Thoughts on What is IPO and How to Apply IPO in Stock Market
Learning what’s IPO and the way to practice IPO in the stock market is your first step towards turning into a confident inventory marketplace investor. IPOs may be a terrific opportunity to invest in upcoming businesses, but like all funding, they require right research and endurance.
So the following time you pay attention to a new IPO, don’t be burdened. Open your app, evaluate the details, and observe smartly!
🙋♀️ FAQs – What is IPO and How to Apply IPO in Stock Market
❓ What is IPO in simple words?
IPO is whilst a private company gives its stocks to the public for the first time.
❓ Is IPO appropriate for novices?
Yes, in case you research well and make investments accurately. But don’t forget, it incorporates hazards too.
❓ Can I observe for IPO without a Demat account?
No. A Demat account is obligatory to acquire shares.
❓ Is IPO allotment guaranteed?
No. Allotment depends on demand. If oversubscribed, shares are given via lottery.
❓ What occurs after IPO allotment?
If allocated, stocks are credited for your Demat account. You can maintain or sell on list day.
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