Initial Public Offering (IPO) has existed for decades in the Indian stock market. However, it
became a buzzword among new and budding investors when popular brands such as
Zomato, Nykaa, and Paytm launched their IPOs in 2021!
When a private limited company goes public by issuing shares to the general public, it is
done through IPO. It helps the company raise equity capital which can be used to expand
and grow the business or for any other reason. The general public gets an ownership stake
in the company in lieu of their investment.
Benefits of Investing in IPO
1) Earn good returns on stocks that have high growth potential in the long term.
2) Get an entry into a profitable business or a promising startup, which otherwise might
not be possible to invest in through traditional channels.
3) Buy a low price and sell at a higher price by trading it in the stock market
improve your portfolio.
The process to Invest in IPO
You will need bank, Demat, and trading accounts to invest in IPO. If you do not have Demat
or trading accounts, you can open them with the help of your broker or mutual fund
You will be then required to fill out the IPO form and provide all the details mentioned
there. You will have to fill in your investment amount. You will also need to submit a few
documents such as identity proof, address proof, and Aadhar card.
You can get a physical application form from your broker. However, you can also do the
entire process online. Here are steps to apply online:
1) Log into your Demat account or trading app.
2) Click on the ongoing IPO tab.
3) Select the type of investor and IPO you want to apply for.
4) Enter the number of shares, bid price, and UPI ID.
5) A UPI mandate text will be sent to your registered mobile number to authorize the
transaction after which the IPO application process is complete.
Please note that it is mandatory to apply for every IPO through Application Supported by
Blocked Amount (ASBA). It is a SEBI-governed interface that ensures that funds are debited
from your account only when shares are allotted within 10 days of the closing date. Till the
time, the amount remains blocked in your bank account for IPO, it will earn interest. If
shares are not allotted, the money will be credited back to your bank account. You can read
more about ASBA and how it works here
With experience in portfolio management in both the Indian and US stock market
x-change can manage your IPO application process smoothly and smartly. Get in touch to
get more details.