Buying an IPO
Buying IPO stock can be a smart move to quickly grow your money. But before you dive in, it is important to know how the process works. In this guide, we will break down the steps to make sure you are well-prepared to invest in an IPO and have all the information you need to make a smart decision.
About IPO
IPO, or Initial Public Offering, is when a company decides to sell its shares to the public for the first time. This means that the company, which was private before, becomes a public company. There are two main types of IPOs: fixed price offering and book-built offering.
In a fixed price offering, the company decides on a set price for its shares in advance. In contrast, in a book-built offering, the share price can change based on the bids placed by investors. So, it is kind of like a flexible price where investors help determine how much each share is worth.
How to apply IPO online and offline?
You have two ways to apply for an IPO: online and offline. If you choose the offline method, you fill out a form and give it to your IPO banker or broker.
On the other hand, applying online is easier. You log in using the trading system provided by your banker or broker. This method saves time because most of your details are automatically filled in from your Demat Account, making the process quicker and simpler.
https://support.zerodha.com/category/console/ipo/ipo-application/articles/how-to-apply-for-ipos-and-how-to-stay-informed-of-new-ones for an easy process.
Choosing the Right IPO
Selecting the right IPO is super important, and it is the first big decision you will make. Not all IPOs are winners, so it is crucial to think carefully before investing. Two main things should guide your decision: personal factors and company factors.
Personal factors mean understanding your own investment preferences. Figure out how much you can invest and how comfortable you are with risks. Also, think about your long-term financial goals before jumping into an IPO.
Company factors involve checking out the details about the company launching the IPO. Read their prospectus carefully—it is like their business plan. See how well the company has done before and what plans they have for the future. This helps you get a sense of whether it is a good investment.
Arranging for funds
Before you invest in anything, make sure your money stuff is sorted out. You can use your savings or even borrow money to invest in an IPO.
But here is the big deal: be sure about the money you are putting in. Investing in IPOs is risky, and if the company does not do well, you might end up losing your money. So, only invest what you can afford to lose.
Opening a Demat and Trading Account
A Demat Account holds a record of all the purchases you make in the electronic format, while a trading account allows you to trade shares freely.
With a Demat account, you can only buy shares. At the same time, you will need a trading account to sell shares. It is advisable to open a Demat and Trading account simultaneously for easy processing.
How to Purchase IPO Shares- The application process
Buying IPO shares is easy with your Demat or bank account. Some banks make it even simpler by letting you open trading, Demat, and bank accounts together. Once you are trading and Demat accounts are good to go, you can start investing in IPOs.
Now, you do not need to bother with writing cheques or Demand Drafts. There is this cool thing called ASBA (Application Supported by Blocked Account) that makes it super easy. ASBA lets banks set aside money in your account for buying shares. They lock in the funds from the day you apply until the shares are allotted.
Sometimes, you might not get as many shares as you wanted. If that happens, only the amount for the shares you get will be taken from your account, not the total blocked amount. For instance, if you applied for 1 Lakh INR worth of shares but got shares worth 40,000 INR, only 40,000 INR will be taken from your account.
Bidding and Allotment of shares
Before buying shares, you must place a bid. You can only bid for shares in multiples of the lot size mentioned in the prospectus. The lot size is like the minimum number of shares you can bid for when applying for an IPO. The company sets a price range, and your bid must be within that range. Good thing is, you can change your bid if you need to.
If you get the full allotment of shares, you will get a Confirmatory Allotment Note (CAN) within six working days.
After the shares are assigned to you, they will show up in your Demat account. Now, you just wait for the company to be listed on the stock exchange before you can start trading.
Now that you know the ropes of how to invest in an IPO, go ahead and start your investing journey!
Get in Touch with us
For any query/ personal assistance feel free to reach out at support@Altiusinvestech.com or call us at +91-8240614850.
To know, more about Unlisted Company. Click here – https://altiusinvestech.com/blog/what-is-listed-and-unlisted-company
For Direct Trading, Visit – https://altiusinvestech.com/companymain.
You can also checkout the list of Best 5 Unlisted Shares to Buy in India
For Direct Trading, Visit – https://trade.altiusinvestech.com/.