IPO FAQs | FREQUENTLY ASKED QUESTIONS OF IPO

Is it compulsory to have a Demat account while applying an IPO?

Obtaining a trading account is essential for buying and selling securities on the stock market, including participating in IPOs. Here are the main steps involved in getting a trading account:

Step 1: Identify the Right Trading Account:

• Begin by shortlisting reputable stock brokers or stock-broking firms.
• Compare their brokerage rates and any available discounts.
• Prioritize quality of service over cost when choosing a broker, as timely execution of orders is crucial when investing in IPOs.

Step 2: Submit Your Trading Account Application:

• Contact your chosen broker or brokerage firm to initiate the account opening process.
• Fill out the provided account opening form and Know-Your-Customer (KYC) form with accurate details.
• Submit the necessary proofs of identity and address as required.

Step 3: Complete the Verification:

• The broker or brokerage firm will reach out to you for verification, which may occur in person or over the phone.
• You may be asked to provide additional personal information to finalize the verification process.

Step 4: Receive Your Trading Account Details:

• After successful verification, the broker will provide you with the details of your newly opened trading account.
• With your trading account in place, you are now prepared to make your first IPO investment.

These steps outline the process of acquiring a trading account, which is a fundamental requirement for engaging in stock market trading activities, including participating in IPOs.

Can IPO application be made through FD in the bank account?

No, according to ASBA (Application Supported by Blocked Amount) guidelines, the applicant must have sufficient funds in their Savings or Current account to cover the application money. Funds from other types of accounts such as loans, overdrafts, or Fixed Deposits (FDs) cannot be used for this purpose.

Why are shares not allotted?

Many IPOs experience oversubscription, indicating that the demand for shares far exceeds the number of shares available for sale. As a result, a significant number of investors may not receive any allotted shares.

To navigate this situation, it’s advisable for investors to consider applying for IPO shares on the last day of the bidding period. By doing so, they can gauge the level of subscription and assess whether the IPO is heavily oversubscribed. In such cases, it’s recommended to bid for just one lot to avoid unnecessarily tying up capital.

This strategy allows investors to make more informed decisions and manage their investments effectively, especially when faced with highly sought-after IPOs that are likely to receive overwhelming demand.

How much returns can expect from an IPO?

The returns from an IPO depend on various factors, including:

1. Type of Company: The nature and industry of the company going public can influence its performance.
2. Past Performance: The historical financial performance of the company can provide insights into its potential for growth.
3. Promoters: The reputation and track record of the company’s promoters can impact investor confidence.
4. Economic Conditions: Broader economic conditions and market trends can affect the performance of IPOs.
5. Demand: The level of demand for the IPO shares in the market can affect their price.
6. Timing: The timing of when you decide to sell your shares can also influence your returns.

To make informed investment decisions in IPOs, it’s essential to research the company, read expert reviews, set clear profit goals, and be patient in choosing the right time to sell your shares.

I am an individual and want to invest in IPO what category should I choose?

If you are an individual investor and your investment amount in an IPO is less than 2 lakhs, you fall into the retail investors category (RII). However, if you invest more than 2 lakhs, you will be considered a High Net Worth Individual (HNI), and your bids will fall under the Non-Institutional Category (NII).

What is IPO & How does IPO Works in India?

An IPO, which stands for Initial Public Offering, is like a big coming-out party for private companies. It’s when these companies decide to go public by offering their securities to the general public. Here’s how it works in India:

First, the company starts by preparing some paperwork, which they call a Draft Red Herring Prospectus (DRHP). They submit this to the Securities and Exchange Board of India (SEBI) for approval. Once SEBI gives the green light, the company moves forward and prepares a Red Herring Prospectus (RHP) and all the final documents, including details about when the IPO will happen and all the necessary information.

Now, here’s the interesting part: when a company does an IPO, there are a couple of ways they can go about it. One way is by creating new shares and selling them to the public. This is called the “Fresh Issue.” The other way is when existing shareholders decide to sell their shares to the public without the company creating new ones. This is known as the “Offer for Sale.” Both of these methods allow the company’s shares to be traded on the stock market.

So, in a nutshell, an IPO is the process by which a private company introduces itself to the stock market and allows people like you and me to become shareholders in the company. It’s a big step for any company and a way for them to raise funds and expand their business.

How & Who decides the Price Band in IPO?

In the IPO process, the price or price range of the IPO is determined by the IPO lead managers, who are often merchant bankers or syndicate members. They carefully assess various factors to arrive at the right price for the IPO. Once all the details are finalized, the Securities and Exchange Board of India (SEBI) steps in to review and validate the content provided in the IPO Prospectus. This validation by SEBI ensures that all the information presented to potential investors is accurate and transparent.

How to get my lien amount back after IPO?

When you apply for an IPO online, the application amount is blocked in your account. This means that the specified amount is set aside and cannot be withdrawn or used for other purposes until the IPO allotment process is finalized. Once the IPO shares are allotted or if your application is rejected, the blocked amount is released, and you can access it again for other transactions or withdrawals. This process of setting aside the application amount is referred to as marking a lien.

Can i apply SME IPO via net banking?

Yes, you can apply for a SME IPO through online banking. Most banks offer the ASBA (Application Supported by Blocked Amount) facility, which allows you to apply for the desired IPO online. However, please note that you need to have a demat account to apply for an IPO, as the allotted shares will be credited to your demat account once the IPO is successfully allotted to you.

What is the difference between cut-off price and floor price?

In a Book Building Public Issue (IPO), the price range is defined with a minimum bid price known as the “Floor Price,” and the price at which investors are willing to receive shares according to the company’s determined price is called the “cut-off price.”

For instance, if an IPO’s price band is set at a range of Rs. 90-100, the Floor Price would be Rs. 90, and the maximum cut-off price would be Rs. 100. If the company decides to set the IPO price at Rs. 95, then investors who applied at the cut-off price would receive shares at Rs. 95, which is the price determined by the company. This allows investors to acquire shares at a price they find acceptable within the specified range.

What is the difference between fresh issue of shares and offer for sale?

Certainly, in the context of an IPO, the “Fresh Issue” involves a company issuing brand new equity shares to the public, thereby raising capital directly from investors through the IPO. On the other hand, the “Offer for Sale” pertains to the sale of existing equity shares that were previously issued to the company’s promoters. These existing shares are sold to the public through the IPO.

Where to find the ipo prospectus?

You can access the Draft Red Herring Prospectus (DRHP), Red Herring Prospectus (RHP), and the Final Offer Document for various IPOs on SEBI’s website under the “Filings” section specifically for Public Issues. Here are the direct links to these documents:

• Draft RHP: SEBI DRHP Link
• RHP: SEBI RHP Link
• Final Offer Document: SEBI Final Offer Document Link

These resources provide valuable information about the companies and their IPO offerings, helping investors make informed decisions during the IPO subscription process.

Who decides the date of the issue?

Once the Draft Red Herring Prospectus (DRHP) has received approval, the company engages in discussions with the lead managers and merchant bankers to determine the final dates for the IPO.

What is the role of registrar in an issue?

In the IPO process, a crucial role is played by the IPO registrar, who is a SEBI registered entity appointed by the company to facilitate various aspects of going public. The registrar is responsible for tasks such as collecting IPO applications, allocating shares to investors in different categories in accordance with SEBI guidelines, and handling the refund process for those who did not receive an allocation. Additionally, they oversee the transfer of allotted shares into the respective Demat accounts of investors who were successfully allocated shares in the IPO.

What is the role of lead manager?

Companies typically enlist the services of lead managers to facilitate the process of conducting an IPO. These lead managers play a pivotal role in various aspects of the IPO journey. Their responsibilities include drafting the prospectus, obtaining approval from SEBI (Securities and Exchange Board of India), determining the price range for the IPO, finalizing the IPO date, and assisting companies in the process of getting their shares listed on the stock market. Depending on the size and complexity of the IPO, there may be multiple lead managers involved to ensure its successful execution.

What is primary market and secondary market?

The primary market is where investors have the opportunity to purchase shares directly from a company when they are initially offered through an IPO (Initial Public Offering).

On the other hand, the secondary market is where trading occurs after the shares have been successfully listed following an IPO. It serves as a platform for individuals to buy and sell the already listed equities, including shares of companies that have gone public in the past.

WHAT IS THE IPO PROSPECTUS LIFE CYCLE?

The IPO Prospectus Life Cycle refers to the various stages and activities involved in the preparation, review, approval, and distribution of the prospectus during the initial public offering (IPO) process. Here’s a breakdown of the typical life cycle:

1. Drafting: The company, with the assistance of legal and financial advisors, creates a Draft Red Herring Prospectus (DRHP). This document includes essential information about the company’s financials, operations, risks, and the proposed IPO.
2. SEBI Review: The DRHP is submitted to the Securities and Exchange Board of India (SEBI) for review and approval. SEBI ensures that the prospectus complies with regulatory requirements and provides adequate information to investors.
3. Approval: Once SEBI approves the DRHP, the company can proceed with finalizing the Red Herring Prospectus (RHP) and other related documents.
4. Price Band and IPO Date: The company, in consultation with lead managers, determines the price band for the IPO and sets a date for the IPO launch.
5. Investor Roadshows: The company may conduct roadshows to generate interest and promote the IPO among potential investors.
6. IPO Launch: The IPO is officially launched, and investors can start subscribing to the shares within the specified price range.
7. Subscription Period: Investors submit their applications and bids for shares during the subscription period.
8. Allotment: After the subscription period ends, the company and registrar work together to allocate shares to investors based on the bids received and SEBI guidelines.
9. Refund and Share Transfer: The registrar processes refunds to non-allottees and transfers allotted shares to the respective Demat accounts of successful allottees.
10. Listing: Once the allotment process is completed, and necessary approvals are obtained, the company’s shares are listed on the stock exchange(s).
11. Trading Begins: Trading in the company’s shares commences on the stock exchange(s), marking the transition from the primary market (IPO) to the secondary market.
12. Continuous Reporting: The company must continue to provide financial and operational updates to the public and regulators as required by stock exchange listing and SEBI regulations.

The IPO Prospectus Life Cycle involves careful planning, regulatory compliance, and coordination among various parties to ensure a successful IPO and the subsequent trading of the company’s shares in the secondary market.

Can i apply for an IPO by taking a loan?

While it’s technically possible to apply for an IPO through a loan, it’s generally not recommended, especially for retail investors. Applying for an IPO using borrowed funds can significantly increase your cost of investment. Here are a few reasons why you should be cautious:

1. Interest Costs: When you take a loan, you’ll have to pay interest on the borrowed amount. This interest cost adds to the overall expense of your investment.
2. Risk: IPOs can be volatile, and there’s no guarantee that the share price will rise immediately after listing. If the IPO doesn’t perform as expected, you may struggle to repay the loan along with interest.
3. Increased Expenses: Apart from interest, you may also incur processing fees, brokerage charges, and other costs associated with IPO applications, which can further eat into your returns.
4. Financial Stress: Borrowing to invest can put you under financial stress, especially if the IPO doesn’t perform well. It’s essential to assess your risk tolerance and ability to manage potential losses.
5. Opportunity Cost: Borrowing for an IPO means tying up borrowed funds in a specific investment. You might miss out on other investment opportunities or need to liquidate other assets to repay the loan.

Before considering a loan for an IPO, it’s crucial to evaluate your financial situation, risk tolerance, and the potential returns from the IPO. It’s generally advisable to invest with your own funds rather than taking on additional debt for IPO investments.

What is DRHP?

When a company intends to go public, they collaborate with lead managers to prepare and submit a document known as the Draft Red Herring Prospectus (DRHP) to SEBI (Securities and Exchange Board of India). This comprehensive DRHP contains a wealth of information about the company, including its business operations, management team, potential risks associated with investing in the IPO, financial details, and more.

SEBI undertakes a meticulous review of this PDF document and provides feedback or requests any necessary revisions. Following this iterative process, once the final review is complete, SEBI grants approval for the DRHP, signaling the green light for the company to proceed with its IPO. These approved documents are made accessible to the public on SEBI’s website, typically found under the section titled “Reports” and specifically within “Public Issues: Draft Offer Documents filed with SEBI.” This transparency allows potential investors and stakeholders to access crucial information about the upcoming IPO.

What is RHP?

Following the clearance of the Offer Document by SEBI, the company incorporates additional details such as the issue size, date, and price band into the document. This modified version is referred to as the Red Herring Prospectus.

For public accessibility, these documents are typically accessible on SEBI’s website under the section titled “Filings,” specifically within “Public Issues: Red Herring Documents filed with ROC” (Registrar of Companies). This makes critical information about the IPO available to potential investors and interested parties, allowing them to review the updated prospectus before making investment decisions.

Can I apply for IPO without Demat account?

Indeed, an investor who wishes to apply for an IPO must possess a Demat account number, which can be obtained through either NSDL (National Securities Depository Limited) or CDSL (Central Depository Services Limited). This Demat account is essential for the safe and electronic holding of securities, including the shares acquired through the IPO application process.

What is meant by issue size?

The issue size of an IPO represents the total value of the offering. It is determined by multiplying the number of shares offered by the company by the issue price per share. This calculation provides the overall financial size of the IPO, indicating the total capital the company aims to raise from the public through the issuance of shares.

What GMP means?

GMP, or Grey Market Premium, represents the additional amount traders are willing to pay or ask for IPO shares over and above the issue price. It serves as an indicator of how an IPO is expected to perform on its listing day.

If you are considering applying for an IPO, monitoring the GMP can provide insights into potential listing day behavior. However, it’s crucial not to rely solely on GMP when making investment decisions. Other factors should also be taken into account.

For investors, GMP should be considered cautiously. This is because GMP is a volatile metric and should not be the sole determinant for investment decisions. Instead, more emphasis should be placed on evaluating the company’s fundamentals and its earning potential when deciding whether or not to invest in an IPO.

In summary, while GMP can offer valuable insights into IPO performance, it should be used in conjunction with other factors, and investments should primarily be based on the company’s underlying fundamentals and long-term earning prospects.

Is IPO better than stocks?

There are distinct characteristics that set IPOs apart from established businesses. IPOs typically represent untested business models that have not yet undergone extensive public and regulatory scrutiny. Additionally, IPOs often come with high valuations that may not provide a sufficient margin of safety for investors.

From our perspective, a more prudent approach is to wait for a track record to develop after an IPO’s listing. This allows investors to assess how the business performs in the public markets and whether it meets their investment criteria. Investing in well-established businesses with a proven track record and reasonable valuations can provide a greater sense of security.

In both IPOs and established stocks, due diligence and maintaining a margin of safety should be fundamental principles. Careful research and a cautious approach can help investors make informed decisions and mitigate risks associated with their investments, whether they are considering IPOs or already listed stocks.

Can I modify my IPO bid?

Yes, retail investors have the flexibility to revise the quantity or price in their bids for an IPO as long as they make these revisions before the offer closing date. This allows investors to adjust their bid preferences within the specified timeframe to align with their investment goals and market conditions.

Can I cancel IPO bid?

 Yes, you can cancel your bid for an online IPO application before the Modification/Revision/Cancellation cut-off time. Different brokers or banks may have specific cut-off times for making changes or canceling your application, so it’s essential to check with your specific service provider for their guidelines and deadlines. If you cancel your bid before the cut-off time, the blocked funds will be released, and you won’t be considered for IPO allotment.

From when can I use UPI as a payment option in IPO?

UPI as a payment mechanism for IPOs is applicable in all IPOs for which the Red Herring Prospectus is filed after January 01, 2019.

Up to what limit can I apply for an IPO in UPI?

The limit for IPO application is 2 Lakhs per transaction on UPI.

Will I be charged for using UPI option for IPO?

Please get in touch with your respective bank for details of charges, if any.

What if I input wrong UPI PIN while authorising the request from IPO?

If you enter the wrong UPI PIN during the IPO application process, the transaction will be declined, and you will need to re-initiate the transaction. To do so, you can approach the same intermediary (such as your bank or broker) to which you had initially submitted the application form. They can assist you in resubmitting the application correctly.

What happens when an IPO request has expired?

If the IPO request has expired, the transaction will be declined, and it will need to be reinitiated by your broker. You will need to contact your broker to initiate the IPO application process again.

 What is DP Name in IPO Online Form?

The DP Name, which stands for Depository Participant Name, is the name of the company or entity through which an investor has opened their Demat account. For example, if an individual opened a Demat account through ICICI Securities, they should provide “ICICI Securities” as the DP Name when filling out relevant forms or documents. This information helps in accurately identifying the depository participant responsible for maintaining the investor’s securities in their Demat account.

Is PAN Card Mandatory to Apply for an IPO?

Since 2006, SEBI (Securities and Exchange Board of India) has mandated the use of PAN (Permanent Account Number) cards for IPO applicants. If an individual applies for an IPO without a PAN card or provides incorrect PAN card details, it is considered a faulty application. Having a valid and accurate PAN card is crucial for the IPO application process to ensure proper identification and compliance with regulatory requirements.

Can I apply for multiple IPO Applications on a Single PAN Card?

You are correct. In accordance with IPO application rules, an individual is allowed to submit only one IPO application. Submitting multiple IPO applications using the same PAN card, the same name, or the same Demat account is not permitted and will result in the rejection of those additional applications. This rule is in place to ensure fairness and compliance with IPO application guidelines.

How a Company gets listed on stock exchange without an IPO?

SEBI, the securities regulator in India, has introduced a positive change for small and medium-sized enterprises (SMEs) by permitting them to list specific securities on the Institutional Trading Platform (ITP) of recognized stock exchanges without the need for an Initial Public Offering (IPO). This development is a welcomed move and aims to support SMEs in the country.

SEBI has enacted new regulations known as the SEBI (Listing of Specified Securities on Institutional Trading Platform) Regulations, 2013 (ITP Regulations). These regulations have been added as a new chapter within the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR Regulations). This change is designed to provide SMEs with greater flexibility in accessing the capital markets and listing their securities for trading without the traditional IPO process.

How many IPO Applications via one PAN Number?

As per the rules, IPO applicants are generally limited to applying for only one IPO from a single PAN Number. This restriction is in place to maintain fairness and compliance with regulatory guidelines.

How many IPO Applications can be made from One Bank Account?

The number of IPO applications that can be made from a single bank account varies depending on the specific bank’s policies. For example, SBI Bank permits up to 5 IPO applications to be made via one SBI bank account, whereas ICICI Bank allows only 1 IPO application per bank account.

In the case of SBI Bank, IPO investors have the flexibility to link up to 5 different Demat accounts to their SBI bank account, allowing them to apply for IPOs through a single bank account for each of those Demat accounts. This provides convenience and options for investors when participating in IPOs.

Is it possible to apply for an IPO via BHIM UPI?

SEBI (Securities and Exchange Board of India) has allowed the use of UPI (Unified Payments Interface) ID for IPO applications, and the BHIM app is considered one of the convenient options for this purpose. Utilizing BHIM streamlines the IPO application process.

To get started, you can download the BHIM application and either create a new UPI ID or link your existing bank accounts. When you’re ready to apply for an IPO, simply provide your UPI ID during the application process. Subsequently, you will receive a mandate request on the BHIM app. Approve this mandate, and your IPO application will be successfully submitted, all in a few straightforward steps. This simplifies the process of applying for IPOs and makes it more user-friendly for investors.

What is the difference between Book Building & Fixed Price?

An Initial Public Offering (IPO) can be conducted using various methods, with two common approaches being the fixed price method and the book building method. Here are the key differences between shares offered through book building and shares offered through a normal public issue:

1. Pricing Mechanism:

• Fixed Price Method: Under this method, the price at which shares are offered to the public is predetermined and remains fixed. All investors are offered shares at the same fixed price.
• Book Building Method: In contrast, the book building method allows for a price discovery process. Investors bid for shares within a price range specified by the company. The final issue price is determined based on the demand generated through these bids.

2. Price Range:

• Fixed Price Method: There is no price range in the fixed price method. The offer price is static and does not change.
• Book Building Method: In the book building method, the company provides a price range (floor and cap price), and investors can bid for shares within this range. The final price is decided based on the highest price at which the required number of shares can be sold.

3. Investor Participation:

• Fixed Price Method: In this method, all investors are offered shares at the same fixed price. There is limited flexibility for investors to determine the price they are willing to pay.
• Book Building Method: Investors have the flexibility to bid at their desired price within the specified range. This method allows for a broader range of investor participation and price discovery.

4. Demand and Oversubscription:

• Fixed Price Method: It may not reflect the true demand for the shares, and oversubscription is typically not a factor.
• Book Building Method: The book building process can lead to oversubscription if the demand for shares exceeds the supply. In such cases, shares may be allocated proportionally to investors.

5. Pricing Transparency:

• Fixed Price Method: Offers less transparency in determining the fair market price of the shares.
• Book Building Method: Offers greater transparency by involving market forces to arrive at a price that reflects investor demand.

6. Market Conditions:

• Fixed Price Method: May be less responsive to changing market conditions as the price is fixed in advance.
• Book Building Method: Can be more adaptable to market conditions as the final price is determined based on current investor demand.

Companies can choose between these methods or even use a combination of both to conduct their IPO, depending on their specific needs and market conditions. The choice of method can impact the pricing, participation, and overall success of the IPO.

What information should I keep after I submit the IPO application form?

For IPO investors, it is crucial to retain certain essential information for future reference and correspondence with the company or the registrar of the issue. Here’s what you should retain:

1. Application Form Photocopy: Keep a photocopy of the IPO application form that you submitted. This document contains your application details, including the number of shares applied for, the price bid, and other relevant information.
2. Cheque Photocopy: If you made the payment for your IPO application through a cheque, retain a photocopy of the cheque. This serves as proof of payment and can be useful for reference.
3. Application Number (Online IPO Submission): If you applied for the IPO online, make sure to note down or retain the application number provided to you during the online submission process. This number can help you track your application and correspond with the authorities if needed.

By keeping these records, you ensure that you have the necessary documentation to address any future queries, concerns, or requirements related to your IPO investment.

What is the Difference Between RII, NII, QIB, Anchor Investors?

The different categories in an IPO application:

1. Retail Individual Investors (RII):

• Eligibility: RII category is open to Indian residents, NRIs (Non-Resident Indians), and HUFs (Hindu Undivided Families).
• Bid Limit: Applicants in this category can apply for bids below Rs. 2 lakh.
• Allocation: The RII category is typically allocated 10% to 35% of the issue size, as specified in the company’s prospectus.
• Application Type: Retail investors have the option to apply at the cut-off price.

2. Non-Institutional Investors (NII):

• Eligibility: NII category is open to Indian residents, NRIs, HUFs, companies, corporates, societies, or trusts.
• Bid Limit: Applicants in this category can apply for bids of more than Rs. 2 lakh.
• Allocation: The NII category is usually allocated 15% of the issue size, as indicated in the company’s prospectus.
• Application Type: NIIs can participate in the IPO.

3. Qualified Institutional Investors (QIB):

• Eligibility: QIB category is for qualified institutional investors, which can include public financial institutions, commercial banks, mutual funds, foreign portfolio managers, and more.
• Allocation: The QIB category is typically allocated 50% to 75% of the issue size, as stated in the company’s prospectus.
• Application Type: QIBs cannot withdraw their applications, and they are not eligible for cut-off price applications.

4. Anchor Investors:

• Eligibility: Anchor investors are typically large entities that can apply for Rs. 10 crores or more through the book-building process.
• Role: Anchor investors subscribe to shares before the IPO date to attract other investors to the public offering.
• Allocation: Anchor investors can receive up to 60% of the QIB category allocation.
• Application Type: Anchor investors are not eligible for cut-off price applications.

These categories help in defining the eligibility criteria, bid limits, and allocation percentages for different types of investors participating in an IPO. Each category serves a specific segment of the investor community and contributes to the overall success of the IPO.

As a Retailer How to Apply in NII Category?

A retail investor who places bids totaling more than Rs. 2 lakhs is classified as an NII (Non-Institutional Investor). This means that the same retail investor has the option to apply either in the Retail category or the NII category when participating in an IPO. This flexibility allows the investor to choose the category that best suits their investment preferences and the amount they intend to bid.

What is the role of ‘Syndicate Members’ in IPO Processing?

Syndicate members play a crucial role in the IPO process as intermediaries responsible for various tasks, including:

1. Distribution of IPO Applications: Syndicate members distribute IPO application forms to investors, making them accessible to potential shareholders.
2. Receipt of Filled Applications: They collect filled IPO applications from investors, ensuring that all necessary details are correctly provided.
3. Data Update on Stock Exchanges: Syndicate members update the data related to IPO shares bidding on the stock exchange platforms, such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This includes recording bid information and managing the bidding process.

By performing these tasks, syndicate members help facilitate the smooth functioning of the IPO subscription process, from the distribution of application forms to the allotment of shares to investors.

Can I apply in an IPO through multiple applications on same name?

No, it is not allowed for one individual to apply multiple times through multiple applications for the same IPO. This is a rule, and if you attempt to apply for an IPO through multiple applications using the same name, demat account, or PAN number, all of your applications will be rejected.

If you wish to place orders for multiple applications, you can do so by applying in the name of each eligible family member. However, it’s important to note that all eligible family members should have their own demat accounts and PAN numbers to comply with the regulations governing IPO applications.

Can I revise or cancel my IPO application?

In the case of a Book Building IPO, investors do have the option to revise the quantity and price of their already submitted bids, provided that the IPO subscription period is still open. To make revisions, the investor needs to complete a revision form and submit it to the syndicate member handling the IPO. This flexibility allows investors to adjust their bid details based on changing market conditions or investment preferences as long as the subscription period is ongoing.

Where do I get an IPO application form?

nvestors can obtain IPO application forms from the following sources:

1. Nearest Stock Broker Office.
2. Syndicate Member Office of the IPO. Syndicate members are typically banks or other financial institutions (e.g., SBI). The list of syndicate members for a specific IPO is usually published in the IPO Prospectus.

It’s important to note that IPO application forms are typically available for free. Once the application is filled out, investors can submit it to any stock broker office or syndicate member office for further processing.

Can a person apply in the non-institutional bidder category of an IPO?

Yes, individual investors have the option to apply in the Non-Institutional Investors (NII) category of an IPO.

Here’s some information about the NII category:

• NII includes individual investors, NRIs (Non-Resident Indians), companies, trusts, and other entities bidding for more than Rs 1 lakh in an IPO.
• Unlike Retail Individual Investors (RIIs), there is no upper limit on the application amount for the NII category.
• In Book Build IPOs, the NII category typically receives an allocation of 15% of the total issue size.

While applying in the NII category offers the advantage of no upper cap on the application amount, there are also some disadvantages to consider. For instance:

• Only 15% of the total shares are reserved for Non-Institutional Investors, whereas the RII category has a larger allocation of 35% of the total shares.
• Due to the limited allocation in the NII category and its potential to get oversubscribed, the chances of receiving an allotment in this category are comparatively lower.

Investors should carefully weigh these factors and consider their investment goals and risk tolerance when deciding whether to apply in the NII category of an IPO.

What is right issue?

A public company seeking to raise capital has two primary options: a Public Issue or a Rights Issue. Typically, they may choose to conduct a Rights Issue first, followed by a Public Issue. Here’s an explanation of these terms:

1. Rights Issue: In a Rights Issue, existing shareholders of the company are granted the privilege to purchase a specific number of new shares at a predetermined price within a set timeframe. This price is usually lower than the current market price, making it an attractive investment opportunity for existing shareholders. Long-term investors often take advantage of this opportunity to acquire additional shares at a discounted rate.

From a short-term investment perspective, shareholders can also sell their rights entitlement in the market.

Alternatively, some shareholders may choose not to exercise their rights, allowing them to expire.

It’s worth noting that a Rights Issue can impact the company’s earnings per share and dividend yield, particularly if the company is not in a growth phase. In such cases, offering rights may not be a prudent course of action.

• Key Dates Related to Dividends and Rights Issues:

• Declaration Date: This is when the company’s board of directors officially announces to shareholders and the market the details of the upcoming dividend, including the dividend per share and the payment date. Once declared, the dividend becomes an obligation for the company.
  • Record Date: This is the date set by the company to determine which shareholders are eligible to receive the dividend or participate in the Rights Issue. Only shareholders listed as holders of record on this date are entitled to the dividend or rights.
  • Ex Date: The ex-dividend date is the date on which existing shareholders are entitled to receive dividends or Rights Issue shares. If an investor buys a dividend-paying stock one day before the ex-dividend date, they will still receive the dividend. However, if they buy the stock on the ex-dividend date itself, they won’t be eligible for the dividend. On the ex-dividend date, the stock price often drops by approximately the value of the upcoming dividend. If the stock price remains unchanged on this date, it is considered to have risen by an amount equal to the declared dividend.
  • Date of Payment (Payable Date): This is the date on which the company disburses dividends to shareholders who are eligible to receive them.

These key dates are important for shareholders to understand as they relate to dividend payments and participation in Rights Issues.

How many days does the IPO Open?

As per the rules, an IPO typically remains open for a duration of 3 days. However, in certain exceptional cases or when there is a price band revision, the IPO may be open for a maximum of 10 days.

When should I expect credit of IPO Shares in my Demat Account?

The shares allotted in an IPO are typically transferred to your demat account just before the day of listing of the IPO shares on the stock exchanges. This means that you will have ownership of the shares in your demat account and can view them in your portfolio on the listing day.

The exact timing of share transfer may vary depending on the IPO and the processes followed by the company and the registrar. It’s essential to be prepared and monitor your demat account for the arrival of the shares so that you can trade or manage your investments effectively on the listing day.

How many lots in an IPO should I apply to get maximum allocation in retail category?

The two possible scenarios when applying for IPO shares in the retail category. Here’s a recap:

1. Oversubscribed IPO: If an IPO is highly popular and oversubscribed multiple times in the retail category, each applicant will receive a maximum of one lot through a lottery system. Applying for more lots won’t increase your chances of allotment in this scenario.
2. Undersubscribed IPO: In contrast, if an IPO receives limited demand in the retail category (subscription is less than or equal to one time), applicants can receive as many lots as they have applied for, up to the maximum limit of shares worth Rs 2 lakh. However, an undersubscribed IPO may carry the risk of share price decline upon listing due to lower demand.

As a general guideline to manage risk and ensure a fair allocation of funds, many investors choose to apply for only one lot in all cases. This approach allows them to participate in IPOs without overcommitting capital, especially in situations where demand can be unpredictable.

What is the Market Lot Size?

There are typically two types of market lot sizes in an IPO: the minimum and the maximum. The market lot size represents the number of shares that a company has set as the minimum requirement for an IPO application. Investors who wish to apply for more shares than the minimum can do so in multiples of the market lot size.

For instance, the minimum lot size might be set at 1, which is approximately equivalent to Rs. 15,000. On the other hand, the maximum lot size for retail investors is usually around 13 or 14, which translates to approximately Rs. 2,00,000. This structure allows investors to apply for shares based on their investment preferences within the specified lot size limits.

Is there any guarantee to get the IPO Application Success with Allotment?

Indeed, in the IPO application process, there is no assurance of receiving a successful allotment of shares. If the IPO is subscribed to a level below 1 time (1x), there is a higher likelihood of receiving a firm allotment of shares. However, when the IPO is oversubscribed (demand exceeds supply), allotment is typically conducted through a lottery system. This means that investors’ chances of getting shares are subject to luck, as the allocation is random among eligible applicants.

What is the Basis of Allotment?

The basis of allotment is a document published by the registrar after the allotment process in an IPO. It provides important details such as the final price and the share allotment ratio based on the subscription received. The basis of allotment becomes especially critical when an IPO is oversubscribed, meaning the demand from investors exceeds the available shares.

For instance, in a scenario where there is significant oversubscription, such as 10 times, the basis of allotment may reflect a ratio of around 10:1. This means that for every 10 applications received, only 1 will be successful in receiving the share allotment. This document helps clarify how shares are allocated among investors when demand exceeds supply, ensuring a fair and transparent distribution process.

Should I do Multiple Applications for One IPO?

Indeed, you have the option to apply for an IPO using different Demat accounts with different names and PAN numbers. Additionally, you can choose to apply for an IPO through various methods, including ASBA (Application Supported by Blocked Amount), UPI (Unified Payments Interface), or offline application forms. This flexibility allows investors to use the method that best suits their preferences and requirements when participating in an IPO.

How to Cancel the IPO Application?

Investors in an IPO have the option to reverse or revise their bid, but this must be done by filling out a revision form and submitting it to the syndicate members handling the IPO. It’s important to note that IPO application cancellations should be made during the IPO subscription period. Once the IPO subscription period has closed, it is generally not possible to cancel or reverse the IPO application. Therefore, it’s crucial for investors to make any necessary changes or cancellations within the specified subscription window.

Can a Minor Apply in an IPO?

In certain cases, companies may permit IPO applications on behalf of minors. However, it’s important to note that if an individual has both their own Demat account and a Demat account for their minor child, they can typically apply via only one of these Demat accounts, either as a guardian in the minor account or as a retail investor. Attempting to apply in both categories, i.e., through the minor account and as a retail investor, can result in the rejection of both applications. It’s essential to adhere to the specific rules and guidelines set by the company and the registrar to avoid any application-related issues.

How to Choose the Right IPO?

When considering whether to apply for an IPO, it’s important to evaluate several factors about the company:

1. Fundamentals: Examine the company’s financial health, including factors like revenue growth, profitability, debt levels, and cash flow. Strong fundamentals are a positive indicator.
2. Financial Results: Analyze the company’s recent financial performance, looking at factors such as revenue, profits, and margins. Consistent and robust financial results are favorable.
3. Demand: Assess the level of demand for the IPO. A highly demanded IPO may indicate investor confidence in the company.
4. Future Prospects: Consider the company’s growth potential and future outlook in its industry or market. A company with a promising future can be an attractive investment.
5. Background: Review the company’s history, management team, and any relevant background information. A strong and experienced team can contribute to a company’s success.
6. IPO Size: Determine the size of the IPO, including the number of shares being offered. This can impact the liquidity and pricing of the shares.
7. Price Band: Understand the price band set for the IPO. Assess whether the valuation is reasonable based on the company’s fundamentals and market conditions.
8. Promoter’s Stake Sale (OFS): Evaluate whether the IPO includes an offer for sale (OFS) by the promoters. This can indicate the promoters’ confidence in the company.

By thoroughly reviewing these factors, investors can make informed decisions about whether to apply for an IPO, considering both the company’s current standing and its potential for future growth.

How many Ways to Apply for an IPO?

Investors have several options for applying for an IPO, including using the ASBA (Application Supported by Blocked Amount) through their bank, utilizing the UPI (Unified Payments Interface) method, or filling out and submitting offline application forms. These diverse application methods offer flexibility to investors when participating in an IPO.

What are the Risk Factors in an IPO?

Applying for an IPO carries certain risk factors that investors should be aware of:

1. No Share Allotment Guarantee: In cases of oversubscription, there is no assurance of receiving the desired share allotment. The allocation process may result in partial or no allotment.
2. Application Decline: IPO applications can be declined for various reasons, including discrepancies in application details or payment issues.
3. Mandate Approval: Investors may not always receive the mandate approval for their applications, which can affect the successful completion of the IPO subscription.
4. Rejected Applications: Some IPO applications may be rejected, leading to the blocking of the applied amount.
5. Market Price Variability: After listing, the share price may not necessarily trade above the IPO price. There is a risk of the share price declining, potentially resulting in a loss for investors.

Investors should carefully consider these risks and conduct due diligence before participating in an IPO. Diversifying investments and seeking professional advice can help mitigate some of these risks associated with IPO investments.

What are the minimum and maximum amounts for the retailer category in an IPO?

In the retail category of an IPO, the minimum lot size is typically 1, which is approximately valued at Rs. 15,000. The maximum lot size for retail investors is usually set at around 13 or 14, which translates to approximately Rs. 2,00,000. However, it’s worth noting that as per new rules, retail investors also have the option to apply in the NII (Non-Institutional Investors) category with applications exceeding Rs. 2,00,000 if they choose to do so. This provides retail investors with additional flexibility in their investment choices when participating in an IPO.

How to Withdraw an IPO Application?

Investors have the option to withdraw their IPO application during the bidding period. They can do this by going to their order section, selecting IPO, and choosing the withdrawal option. Once the withdrawal is initiated, the funds will typically be released within 2 to 3 working days. This process allows investors to cancel their IPO application if they choose to do so before the IPO subscription period ends.

How to Sell on Listing Day? Should I be able to sell the allotted IPO shares on the listing?

On the day when a company’s shares are set to be listed on stock exchanges like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange), there is typically a pre-opening session from 9:00 AM to 9:45 AM. During this session, investors have the opportunity to enter, modify, or cancel their orders for the company’s shares.

Investors can either use online trading platforms or contact their broker to place orders to sell the IPO shares on the listing day. It’s important to note that, as per the rules, IPO share allottees usually receive the shares in their Demat accounts before the listing day. This ensures that investors have the shares available for trading when the stock market opens on the day of the company’s stock debut.

In which category a Private Limited Company can apply for an IPO?

A private limited company has the option to apply for an IPO in the NII (Non-Institutional Investor) category. This category is open to various entities, including private limited companies, when participating in the IPO subscription process.

How to sell IPO?

Yes, you can sell the shares bought through an IPO on the listing day itself. Here are the steps to sell IPO shares on the listing day:

1. Wait for Listing: After you have been allotted IPO shares, you will need to wait for the day the company gets listed on the stock exchange. The listing date is typically announced by the company or the stock exchange.
2. Monitor Market: On the listing day, monitor the stock market closely. Be aware of the market opening time and any pre-opening sessions that may occur.
3. Place Sell Order: To sell your IPO shares, you can place a sell order through your stockbroker’s trading platform or by calling your broker. You will need to specify the quantity of shares you want to sell and the price at which you want to sell them.
4. Market Price: Since IPO shares are newly listed, there may be high volatility in the initial trading session. You can choose to sell at the market price, which is the prevailing price at the time of placing the order, or you can set a limit price at which you are willing to sell.
5. Execution of Order: Once your sell order is placed, it will be executed if there is a buyer willing to purchase your shares at the specified price or at the prevailing market price.
6. Settlement: After the trade is executed, the settlement process begins. The shares are transferred from your demat account to the buyer’s demat account, and the funds from the sale are credited to your trading account.
7. Confirmation: You will receive a trade confirmation from your broker, indicating the details of the sale transaction.

It’s important to be cautious and well-informed when selling IPO shares on the listing day, as prices can be highly volatile. Consider setting stop-loss orders or price limits to manage risk. Additionally, consult with your stockbroker or financial advisor for guidance on the best strategy for selling your IPO shares based on market conditions and your investment goals.

In which category a Private Family Trust can apply for an IPO?

Yes, a private family trust has the option to apply for an IPO in the NII (Non-Institutional Investor) category. The NII category is open to a range of entities, including private family trusts, when participating in the IPO application process.

How many days after IPO is listed?

The listing and the commencement of trading typically occur within six working days of the offer closing date.

How long does an IPO allotment take?

The IPO allotment generally takes place within three to four working days of the offer closing date.

How do I check my IPO allotment status?

Investors can check the IPO allotment status on the BSE (Bombay Stock Exchange) website or the IPO Registrar’s website on the allotment date specified by the company registrar.

Can I apply IPO in the name of family members & friends from my saving demat account?

No, you cannot apply for multiple IPO applications using different PAN numbers with the same demat account or the same name. The IPO application process requires consistency in the PAN number and the name used in your demat account.

Each individual can apply for an IPO using their unique PAN number, and this PAN number should match the one linked to your demat account. Multiple IPO applications using different PAN numbers or mismatched information may lead to rejection of your applications.

It’s essential to ensure that your PAN number and personal details are accurate and consistent when applying for IPOs to avoid any complications or rejections in the application process.

What is the lock in period for anchor investor?

In the case of anchor investors, there is typically a lock-in period of 30 days for 50% of the shares allocated to them, and a longer lock-in period of 90 days for the remaining 50% of the shares. This means that anchor investors cannot sell or transfer these shares during the respective lock-in periods after the IPO listing.

Is there any lock-in period for HNI or NI?

High Net Worth Individuals (HNI) and Non-Institutional Investors (NII) are generally not subject to a lock-in period for the shares they receive through an IPO. They are typically allowed to sell their shares on the listing day itself, providing them with the flexibility to trade their allocated shares immediately after the IPO listing.

What is the lockup period for Retail investors?

Retail investors (RII) are typically not subject to a lock-in period for the shares they receive through an IPO. This means that retailers have the freedom to sell their allocated shares on the listing day itself, without any mandatory holding period.

Can I apply in an IPO from my current bank account?

It’s important to note that many banks do not allow IPO applications to be submitted via current accounts.

Can I apply an IPO application in the name of HUF?

Indeed, applying for an IPO via a Hindu Undivided Family (HUF) account follows a straightforward process. The HUF Karta (the head of the HUF) typically has the option to apply for two IPO applications: one through the HUF account and another through the retail category. This provides flexibility for HUFs when participating in IPOs.

Can I trade an IPO through a Discount Broker

You have the option to trade an IPO through a discount broker. The process of buying and selling IPO shares becomes straightforward once you have both a trading account and a Demat (Dematerialized) account properly set up. Discount brokers provide a cost-effective way to participate in IPOs and trade in the stock market, making it accessible and convenient for investors.

How many days will it take to refund IPO money?

he blocked funds in your ASBA account for an IPO are typically released after the allotment of IPO shares, which may take 1 to 2 days after the allotment process is completed. Once the shares are allotted to you, any excess funds that were blocked for the IPO application are released back to your bank account or made available for use in your trading account.

The exact timing of fund release may vary depending on your bank or financial institution and the specific IPO’s allotment process. It’s advisable to check with your bank for the precise timeline for fund release in your individual case.

What time can IPO be applied on last day?

Certainly, investors have the option to apply for an IPO on the last day of the subscription period, but there are specific time limits to submit their bids. These timings may vary depending on the bank or broker through which the ASBA (Application Supported by Blocked Amount) application is being made.

For retail investors, the IPO bid time typically ends at 5:00 PM on the last day. However, it’s essential to note that some brokers may stop accepting applications earlier, around 12:00 PM, so investors should check with their specific bank or broker for the precise cutoff time.

For QIB (Qualified Institutional Buyer) and NII (Non-Institutional Investor) categories, the IPO bid timings usually end at 4:00 PM on the last day of the subscription period. These times are in accordance with the IPO application process and help ensure that bids are submitted within the stipulated timeframe.

How To Apply For an IPO offline?

To apply for an IPO through physical forms, you can follow these steps:

1. Visit your stockbroker’s office or authorized IPO collection center to obtain the physical IPO application form.
2. Fill in all the required details on the IPO application form. Ensure that the information is accurate and complete.
3. Once the form is filled out, you have two options for submission:

• Submit the completed form to your bank, where the Application Supported by Blocked Amount (ASBA) process will be initiated.
  • Alternatively, you can submit the form directly to your stockbroker.

• Some brokers may offer pre-filled IPO application forms, which can simplify the application process. You can inquire with your broker about this option.

By following these steps, you can apply for an IPO using a physical application form through either your bank or your stockbroker, depending on your preference and convenience.

How to Apply for an IPO Online?

You have the option to apply for an IPO online through two primary methods: ASBA (Application Supported by Blocked Amount) or UPI (Unified Payments Interface). These digital application methods offer convenience and efficiency when participating in an IPO.

Can a retail investor apply in NII category?

Yes,When applying for an IPO, you can choose the NII (Non-Institutional Investor) category and place bids for more than Rs. 2,00,000 if you meet the eligibility criteria for this category. This allows you to participate as a non-institutional investor with a higher investment amount in the IPO.

What is the maximum upper circuit limit?

As per market rules, there are circuit limits that restrict the price movement of a newly listed stock. These limits are typically defined as follows:

1. B Category Listing: There is a 20% circuit limit applied to the listing price. For instance, if the IPO price band is Rs. 1000 and the stock lists at Rs. 1500, the circuit limit would be based on this listing price. Therefore, the stock’s price can go up to a maximum of Rs. 1800 on the higher side and down to a minimum of Rs. 1200 on the lower side within a trading session.
2. T Category Listing: In the case of a T category listing, there is a 5% circuit limit applied to the listing price. This means that the stock’s price movement is restricted to a maximum increase or decrease of 5% from the listing price during a single trading session.

These circuit limits are designed to prevent extreme price volatility in newly listed stocks and provide a level of stability in the market.

Can we apply for an IPO online on Sunday?

If you are applying for an IPO through the ASBA (Application Supported by Blocked Amount) method, it is possible to revise or modify your IPO application. However, if you are applying for the IPO through the UPI (Unified Payments Interface) method, making revisions or modifications may not be possible. The ability to revise an application may vary depending on the specific IPO and the application method you choose, so it’s essential to check the IPO’s specific guidelines and the application platform for any applicable rules regarding application modifications.

How are IPO listing gains taxed?

Yes, the profit or loss from selling shares allotted in an IPO is subject to taxation in accordance with the Income Tax Act. If these IPO shares are sold within a holding period of 12 months from the date of allotment, any resulting gain or loss is considered short-term capital gains or loss and is taxable as such. It’s important for investors to be aware of the tax implications and consult with a tax advisor for accurate tax treatment based on their individual circumstances.