Online IPO Applications: Steps Involved in the Subscription Process

Applying for an IPO online is a convenient way for investors to participate in new stock listings. The online process simplifies IPO subscription, making it easier for retail investors to apply IPO online without paperwork. By understanding the process and requirements beforehand, investors can complete their applications smoothly and avoid common errors.

What is IPO Subscription

IPO subscription is the process of applying for shares when a company goes public. Investors place bids for a specific number of shares within a price range. After the subscription closes, shares are allotted based on demand and applicable criteria.

There are two types of IPO subscriptions:

1. Fixed Price Offering: Shares are offered at a pre-set price.
2. Book Building Offering: Shares are bid within a price range, with the final price set based on demand.

How to Apply for an IPO Online

Here’s a step-by-step process to apply IPO online:

1. Choose an Online Platform

You need an account with a stockbroker or trading platform that supports IPO applications. An active Demat account is required, as allotted shares are credited electronically.

2. Check the IPO Details

Review the prospectus and Red Herring Prospectus (RHP) to understand the company’s business, financials, risks, and the IPO price band before applying.

3. Register for IPO Subscription

Log in to the IPO section on your platform, select the IPO, and enter details such as the number of shares, price band (for book-built issues), PAN, bank, and Demat information.

4. ASBA (Application Supported by Blocked Amount)

Most IPO applications are processed through ASBA, where the application amount is blocked in your bank account instead of being deducted immediately. ASBA ensures that the amount is only debited if you are allotted the shares.

5. Complete the Payment Process

Make sure your bank account has sufficient balance, as the amount remains blocked until the allotment is finalised.

6. Receive IPO Allotment Confirmation

Once the IPO subscription period ends, the company will allocate shares based on demand and availability.You will receive allotment confirmation, and allotted shares will be credited to your Demat account. If you are not allotted shares, the blocked amount will be unblocked in your bank account.

Types of IPO Applications

There are several methods through which you can apply for an IPO:

• Retail Individual Investor (RII): This category applies to individual investors who are applying for shares worth ₹2 lakh or less. Retail investors participate in a reserved portion of the issue, with allotment subject to demand and applicable rules.
• Qualified Institutional Buyers (QIBs): QIBs are typically institutional investors such as mutual funds, insurance companies, and banks. They apply for a larger share of the IPO.
• Non-Institutional Investors (NIIs): These investors include high-net-worth individuals (HNIs) who apply for shares worth over ₹2 lakh. This category typically faces a lower chance of allotment compared to RIIs.

In online IPO applications, investors will be required to choose the category they fall into, which will affect their eligibility and allotment chances.

Common Mistakes to Avoid When Applying for an IPO

Here’s what to avoid during the IPO application process:

• Not Checking Eligibility: Ensure that you meet the criteria for applying under the appropriate category, such as RII or NII. Incorrect categorisation may lead to issues with allotment.
• Incorrect Bank Details: Always double-check the bank account details provided during the application process. Any errors could lead to the blocking of funds or delays in the process.
• Not Reading the Prospectus: Failing to read the IPO’s prospectus can lead to uninformed decisions. This document contains important information about the company’s financials, risks, and the use of proceeds from the IPO.
• Missed Deadlines: IPO subscriptions are time-sensitive, and missing the deadline means you miss out on the opportunity to apply. Ensure you submit your application within the prescribed window.

How to Track the Status of Your IPO Application

After applying for an IPO, you can track your application status through various methods:

• Trading Platform: Your broker’s online platform or app will allow you to track the IPO application status. You can view whether your application is successful, partially allotted, or if you’ve received no allotment.
• Registrar’s Website: IPOs have registrars who manage the allotment process. The registrar’s website typically provides an option to check the status of your application by entering your PAN number or application number.
• Bank: If you applied using ASBA, you can also track the status through your bank’s online portal.

Tracking your IPO application ensures that you stay informed about the allotment process and know when funds will be debited or refunded.

Conclusion

Applying for an IPO online is simple when you follow the right steps and pay attention to details. Choosing the correct platform, understanding the IPO, completing the ASBA process, and ensuring accurate bank and eligibility details can help to apply IPO online smoothly. With proper preparation, you can participate confidently in new listings.