IPOs are one of the most rewarding things which every investor wants to accumulate.
The craze for IPOs is impressive because they have the potential to deliver very high returns for investors. Just like IPL matches create hype among the fans, the same way each IPO makes a lot of hype surrounding the market.
Every investor who spends money in IPO knows the value of investing in an IPO because they get a chance to represent themselves to become a part of a successful business story.
While everybody is looking to invest in a certain IPO of a company, one question that still arises is: how do you subscribe for an IPO?
The process to bid for an IPO is different from others, but today it is simple to apply for an IPO within a few minutes. All thanks to the online process and offline options from leading broking houses.
This article will give you a step-by-step guide on how to subscribe for an IPO.
Before subscribing for an IPO, there are two essential things that you need to understand carefully:
A trading account is an online investment account that allows all the traders to purchase security and tracking trades. Traders mostly use this account to buy and sell equity shares in the market. Before applying for an IPO, an adult must have a valid trading account along with a PAN card.
Subscribing for an IPO does not require an investor; all required is a trading account. However, a Demat account answers all your questions, but you need a trading account to list your shares.
A trading account is essential along with a Demat account, and this is the primary reason recommended by several brokers to invest in an IPO.
Before applying for an IPO, the first step you have to do is proper research of a company you're interested in investing.
Do a brief study about a company and decide for yourself. Listen to all the rumors and tips but don't follow until you have researched your own.
Determine its plans and objectives, how much revenue the company has generated over the years, its profit and loss figures, investment flows, and study it carefully.
If you are uncomfortable or have confusion about applying for an IPO, you can take the help of a broking firm, and they will be happy to help you.
There are two simple ways that major broking firms provide to subscribe for an IPO:
Customers registered on their respective broking services can register for an IPO through their mobile trading or a trading website.
Applying for an IPO through the online method is a fast and easy way, and it is found out to be the preferable way for an IPO.
The online application reduces time and satisfies all the process of form filling because client data is directly uploaded from a Demat or trading account.
If clients feel uncomfortable applying for an IPO through the online method, they can subscribe to their IPO by visiting the nearest branch of their broking firm.
Whether you’re subscribing for an IPO through offline or online methods, you have to fill an ASBA (Application Supported by Blocked Amount) application and provide essential KYC details.
ASBA is a fast and efficient way to apply for IPOs. You have the chance to decide and to apply for a certain number of shares depending upon your share price and funds
When you invest your funds in ASBA, the application of your funds is blocked from your bank account. The amount invested gets debited only if you’ve purchased the shares and are allotted on the allotment day.
So if you invested your money worth 5 lakhs and got allotted shares worth 3 lakhs, then only Rs 3 lakh will be debited from your amount, and the remaining account will remain unblocked from your bank account.
The ASBA application is convenient in Demat or hard copy format. However, to subscribe for an IPO, you must have a valid PAN Card, Demat account number, bank account number, and especially bidding details to complete the process.
After subscribing to IPO, you will get a slip of acknowledgement along with a reference number that depicts you have successfully subscribed for an IPO.
IPO is an Initial Public Offering in which a company decides to enter the public to raise funds for their business by selling its shares to the general public.
There are two ways to subscribe for an IPO:
1) Applying for an IPO through an offline method
2) Applying for an IPO through an online method
YES, subscribing to an IPO through the online method is genuinely safe and very fast. Customers registered on their respective broking services can register for an IPO through their mobile trading or a trading website.
Yes, it can offer high returns to investors only if the company has the power to grow its business. So buying shares of a company that grows their business successfully can benefit you.
Yes, ASBA is mandatory for subscribing in IPO because in major public issues like right issues, IPO, it is essentially required to provide ASBA application as a mode of payment.
In today’s time, due to advanced technology and online mode, applying for an IPO has become an easy process. It will take less than few minutes to subscribe to your favorite IPO, and once it’s done, the next step is to bid for an IPO.
The next time if you don’t know how to subscribe for an IPO, just follow the above steps. And if you get the desired number of shares allotted to your Demat account, then you’re good to go.