🟦How to apply for IPO | Zerodha, Upstox, SBI, ICICI, UPI

Summary

In this informative video, Mandeep explains the intricacies of Initial Public Offerings (IPOs), including their purpose, processes, and how to apply through popular platforms like Zerodha and Upstox. He emphasizes the importance of having a Demat account and understanding the company's use of raised funds as detailed in the Red Herring Prospectus. Mandeep breaks down the concepts of oversubscription and allotment while guiding viewers on the practical steps to invest in IPOs, even through net banking. This comprehensive guide is essential for anyone looking to navigate the IPO landscape and capitalize on potential listing gains.

Takeaways

• 😀 IPO stands for Initial Public Offering, marking a company's transition from private to public by selling shares to the public for the first time.
• 💰 Companies opt for IPOs to raise funds for expansion or to allow existing investors to sell their stakes and book profits.
• 📄 The Red Herring Prospectus (RHP) is a crucial document submitted to SEBI, detailing the company's plans for IPO funds and is accessible to the public.
• 🔍 It's essential to understand how a company plans to use the IPO proceeds before investing, as some may not reinvest in the business.
• 🏦 You need a Demat account to apply for an IPO, and you can open one quickly using links provided in the video description.
• 🛠️ IPOs can be applied through various brokers like Zerodha and Upstox, with specific steps to follow in their respective apps.
• 📈 IPO applications are subject to oversubscription, meaning not all applicants may receive shares, especially in popular offerings.
• 📊 Different investor categories exist for IPO applications: QIB (Qualified Institutional Buyers), HNI (High Networth Investors), and Retail Investors.
• 💡 Listing gains are a primary motivation for investing in IPOs, where shares may sell at a higher price on listing day than the issue price.
• 💻 If a broker doesn't allow direct IPO applications, you can apply via net banking by navigating to the appropriate services on your bank's website.

Q & A

What is an IPO?

An IPO, or Initial Public Offering, is when a private limited company offers its shares to the public for the first time, transitioning to a public limited company.

Why do companies opt for IPOs?

Companies typically choose to go public to raise funds for expansion or to allow existing investors to sell their stakes and realize profits.

What is the Red Herring Prospectus (RHP)?

The RHP is a document that companies submit to SEBI before an IPO, detailing how the funds raised will be used. Investors can access it for free on the SEBI website.

What are the different types of IPO pricing methods?

There are two primary pricing methods: Fixed Price Issue, where the share price is set beforehand, and Book Building Issue, where there is a price range and the final price is determined based on demand.

What are the investor categories involved in IPO applications?

There are mainly three categories: QIBs (Qualified Institutional Buyers), HNIs (High Net-worth Investors), and Retail Investors, with quotas reserved for each.

What does oversubscription mean in the context of IPOs?

Oversubscription occurs when more investors apply for shares than are available. For example, if a company issues 1 lakh shares but receives applications for 5 lakh shares, it is oversubscribed.

How can investors apply for an IPO through Zerodha?

To apply for an IPO through Zerodha, investors need to open the app, navigate to the IPO section, enter their UPI ID, select the quantity based on lot size, check the cutoff price, and submit their application.

What happens if an investor applies for multiple lots in an IPO?

If an investor applies for multiple lots, they may still only receive one allotment in the case of oversubscription. Therefore, it's advisable to apply for only one lot.

What are listing gains?

Listing gains refer to the profit made when shares are listed at a higher price on the stock exchange than the issue price. This typically occurs when an IPO is oversubscribed.

What should an investor do if their broker does not allow direct IPO applications?

If the broker does not provide an IPO application option, investors can use their net banking services to apply, which is available across most banks.