Generally, IPO Investment is considered as the first step when it comes to an early level person investing in the stock market. But, the important question is that How to invest in an IPO in India Or Invest via UPI, Zerodha, SBI Yono App, Groww App.
Therefore, to invest in IPO it becomes very necessary to understand the process. The question now is whether to invest in the IPO for the needs of a particular rule or guide? In this article, we will give answers to all these questions to your readers.
In this post today, we will explain in detail the process of investing in IPO to our readers. There are the initial steps of IPO investment, what are the online and offline methods and will do such important things, which you should always remember.
How to invest in an IPO in India:
If except 2020, the stock market has been buzzing with IPO for the last few years. And this trend is still going on. In the first month of the year 2021, several IPOs have been launched. In addition, there are about 21 IPOs to come in 2021 this year.
But, but, but!!
There is no investment in the world that gives you 100% guaranteed returns. Therefore, in this post today, we will talk about some important concepts for investing in IPOs. With this, you invest only by keeping in mind the upcoming IPO.
Only this concept can save you your hard-earned money. If you have an upcoming IPO ( Upcoming IPO 2021 ) is planning to invest in you can see the following list. You can apply to invest in Brookfield IPO in this year's new IPO Brookfield IPO can look at. In this list, a review of IPOs coming in 2021 is given:
• LIC IPO
• Kalyan Jewelers IPO
• IRFC IPO
• Laxmi Organics IPO
• Rail Tail IPO
• Indigo Paints IPO
• Stove Kraft IPO
1. How to invest in an IPO:
Do research on your own, as best as you can. Do not invest in an IPO just because your relative or friend is saying so. You will also have to do research at your level. Check the financial data made public to the company to be listed.
The numbers and data the company makes public are limited and mostly partial. Since it is not audited by any third party, it cannot be relied upon. Nevertheless, there are some statistics which will tell you the performance of the company over the years. PE Ratio, EPS, NAV -Metrics like this can help you.
Also, you go to Google, type in the company name and go to the "News" tab. Here you can see the latest media release of this company. You will first see why this company is in the news. You can check news from the last 6 months to 1 year and get an idea about that company in the market.
Watch Stock Market videos and blogs. There you will get different opinions about the IPO of the company from this stock market expert. Read the prospectus issued by the company before their IPO is listed on the stock market. Over time, you will get to know what to look for and what is important to you in making decisions. This will give a very good summary of the research at an objective level.
2. How to invest in an IPO:
Check the valuation of the company. This may sound too technical to most readers. But, this is not a difficult task. Even if you know how to do basics calculations, you will still get a good idea about it. Now, when a company brings a new issue, it also announces the number of shares in it, the issue size of the IPO, the equity stake.
Now, suppose that a company ABC is looking to raise Rs 150 crore. In the process, he gets his 5% is ready to sell equity value. With this figure, the total valuation of a 100% stake in the company would be ₹ 3000 crores, right?
When you check or compare the financial data of the last few years of that company, then you compare the valuation of that company with its competitors in the goods industry. This simple exercise will give you a very accurate idea of whether the company has done the right valuation or not.
There is also a possibility that the company overvalues itself. In this situation, the stock price of the company stock may fall in the long term. Remember, if a company is going public to raise funds, it is not necessary that the company is financial.
3. How to invest in an IPO:
You must have a Demat account. Make sure your Demat account is active, as it is necessary to apply for an IPO. A trading account will not be required for IPO allocation, but a Demat account is 100% mandatory. However, after some time you will also need a trading account when you decide to sell those shares in the stock market.
When you open your Demat account, make sure that you open it with a major stockbroker that matches your needs. If necessary you can get suggestions for stockbrokers from our backend team.
So, here we are, the basic rules that have to be followed before investing in an IPO. In the comment section below, you are free to tell us your thoughts or any other rules. Going forward, let's talk quickly about the process of how to make an IPO investment.
IPO Requirements & Eligibility Criteria:
• For investing in an IPO, you can adopt both offline and online methods.
• Over time, apparently, people have turned to the online method of IPO investment. However, some investors still prefer to access offline. We will explain both the procedures in this mention for your understanding. Here are some basic steps in the process of investing in an IPO.
But first, let's examine some other important topics, Are you eligible for an IPO investment? To apply for an IPO investment, you must ensure:
• Be an Indian
• Become an adult (18 years of age or older).
• Must have a valid PAN card issued by Income Tax Department.
• An active Demat account (as mentioned above).
• Must have a valid bank account.
• Now make sure that you have met all these basic criteria so that you do not get stuck in investing in your IPO later.
• You can easily apply for an IPO through UPI. If interested, download the UPI app and apply for an IPO without any hassle.
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How to apply for IPO Offline?
As mentioned above, there is still a group of investor bases that prefers to invest in IPOs offline. Obviously, this process is a bit difficult, so your time and effort in the IPO application process are slightly more.
To apply for an IPO offline, you have to:
• Contact the local sub-broker or agent with whom you have opened your account.
• Request that agent for the IPO application (free cost).
• Fill the form with all your personal details, Demat account information, IPO bidding process details.
• Attach a check of the amount of the associated bid with the IPO application.
• Submit the form.
• You have to make sure that all the details you have entered are completely valid.
• If any of the details are incorrect, your IPO application will be rejected.
How to invest in IPO online:
The most prominent way to apply for an IPO is through the online method. It is also called ASBA or Application Support Blocked Account. To apply in IPO through ASBA best part is that you do not pay any amount until you find the stock you have allocated.
When you fill the IPO application online, most of the personal, professional, financial information about you is captured in your Demat account, since most of the details are recorded by themselves.
• All you need to do is enter IPO-related information including your bidding amount.
• When you apply for an online IPO through ASBA, the amount you bid is blocked by your bank.
• This amount is not transferred anywhere and is not available for your use.
• If you receive an IPO allotment, that amount is deducted from your bank account and the related shares are added to your Demat account.
• Unfortunately, if you do not get any allocation of IPO shares, then that amount is unblocked by the bank and you get permission to use those funds for your use.
For example: if you bid for shares worth ₹ 2 lakh and you only get 60 thousand shares. In this case, ₹ 1.4 lakh will be released back for your use with a block amount of ₹ 2 lakh in your bank account.
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Some Important Things before Investing in IPO:
Here are some important things to keep in mind while making an IPO investment:
• As a retail investor, you can bid for a maximum of ₹ 2 lakh worth of shares.
• Be sure to open your Demat account on time so that there are no roadblocks in the IPO application.
• It takes a few days from the closing date of the IPO to add shares to your Demat account and is unblocked in your bank account for the unused amount.
• So this is a little bit about the basics of IPO investment in India. Friends, we have also explained to you the IPO application process.
How to Buy IPO in Zerodha?
You should keep in mind that the IPO application of Zerodha can only be completed by a back office of the firm, such as the Zerodha console.
Apart from this, you should also have a UPI app that has version 2.0. For this, a version less than this will not work. To check the list of apps of UPI version 2.0, click here.
Install any of these supported UPI apps and follow the steps given below to apply for an IPO by Zerodha:
• First, log in to Zerodha, so that you get permission to enter the console and then click on "IPO" from the "Portfolio" menu.
• After this, choose the IPO of your choice.
• After doing this, you will be able to see all its information such as - open date, close date, lot size, issue size, etc.
• After this, enter your UPI ID in it and then click on "Variety".
• The UPI ID given by you must be linked to your personal bank account, otherwise, the IPO application may be rejected.
• After verification of your UPI ID, enter your bid and select your investor type. Keep in mind that its volume should be many times more than your lot size.
• To apply at a cut-off price, tick the checkbox next to "Cut off-price".
• To bid on the price of your choice, enter the price of the choice in the box of "Price".
• After filling in all this information, click on "Confirm" and then click on "Submit".
• After doing this, you will see a payment request on the UPI app provided by you.
• Accept that request and now your process is complete. (Sometimes it may take some time to request)
Once the bid is completed, you will receive a confirmation message sent by the exchange in the form of SMS. Apart from this, you can also check the status of your IPO application.
Funds will be withheld from your bank account after accepting the mandate. Those will be held till the date of allotment, which is 2 days before the date of listing.
After you receive the allotment, the same amount will be deducted from your account. Which will be deposited as shares in your Demat account.
And if for some reason, you are unable to receive the IPO allocation, those withheld funds will be sent back to your bank account by the date of allotment.
Invest in IPO using UPI:
Many investors currently use the ASBA system for IPO payments. For this, in the application form of the IPO, you have to give the details of the bank. With this, the banks block the amount of the application. However, this process takes time. Market regulator SEBI has allowed investors to use their UPI (Unified Payment Interface) ID as a payment option for an IPO issue. Let's know its way.
How is the processing done:
After receiving the application, the intermediary uploads the details of the bid (bid) on the stock exchange bidding platform. The exchanges share the bid details of the applicant's UPI ID with the sponsor bank.
The amount will be blocked:
The bank block the amount applied for. This amount is deducted from the allotment of shares. A message about this goes to the applicant's mobile number. The applicant needs to verify this request.
The remaining money is unblocked:
After the bidding process, if the applicant gets some shares allotted, then the instruction is sent to the sponsor bank to deduct the money from the blocked amount from the investor's account and unblock the remaining amount.
What should be kept in mind:
UPI is the payment mechanism for the IPO application of all the companies who have submitted the draft document after January 1, 2019. With time, the UPI ID can be made a mandatory payment mechanism for IPOs. So this is the way How to invest in an IPO in India: Invest via UPI, Zerodha, SBI Yono App, Groww App.