Investing in an Initial Public Offering (IPO) provides a unique chance to acquire shares as a company goes public. Though exciting, the IPO process can be complex, especially for newcomers. To simplify your IPO investments and enhance your understanding, we’ve compiled answers to key questions about IPO online applications, IPO allotment status, and more. This guide will help you confidently navigate the IPO landscape and make informed decisions.
- Is it Mandatory to Have a PAN Number to Apply for an IPO?
Yes, it is mandatory to have a Permanent Account Number (PAN) to apply for an IPO. The PAN serves as a unique identifier for all financial transactions in India, including IPO investments. Without a PAN, your IPO application will not be processed.
- What Does ‘DP Name’ Mean in an IPO Online Form?
‘DP Name’ refers to the name of your Depository Participant (DP), the entity where you hold your Demat account. In the IPO online form, you need to provide your DP name to ensure the shares are credited to the correct Demat account after the allotment. Demat account opening with a reliable Depository Participant is essential before you can apply for IPOs.
- How Many Days Will an IPO Remain Open for the Public?
Typically, an IPO initial public offering remains open for 3 to 5 working days for the public. During this period, investors can apply for shares. It’s important to submit your IPO application within this window, as late applications will not be accepted.
- What is ‘Market Lot Size’ and ‘Minimum Order Quantity’ for an IPO?
The ‘Market Lot Size’ refers to the minimum number of shares an investor can apply for in an IPO initial public offering. The ‘Minimum Order Quantity’ is usually the same as the market lot size. For example, if the lot size is 100 shares, you cannot apply for less than 100 shares. The lot size is determined by the company based on the issue size and price.
- Can I Apply for an IPO Through Multiple Applications on the Same Name?
No, multiple IPO applications under the same name and PAN number are not allowed. If you do so, all your applications may be rejected. To avoid disqualification, submit only one IPO application per PAN number.
- What is the Basis of Allocation or Basis of Allotment?
So, how shares are allotted? The Basis of Allocation is the process through which shares are distributed among investors after the IPO closes. It is based on various factors, including the number of applications received, the number of shares available, and the subscription level. If an IPO initial public offering is oversubscribed, the allotment is usually done through a lottery system.
- Why is the Maximum Subscription Amount for Retail Investors Limited to Rs 2 lakh?
The maximum subscription amount for retail investors is capped at Rs 2 lakh to ensure a wider distribution of shares among smaller investors. This limit helps retail investors participate in IPO investments on a level playing field with institutional investors.
- What is the Procedure to Withdraw from an IPO?
You can withdraw your IPO application before the allotment date. The process involves logging into the HDFC Sky App or the app for IPO you used to apply, navigating to the application status, and selecting the withdrawal option. Ensure you complete this before the cut-off time to avoid the application being processed.
- How is the Cut-off Price of an IPO Decided?
The cut-off price is the final price at which shares are allotted to investors. It is determined after considering all the bids received during the IPO initial public offering. For book-building issues, investors can bid within a price range, and the cut-off price is typically set at the highest price within that range.
- How Many IPO Applications Can be Made from One Bank Account Using ASBA?
You can submit only one IPO application per bank account using the Application Supported by Blocked Amount (ASBA) process. If you want to apply for multiple IPOs, each application must be made from a separate bank account.
- When Should I Expect Credit for IPO Shares in My Demat Account?
IPO shares are usually credited to your Demat account within 6 to 7 days after the IPO closes. You can check your IPO allotment status using the same IPO application app or platform where you applied for the IPO.
- Can You Sell the Stocks Before the IPO Gets Listed?
No, you cannot sell the stocks before they are listed on the stock exchange. You can only sell your shares after the IPO listing, which typically occurs within a week of the allotment.
- What is the Difference Between Floor Price and Cut-Off Price for a Book Building Issue?
The floor price is the minimum price at which investors can bid in a book-building IPO, while the cut-off price is the final price at which shares are allotted. The cut-off price can be equal to or higher than the floor price but cannot be lower.
- What is the Difference Between Book Building Issue and Fixed Price Issue?
In a book-building issue, investors bid for shares within a specified price range, and the final price is decided based on demand. In contrast, a fixed-price issue has a set price at which all investors apply, with no bidding process involved.
- Does Applying to an IPO Early Give a Better Chance of Getting Shares?
No, applying early does not increase your chances of getting shares in an IPO. The allocation is based on the subscription level and is often done through a lottery if oversubscribed. Therefore, applying at any time during the IPO initial public offering window has the same probability of allocation.
- Can You Apply for an IPO Through Multiple Apps or Platforms?
Yes, you can apply for an IPO through different platforms, such as a bank’s online portal or an IPO App. However, each application must be linked to a unique PAN number and bank account to avoid rejection.
- What Happens if an IPO is Oversubscribed?
If an IPO initial public offering is oversubscribed, the shares are allocated on a proportionate basis or through a lottery system. Retail investors may receive fewer shares than they applied for, or in some cases, none at all, depending on the level of oversubscription.
- Can I Track the Performance of Upcoming IPOs?
Yes, you can track the performance of upcoming IPOs and their details through various financial websites, stock market apps, or the platform you use to invest in IPOs. For example, you can easily monitor upcoming IPOs and their IPO allotment status by using the HDFC Sky IPO App, which provides comprehensive information and updates on IPOs.
- What is the Difference Between Issue Size and Lot Size?
Issue size refers to the total number of shares a company is offering in an IPO, while lot size is the minimum number of shares an investor can apply for in a single bid. Both are crucial in determining your investment strategy in an IPO.
- How Do I Invest in an IPO Using the HDFC Sky App?
To invest in an IPO using the HDFC Sky App, download the app from the respective app store, log in to your account, and navigate to the IPO section. From there, you can view details of upcoming IPOs, apply for them, and track your IPO allotment status.
Conclusion
Investing in IPOs demands a clear understanding of the process and the right resources. With the right knowledge, you can make informed decisions and navigate the IPO market effectively. Whether you’re seasoned or new to IPO investments, using a reliable platform like the HDFC Sky App can simplify your journey and help you seize IPO opportunities with confidence.
