How to Bid for an IPO – A Step-by-Step Guide

Investing in an Initial Public Offering (IPO) is an exciting opportunity to own shares of a company going public. However, to maximize your chances of getting an allotment, it’s essential to understand how IPO bidding works. This guide will explain the process in simple steps.

Types of IPOs

1. Book-Built IPO

• The company sets a price range.
• Investors bid within this range, and shares are allocated to those bidding at or above the cut-off price.

2. Fixed-Price IPO

• The company fixes a single price.
• Investors must apply at the specified price, with no bidding process involved.

How to Bid for an IPO – A Step-by-Step Guide

1. Open a Demat and Trading Account

A Demat account is mandatory for IPO investments in India. Open one with a reputable Depository Participant (DP) before applying.

2. Apply Using ASBA (Application Supported by Blocked Amount)

Your IPO application amount is blocked in your bank account until allotment. If shares are not allocated, the blocked amount is released.

3. Decide How Much to Bid

• IPO applications are made in lots (e.g., 100 shares per lot).
• Retail investors (bidding up to ₹2 lakhs) have a better chance of allotment.
• Bidding above ₹2 lakhs moves you to the non-institutional investor (NII) category with different rules.

4. Choose the Right Price

• Always bid at the cut-off price to maximize allotment chances.
• The cut-off price is the final price set by the company after reviewing all bids.

5. Apply for an IPO Online

• Log into your stockbroker’s trading platform.
• Navigate to the IPO section and select the IPO you want to apply for.
• Enter bid details (number of lots, price, cut-off selection).
• Complete the UPI mandate and submit the application.

What Happens After Bidding?

• IPOs often receive high demand, leading to oversubscription.
• If you don’t receive shares, your blocked amount is refunded.
• If you do receive shares, the blocked amount is debited from your account.

Final Thoughts

Understanding the IPO bidding process ensures a smooth investment experience. Open a Demat account, apply strategically, and always bid at the cut-off price to improve your chances of allotment.

Disclaimer: The facts contained herein are for general information only and are not a recommendation to invest in any IPO or any investment opportunity. We take all reasonable care to ensure facts are accurate, but the information is based on publicly available information, research, and credible sources. Investors are requested to verify facts themselves and seek advice from a financial advisor before making any investment decision.