IPOs: How to Apply in India

An Initial Public Offering (IPO) is when a private company sells shares to the public for the first time, listing on the stock exchange. IPOs generate significant excitement in India — major ones like LIC, Zomato, Paytm, and Nykaa attracted millions of applications.

The IPO Process: The company files a Draft Red Herring Prospectus (DRHP) with SEBI. After approval, a price band is set. Investors apply during the subscription window (typically 3 days). Allotment occurs through a lottery system for oversubscribed IPOs. Shares list on the exchange, usually within 6 days.

How to Apply via ASBA: ASBA (Application Supported by Blocked Amount) is the mandatory mechanism. Your application amount is blocked in your bank account — not deducted — until allotment. If not allotted, the block is released immediately. Apply through your bank's net banking or broker app. UPI-based applications (up to Rs 5 lakh) settle within 2 hours.

Categories and Lots: Retail investors (applying up to Rs 2 lakh) are allocated at least 35% of IPO shares. Minimum lot sizes typically range from Rs 10,000 to Rs 15,000. You can apply for multiple lots but the allotment is per-PAN — applying through family members increases your chances.

Grey Market Premium (GMP) is an unofficial indicator of IPO demand and expected listing price. GMP of Rs 200 on an issue price of Rs 500 suggests a ~40% listing gain. However, GMP is unregulated, illiquid, and can swing wildly. Use it as sentiment data, not guaranteed returns.

IPO analysis checklist: Is the company profitable (avoid loss-making startups unless clear path to profitability)? Is the promoter reducing their stake significantly? Is the IPO priced reasonably vs peers? What will the IPO proceeds be used for (growth vs promoter exit)? Critically read the DRHP risk factors section.