Investing in an IPO initial public offering is an exciting chance to purchase shares when a company goes public. However, the process can be tricky, particularly for beginners. To simplify your IPO investments and help you understand the process better, we’ve put together some answers to frequently asked questions about IPO online applications, checking IPO allotment status, and more. This guide will help you make informed choices and approach IPO investments more confidently.
1. Is it Mandatory to Have a PAN Number to Apply for an IPO?
Yes, it is required to have a Permanent Account Number (PAN) to apply for an IPO initial public offering. The PAN serves as your unique identification for all financial transactions, including IPO investments. Without it, your IPO application will not be accepted.
2. What Does ‘DP Name’ Mean in an IPO Online Form?
The ‘DP Name’ refers to the name of your Depository Participant, which is the company where you have your Demat account. You need to provide this information in the IPO online form to ensure that your IPO shares are credited to your Demat account after the allotment. Demat account opening with a trustworthy DP is vital before you can apply for IPOs
3. How Many Days Will an IPO Remain Open for the Public?
An IPO initial public offering usually stays open for 3 to 5 working days. During this time, investors can submit their IPO application. Make sure you apply within this time frame, as applications submitted after the deadline won’t be processed.
4. What is ‘Market Lot Size’ and ‘Minimum Order Quantity’ for an IPO?
The ‘Market Lot Size’ is the minimum number of shares you can apply for in an IPO initial public offering. The ‘Minimum Order Quantity’ is usually the same. For instance, if the lot size is 100 shares, you must apply for at least 100 shares. This lot size is determined by the company based on the issue size and share price.
5. Can I Apply for an IPO Through Multiple Applications on the Same Name?
No, you cannot submit more than one IPO application under the same PAN number and name. If you do, all your applications might be rejected. To avoid this, apply only once with your PAN.
6. What is the Basis of Allocation or Basis of Allotment?
So, how shares are allotted? The Basis of Allocation decides how IPO shares are allotted to investors after the IPO initial public offering is closed. It depends on the number of applications received and the number of shares available. If the IPO is oversubscribed, shares are often allocated through a lottery system.
7. Why is the Maximum Subscription Amount for Retail Investors Limited to Rs 2 lakh?
The Rs 2 lakh limit for retail investors is set to ensure that shares are distributed more widely among smaller investors. This helps retail investors participate in IPO investments on a more equal footing with institutional investors.
8. What is the Procedure to Withdraw from an IPO?
If you want to withdraw your IPO application before the allotment, you can do so by logging into the HDFC Sky App, or the app for IPO you used to apply. Navigate to your application status and select the withdrawal option. Make sure to do this before the cut-off time.
9. How is the Cut-off Price of an IPO Decided?
The cut-off price is the final price at which IPO shares are allotted to investors. It is determined based on the bids received. For book-building issues, investors can bid within a price range, and the final price is usually set at the higher end of this range.
10. How Many IPO Applications Can be Made from One Bank Account Using ASBA?
You can submit only one IPO application per bank account using ASBA. If you wish to apply for more than one IPO, you need to use separate bank accounts for each application.
11. When Should I Expect Credit for IPO Shares in My Demat Account?
The credit of IPO shares to your Demat account generally happens within 6 to 7 days after the IPO closes. You can check your IPO allotment status using the IPO application app or platform where you submitted your application.
12. Can You Sell the Stocks Before the IPO Gets Listed?
No, you cannot sell your IPO shares before the IPO listing. You can only sell them after the IPO has been listed on the stock exchange, which usually takes place within a week of allotment.
13. What is the Difference Between Floor Price and Cut-Off Price for a Book Building Issue?
The floor price is the lowest price investors can bid for in a book-building IPO, while the cut-off price is the final price at which IPO shares are allocated. The cut-off price is always at or above the floor price.
14. What is the Difference Between Book Building Issue and Fixed Price Issue?
A book-building issue allows investors to bid within a price range, and the final price is set based on demand. In contrast, a fixed-price issue offers a set price for all investors, with no bidding involved.
15. Does Applying to an IPO Early Give a Better Chance of Getting Shares?
No, applying early doesn’t improve your chances of getting IPO shares. Shares are allotted based on the subscription level, and if the IPO is oversubscribed, a lottery system is often used to allocate shares. All applications made during the IPO initial public offering period are treated equally.
16. 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 portal or an IPO application app. However, each application must be tied to a different PAN number and bank account to avoid rejection.
17. What Happens if an IPO is Oversubscribed?
If an IPO initial public offering is oversubscribed, the shares are usually allocated through a lottery system or proportionately. You may receive fewer IPO shares than you applied for or none at all, depending on the level of oversubscription.
18. Can I Track the Performance of Upcoming IPOs?
Yes, you can track upcoming IPOs and your IPO allotment status using financial websites, stock market apps, or platforms like the HDFC Sky App, which provides detailed IPO information and updates.
19. What is the Difference Between Issue Size and Lot Size?
The issue size is the total number of shares that a company offers in an IPO, while the lot size is the minimum number of shares that investors can apply for. Both are important for planning your IPO investments.
20. 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, log in to your account, and go to the IPO section. There, you can check upcoming IPOs, apply for them, and track your IPO allotment status.
Conclusion
Having a good understanding of the IPO initial public offering process is essential for making successful IPO investments. With the right knowledge and tools like the HDFC Sky App, you can confidently apply for IPOs, track your IPO allotment status, and manage your investments more effectively.
