When a private company goes public and lists its shares in the stock market the process is called IPO (Initial Public Offering). During IPO and after IPO public can buy the shares of the company as it’s stocks are available via exchange for trade. During IPO, company calls application from individuals and institutions to allot shares to them and raise funds from them. As public is now buying shares by paying money, the promotor shares reduce and company utilises this money raised during IPO process to further expand or reduce loans or exit of promoters.
How to apply IPO?
You will need a DMAT account and money in your DMAT linked bank account to apply any live IPO.
Do IPOs have timeline?
Yes, they are open for short period. You have to submit your application within the last date.
How much shares can I buy during IPO?
The companies specify all details (between what price you can bid, how many lots you can apply, lot size, total IPO size etc.) in there IPO offer document.
Is there any guarantee of getting stocks allotted in IPO? No, there are no surety that you applied and will get it. Stocks are allotted basis automated logic of lucky draw. You may get full lot that you applied or partial or even may not get any.
What happens if I do not get allotted or partially allotted? If you are not allotted, you will get 100% refund within a few days once allotment announcement is out. If you get partial allotment, you will be refunded residual amount.
Do I need to apply for all IPOs? You have to do your research here from various sources and understand which company is doing well, what’s there future plans etc. You can read their IPO prospectus for disclosure, website and other sources. Many IPOs have given good returns on their listing date while there also exists flow shows.