IPO September: Fantastic 5 IPO to hit the market
Indian Investors get plenty of opportunities to invest in IPO this month. Many companies are all set to hit the bourses.
These companies have drafted DRHP with SEBI for Initial Public Offer (IPO) to convert their company identity from Private Limited to Limited.
As per SEBI Rule and Regulation the company needs to register DRHP (draft red herring prospectus) and then final RHP (red herring prospectus) for IPO issuance. SEBI permits the Initial Public Offer for the businesses and then they go for the IPO.
5 few IPO is all set to knock the market this September which involves:-
What is IPO, What it implies for investors
An initial public offering (IPO) indicates the method of advancing shares of private companies to the public in a new stock issuance. Public share issuance allows a company to increase capital from public investors. The shift from a private to a public company can be a relevant time for private investors to fully understand gains from their investment as it typically covers share premiums for current private investors. Meantime, it also allows public investors to participate in the offering.
How to invest in IPO
An initial public offering (IPO) is one way to purchase shares of a company that is elevating the public. It is a successful style of investment because it has the potential to grow manifold in a short time.
Take the example of Matrimony.com. When the corporation chose to go public, they were oversubscribed 4.41 times, which means that there occurred over four times the demand for shares that were advertised by the company. This is not uncommon as IPOs are a chance to make a quick buck. So, read on to know how to invest in IPOs online.
Evaluation of IPO application
The first action is to choose the IPO that you prefer to apply for. An excellent way to decide is by going into the company’s prospectus. You can see them on the Securities & Exchange Board of India’s (SEBI’s) website.
The prospectus gives a decent idea about the company’s business plan and its purpose. Once you select to invest in the appropriate company’s IPO, the next step is to plan for funds.
Funding concerning IPO
You can utilize your savings to invest in an IPO. But grieve not if you don’t have adequate funds in your account.
There are a few banks and non-banking finance companies that are ready to lend you money, at a specific interest rate. So, ask about the interest rates before you take a loan.
A Demat account is a necessity to apply for an IPO. This account is nothing but a facility to deposit your stocks and financial securities electronically. A Demat account can be initiated by submitting your PAN card, Aadhaar card, address, and identity proofs.
The application process of IPO
IPO application can be made by the trading account or bank account. Some banks bunch trading, Demat, and bank accounts.
Once you have initiated your trading-cum-Demat account, you need to be aware of the Application Supported by Blocked Amount (ASBA) facility, which is compulsory for IPO applications. The ASBA is an application that entitles banks to block money in your bank account.
The ASBA is available in physical and Demat form. The facility rejects the use of demand drafts and cheques. All you need to do is to specify your PAN, Demat account number, bank account number, and bidding details in the application.
Bidding of IPO
You need to bid while applying for shares, as per the lot size is stated in the prospectus. The lot size is the minimum number of shares you have to apply for throughout an IPO.
There is a bid price too. The company normally sets a price band. The upper limit is known as the cap price while the lowest is called the floor price. You have to bid for shares in this price range.
Although you can edit your bid during an IPO, it is crucial to note that you will need to block the money needed while bidding. The blocked amount sojourns in the bank account and earns interest until allocation.
Allotment of IPO
As mentioned before, demand may outstrip the actual number of shares issued in the market.
There is a chance that you may get fewer shares than you had asked for. Sometimes, you might miss receiving any at all. In these cases, the bank will open your bid money (in part or full).
But if you are favorable and get a full allotment, you would get a Confirmatory Allotment Note (CAN) within six working days after closure of the IPO process, also termed as a book-built issue.
Once the shares are allotted, they will be credited to your Demat account. The next move is to wait for the listing of shares on stock exchanges, which is made within seven days of the finalization of the issue.
For more further information concerning the forthcoming IPO track Investo Lingo.