Investing in an IPO initial public offering offers a great opportunity to buy shares as a company becomes public. However, the process can be challenging, especially for those who are new to it. To make IPO investments simpler and clearer, we’ve put together answers to some common questions about IPO online applications, tracking IPO allotment status, and more. This guide will give you the information you need to approach IPO investments with confidence.
1. Is it Mandatory to Have a PAN Number to Apply for an IPO?
Yes, having a Permanent Account Number (PAN) is required when applying for an IPO initial public offering. The PAN is essential for all financial transactions, including IPO investments. If you don’t provide your PAN, your IPO application won’t be processed.
2. What Does ‘DP Name’ Mean in an IPO Online Form?
‘DP Name’ stands for Depository Participant, which is the firm where you hold your Demat account. In your IPO online form, you will need to provide the DP name so that the 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 typically remains open for 3 to 5 working days. During this time, investors can submit their IPO application. It’s important to apply within this timeframe, as late applications won’t be considered.
4. What is ‘Market Lot Size’ and ‘Minimum Order Quantity’ for an IPO?
The ‘Market Lot Size’ is the smallest 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. The company sets the lot size based on the issue size and price.
5. Can I Apply for an IPO Through Multiple Applications on the Same Name?
No, submitting multiple IPO applications under the same PAN and name is not allowed. If you submit more than one application, they may all be rejected. Make sure to apply only once per PAN to avoid disqualification.
6. What is the Basis of Allocation or Basis of Allotment?
So, how shares are allotted? The Basis of Allocation determines how IPO shares are distributed to investors after the IPO initial public offering closes. The process depends on how many applications are received and the number of shares available. In case of oversubscription, the allotment is usually done through a lottery system.
7. Why is the Maximum Subscription Amount for Retail Investors Limited to Rs 2 lakh?
The limit of Rs 2 lakh for retail investors helps ensure wider distribution among smaller investors. This restriction allows more retail investors to participate in IPO investments on equal footing with larger institutional investors.
8. What is the Procedure to Withdraw from an IPO?
You can withdraw your IPO application before the allotment date. This can be done through the HDFC Sky App or any other app for IPO you used for applying. Simply log in, check your IPO allotment status, and select the withdrawal option 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 shares are allotted to investors. It is decided after considering all the bids received. For book-building issues, the cut-off price is typically the highest price within the bid range.
10. How Many IPO Applications Can be Made from One Bank Account Using ASBA?
You can submit one IPO application per bank account through the ASBA process. If you wish to apply for multiple IPOs, each application must come from a different bank account.
11. When Should I Expect Credit for IPO Shares in My Demat Account?
Your IPO shares should be credited to your Demat account within 6 to 7 days after the IPO closes. You can check your IPO allotment status through the IPO application app or platform you used to apply.
12. Can You Sell the Stocks Before the IPO Gets Listed?
No, you cannot sell IPO shares before the listing. You can only sell shares after the IPO listing, which typically happens within a week of the 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 you can bid in a book-building IPO, while the cut-off price is the final price at which shares are allotted. The cut-off price cannot be lower than the floor price.
14. What is the Difference Between Book Building Issue and Fixed Price Issue?
In a book-building issue, investors bid within a price range, and the final price is set based on demand. In a fixed-price issue, there is no bidding. Investors apply at a set price determined by the company.
15. Does Applying to an IPO Early Give a Better Chance of Getting Shares?
No, applying early does not increase your chances of getting IPO shares. All applications submitted within the IPO initial public offering window are considered equally, and allotments are often made by lottery if oversubscribed.
16. Can You Apply for an IPO Through Multiple Apps or Platforms?
Yes, you can apply through different platforms like your bank’s portal or an IPO application app. However, each application must be linked to a unique PAN and bank account to avoid rejection.
17. What Happens if an IPO is Oversubscribed?
If an IPO initial public offering is oversubscribed, shares are distributed on a proportionate basis or by lottery. In oversubscription cases, you may receive fewer IPO shares than you applied for, or none at all.
18. Can I Track the Performance of Upcoming IPOs?
Yes, you can track upcoming IPOs and their IPO allotment status through financial websites, stock market apps, or platforms like the HDFC Sky App, which provides detailed IPO updates.
19. What is the Difference Between Issue Size and Lot Size?
The issue size is the total number of shares a company offers in an IPO, while the lot size is the smallest number of shares you can apply for. Both are key factors in 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 it, log in to your account, and go to the IPO section. You can view details of upcoming IPOs, apply for them, and check your IPO allotment status.
Conclusion
Understanding the IPO process is essential for successful IPO investments. With clear information and reliable tools like the HDFC Sky App, you can confidently apply for IPOs and track your IPO allotment status, making your investment journey smoother.