How to Apply for an IPO in India? A Beginner’s Step by Step Guide

Everyone’s talking about the upcoming IPO, but do you know how to invest in an IPO? An IPO is your chance to become part of a company’s growth story before it’s widely traded. Early investors usually benefit from attractive pricing and long term potential. In this blog, you’ll learn what an IPO is, its benefits and simple steps to apply for a new IPO.

So let's begin with..

What is an IPO?

IPO, or Initial Public Offering, is when a company sells its shares to the public for the first time. It helps the company raise funds for expansion, increases its market visibility and allows early investors to cash out their holdings. Going public also builds trust with customers and investors. In India, a lot of consumer-facing stocks drew huge attention in the past few years, showing how an IPO can create value for the company and its shareholders.

Why Should You Invest in IPOs?

Investing in new IPO stocks can offer you several benefits, like:

• Listing gains: High demand can lead to the stock listing at a premium, with short term profits.
• Long-term value creation: Fundamentally strong companies can deliver capital appreciation and dividends.
• Early entry advantage: You can gain access before stock becomes widely traded or overpriced.
• Examples: IRCTC’s 2019 IPO gave 101% listing gains and has continued to deliver returns since then. TCS launched in 2004 at ₹850, now trades at ₹3,189 (as of 18 July 2025), rewarding early investors with massive returns, along with regular bonuses, and steady dividends.

Eligibility & Requirements to Apply for an IPO

To invest in a new IPO in India, you must meet SEBI’s eligibility criteria.

Eligibility

• Must be an investor category approved by SEBI: Retail, QIB, NII, or an Employee.
• A valid PAN card is mandatory for identity verification and tax purposes.
• Sufficient bank balance to block the IPO amount until allotment.

Requirements

• Demat & Trading Account: Demat account holds allotted shares, while Trading account to apply and trade. Both must be with SEBI-registered Depository Participant.
• Bank Account linked to UPI or ASBA: You need a bank account linked to UPI or ASBA to apply for an IPO. The amount is blocked during application and debited only if shares are allotted; otherwise, it's released automatically.

Types of IPO Investors

IPO shares are divided into 3 categories, and each has a reserved quota.

• Retail Investor (RII): Individual investors who apply for shares worth up to ₹2 lakh in an IPO, around 35% of shares are reserved for this category.
• High Net-worth Individual (HNI): Investors applying for more than ₹2 lakh fall under this category, about 15% of shares are reserved, and allotment is proportional.
• Qualified Institutional Buyer (QIB): Large financial institutions like mutual funds, banks, and insurance companies fall under this category. Around 50% of the shares are reserved for them.

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Step by Step Process to Apply for an IPO

Through Broker

• You can apply for an IPO by following these steps.
• Log in to your broker’s account or create one if you’re new.
• Go to the IPO section and select the IPO.
• Enter the lot size and choose the bid price. For better chances, bid at the cut-off price.
• Enter your UPI ID, submit, and approve the request in your UPI.
• Application amount stays blocked until IPO shares are allotted.

Through ASBA

• Make sure you have a Demat account linked to your bank.
• Log in to your net banking and go to the IPO section.
• Select the IPO.
• Fill in details like lot size, PAN, and Demat account number.
• Submit the form and approve. The amount will be blocked in your account until allotment.
• After allotment, only allotted share amounts will be deducted, if not allotted, the blocked funds will be automatically released.

ASBA vs UPI: What’s the Difference?

Where Can You Apply for an IPO?

You can apply through:

• Broker Platforms: Online brokers like us offer a quick and easy way for retail investors.
• Net Banking: Banks like SBI, ICICI, HDFC, and Axis let you apply via ASBA, blocking the amount until allotment.

How IPO Allotment Works

IPO allotment depends on demand. If oversubscribed, retail investors get shares through a lottery system, if not, allotment is proportional to the applied shares.

Timeline

• Bidding: You submit your IPO application.
• Mandate: Payment is blocked via UPI or ASBA.
• Allotment: Shares are allotted as per the rules.
• Refund: Money is released if you don’t get shares.
• Listing: Shares are listed on the exchange for trading.

Important Tips Before Applying

• Read the RHP to understand the company’s business, financials, and risks.
• Check GMP for market sentiment, but don’t rely solely on it.
• Invest only the amount that you can afford to keep blocked for a few days.
• Prioritise companies with strong fundamentals & growth potential.

IPO Red Flags to Watch Out For

• Don’t fall for flashy ads or media buzz without checking the company’s actual performance and strength.
• Avoid companies asking for premium pricing without strong earnings.
• If promoters are exiting heavily, it may signal low confidence in the business.
• Less promoter stake post-issue can mean reduced long-term commitment.

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FAQs

• Can I apply from multiple accounts?
  Yes, but only one application per PAN is allowed. Multiple applications with the same PAN will be rejected.
• Is IPO allotment guaranteed?
  No, allotment depends on demand. In oversubscription, it’s decided by a lottery.
• What if I miss UPI approval?
  Your application won’t be processed if you don’t approve the UPI mandate on time.
• What happens if IPO is not allotted?
  The blocked amount is automatically released back to your bank account.