Have you ever thought how can you own a part in a company as Zomato, LIC, or Nykaa?

You may have heard, that someone made a good profit on an IPO, but as a first-time investor, the entire idea can be very daunting. There is no need to stress as this blog is here to make things simple. You will find out why the companies organize IPO, what it is and how you can invest in IPO, even being a beginner.

What is an IPO?

An initial public offering, or IPO, is when a company makes its shares available to the general public. Before this, the corporation is privately held by the founders, original investors or just a few stockholders.

By deciding to go public, a business lets ordinary citizens (that is you and I) purchase some of its shares and become part-owners.

These shares are entitles after they are listed after which they can be traded in the stock market by purchasing or selling those shares either in NSE (National Stock Exchange) or BSE (Bombay Stock Exchange).

What are the motives behind issuance of IPOs?

A company may be interested in becoming public because there are several reasons it can have in mind:

1.To raise Capital

Business organisations require cash to expand. They can desire to go to additional cities, introduce a new product, or settle a debt. An IPO allows the company to raise its capital without loaning.

2. Create Public Image

Being listed in the stock exchange makes the company more visible and also trustworthy. A publicly traded company is considered to be clearer and honest.

3. Give Exit to Early Investors

Founders or early investors who invested money in the business a number of years ago might wish to liquidate a portion of this investment.

4. Appeal to Talent and Alliance

The advantage of being a publicly traded firm is that it can also capture the attention of competent personnel as well as improved business partnerships. Stock will be another way of rewarding the employees.

What exactly is an IPO?

You don’t have to wade into the technicalities, but a basic understanding of the process is advisable.

This is the step-by-step breakdown in simple words:

Step 1: Planning and SEBI Approval

Preparing and SEBI Approval The company assembles papers that describe its operations, financial results, risks, and the proposed use of the funds to be generated.

The company forwarded these documents to SEBI (Securities and Exchange Board of India) for approval.

Step 2: Deciding the Price Band

determining the price band Securing the assistance of investment banks, the company determines the price band for its shares.

It might, for instance, be regarded as the range of ₹95–₹100 per share. You will be required to bid the price in this range.

Step 3: Bidding Opens

Opens on Bidding Typically, the IPO period lasts for three days. In this window, you may place your application either through your trading app or through your bank.

You choose the amount of shares and the price you want.

Step 4: Allotment

Allotment When a lot of individuals apply, there is a possibility that demand overrides supply. Under such circumstances, some investors will not receive stock allotment.

For retail investors, allocation is carried out through a lottery-like process.

Step 5: Listing

listing After the IPO has concluded, the company’s shares are duly listed on NSE or BSE.

You can subsequently dispose of your shares or keep holding them just as you would with any standard stock.

Who is eligible to Invest in an IPO?

All people who are over 18 years old and also own a PAN card, Demat account, and bank account can invest in an IPO. You do not have to be a wealthy person.

As a matter of fact, IPOs could be subscribed by ordinary investors such as students, working individuals, homemakers among others who are willing to accumulate wealth.

You will be regarded as a retail investor once you invest the sum below 2 lakhs in a single IPO application. The majority of new investors are of this kind.

How to Apply for an IPO in India?

The Procedure of IPO in India With modern applications, one can get to an IPO just like ordering food online.

Here’s how:

1.Open a Demat and Trading account

Use brokers such as Zerodha or Upstox, Groww, Angel One or Paytm Money.

2.View IPOs in Future

In the app, one will have a section named: IPO. There, you will get open and outgoing IPOs.

3.Purchase IPO shares

Select the IPO of your interest, type in the amount (quantity) in lots and place a bid.

4.Authorization of UPI Request

UPI payment request will be sent by your bank.

Concur with it - money is not deducted, it is blocked.

5.Allotment in Wait

In the event that you receive the shares, they shall be deposited to your Demat account on the listing date. Otherwise, the blocked amount is automatically freed

Is Investing in an IPO Good Idea?

It does not have a universal answer. IPOs are thrilling and in some cases lucrative enterprises but also risky.

The way to think of it is this:

The Reasons Why People like IPOs:

• You may buy in at a low price and make some profits on the day of listing due to high movement of the value of a price.

• This is also fully transparent and underlain by the SEBI rules.

• No application fee charged by the IPO to buy them using UPI.

• It gets you into the stocks of companies who are yet to be household names.

What You Have to Watch Out For: IPOs

• The non-listed stocks that do pay listing gains are not the only IPOs.

• Most IPOs are hyped beyond their abilities, and their real business may fail to impress the hype.

• In case it is oversubscribed, it may also be the case that you end up not obtaining a single share.

• Companies that are newly listed may not be tracked or evaluated over a long period.

Therefore, conduct a basic research before investing. Get to know about the company, its business model, competition, prospects of growth and its valuation.

Real Life Experiences

We might have come across the news of firms such as Zomato, Nykaa, Paytm, LIC and Mamaearth becoming publicly-traded. Others performed very well when it comes to returns on the listing day whereas others fell short of expectations. It is a message that IPO investing is not a gamble.

It is only smart when it comes through research and discipline.

Advice on IPO Investing to First-Time Investors

1. Don t be deceived by the buzz

Well, it may be a good cause of everyone is talking about it, but it does not mean it is a good investment.

2. Online Prospectus Reading

Go through the company Draft Red Herring Prospectus (DRHP) which is obtainable on SEBI site.

3. See Grey Market Premium (GMP)

This is to demonstrate what people are ready to pay informally prior to listing. It is not official but creates a feeling of demand.

4. Start Small

It is normal to apply on as few as two or three lots. Know before you get profits.

5. Diversify

Investing in a single IPO is not a good idea. Disseminate it among other kinds of corporations with time.

Expectations in the Year 2025:

This is an exciting IPO pipeline in 2025 Reputable brands such as Ola Electric, Swiggy, and SBI Mutual Fund might come out in the market. However, keep in mind this: no IPO is identical.

Each investment should be considered as a distinct decision.

Concluding Remarks

IPO is a good way to get started as long as you have never invested before.

You get to know about the trade of the market, the distribution of the shares and the way companies borrow money.

Let alone, it provides you with the ownership effect, you belong to a journey of a company.

However as with any investment, IPOs need patience, reasoning and a little bit of research.

When you are prepared, do little things.

Open your Demat account, research on future IPOs and start your advent concerning the world of stock markets.

You never know, your first IPO you may make your first success story!!