How to Apply for an IPO on Upstox: A Step-by-Step Guide

How to Apply for an IPO Through Upstox: A Comprehensive Guide

Investing in Initial Public Offerings (IPOs) can be an exciting way to participate in the growth of new companies. Upstox, a popular online brokerage platform in India, makes the IPO application process simple and accessible. This article will guide you through the entire process of applying for an IPO through Upstox, from understanding what an IPO is to knowing how to check your application status. Whether you are new to the stock market or an experienced investor, this guide will help you confidently navigate the IPO landscape.

Understanding Initial Public Offerings (IPOs)

Before diving into the application process, it's important to understand what an IPO is. An IPO, or Initial Public Offering, is the process by which a private company offers its shares to the public for the first time. This transformation from a privately held company to a publicly traded entity allows the company to raise capital and provides investors with an opportunity to buy shares of that company. Once a company goes public, its shares are listed on a stock exchange, where they can be bought and sold by the general public.

Why Do Companies Launch IPOs?

Companies launch IPOs for various reasons, including:

• Raising Capital: To fund growth, expansion, research and development, or debt repayment.
• Increasing Visibility: Becoming a public company can raise a company's profile and make it more recognizable.
• Liquidity: To give early investors and founders a chance to sell their shares.
• Mergers and Acquisitions: Having publicly traded stock can make it easier for a company to make acquisitions.

Understanding the reasons behind an IPO can help you evaluate whether it’s a good investment for you.

Eligibility Criteria for IPO Applications

Before applying for an IPO, it is important to ensure that you meet the eligibility criteria set by the Securities and Exchange Board of India (SEBI). Currently, four types of investors are eligible to apply for IPOs:

• Employees: Individuals who are employed by the company launching the IPO.
• Retail Individual Investors (RII): Individual investors who invest up to a certain amount.
• Non-Institutional Buyers (NII): High-net-worth individuals and other entities that invest a larger amount.
• Qualified Institutional Buyers (QIB): Institutions like mutual funds, insurance companies, and foreign portfolio investors.

Additionally, there are some general requirements for all investors:

• You must have a trading and a Demat account with a SEBI-registered depository participant.
• You need a Permanent Account Number (PAN).
• Your Demat account should be linked to your bank account.
• Your bank account should have a sufficient balance to fund the IPO investment.

Meeting these criteria will enable you to apply for an IPO without any issues.

Requirements to Apply for an IPO

To apply for an IPO, you will need the following:

• Demat Account: A Demat account is necessary to hold your shares electronically. This is where the shares will be credited after they are allotted to you.
• Trading Account: A trading account is required to place orders to buy or sell shares. Both Demat and Trading accounts are mandatory for participating in an IPO.
• Bank Account: A bank account is necessary to pay for the shares. The payment takes place through the Application Supported by Blocked Amounts (ASBA) method. This means that the money for your application is blocked in your bank account and is debited only if the shares are allotted to you. If you are allotted fewer shares than you applied for, the remaining amount will be unblocked.
• UPI ID: You must have a UPI ID linked to your bank account. This is used for the mandate process during the IPO application.

Having all these ready will ensure a smooth application process.

Step-by-Step Guide to Applying for an IPO Through Upstox

Upstox provides a streamlined process for applying for an IPO online. Here are the steps you need to follow:

1. Login to Upstox App: Start by logging into your Upstox app using your 6-digit PIN or Biometrics.
2. Go to the ‘Discover’ Tab: On the navigation bar at the bottom of the screen, tap the ‘Discover’ tab.
3. Click on ‘IPO’: Within the ‘Discover’ tab, locate and click on ‘IPO.’ This will display all the ongoing IPOs.
4. Explore IPOs: Browse the ongoing IPOs and choose the one you want to apply for.
5. Click on ‘Apply’: Once you have selected an IPO, tap on the ‘Apply’ button.
6. Fill Required Details: Fill in all the necessary information, such as the number of shares you want to apply for and the bid price.
7. Click on ‘Continue’: After filling out all the details, click on ‘Continue’ to proceed.
8. Enter UPI ID: Enter your UPI ID linked with your bank account and click on ‘Confirm’.
9. Accept UPI Mandate: After submitting your application, you will receive a UPI mandate request on your UPI app. You need to accept this mandate to block the funds for the IPO application.
10. Check Application Status: After accepting the mandate, you can check your application status under the ‘Status’ tab within the ‘IPO’ section.
11. Check Application Timeline: You can view the timeline for your IPO application, including date details, in the same status section.

By following these simple steps, you can easily apply for an IPO through the Upstox platform.

Applying for an IPO Online: Through Internet Banking

Apart from the broker platform, you can also apply for an IPO through your internet banking portal if your bank supports this option. Here’s how:

1. Log into Your Internet Banking Account: Using your login username and password, access your internet banking account.
2. Look for the ASBA Tab: Find and click on the ‘ASBA’ (Application Supported by Blocked Amounts) tab.
3. Choose 'Apply IPO': Select the ‘Apply IPO’ option and choose the company you want to bid for.
4. Enter Details: Fill in the required details such as your PAN and name.
5. Place Your Bid: Enter the bid quantity and price and then click Submit.

Submitting your bid before 2 PM on a working day will ensure it's processed the same day, otherwise, it will be processed on the next working day.

Applying for an IPO Online: Through Broker

You can also apply through your broker's platform, which is a more convenient method. Here are the steps to do so through a broker like Upstox:

1. Log into Your Broker's App/Website: Access your broker's website or app and log in to your account.
2. Go to the IPO Tab: Find and navigate to the ‘IPO’ section.
3. Choose the IPO: Choose the company you want to apply for.
4. Enter Bid Details: Enter the number of stocks you want to bid for and the bid price.
5. Enter UPI ID: Enter your UPI ID.
6. Submit Application: Click the ‘Submit’ option to submit your IPO application.
7. Approve UPI Mandate: Open your UPI app and approve the transaction.

This method is more direct and easier for those who actively use a trading platform.

Applying for an IPO Offline

If you prefer to apply for an IPO offline, you can do so by visiting a bank branch or a broking firm. Here are the steps:

1. Visit the Branch: Visit the nearest branch of your bank or a broking firm.
2. Fill Out ASBA Form: Fill out the Application Supported by Blocked Amounts (ASBA) form and provide the necessary KYC details.
3. Submit Application: Submit the form and the bank will block your funds.
4. Funds Debited (If Allotted): If the shares are allotted to you, the amount will be debited from your account.

This method is suitable for those who prefer traditional methods and need help filling out the forms.

Important Points to Remember During Application

Keep these points in mind while applying for an IPO:

• UPI ID Mapping: The bank account mapped to your UPI ID should belong to the person applying for the IPO. If a different UPI ID is used, the IPO application will get rejected.
• Mandate Timings: The IPO ‘Apply’ button will be enabled during non-market hours for the initial two days. However, the UPI mandate will be created during business hours only (10 AM to 5 PM) and must be accepted before 5 PM on the closing day of the IPO, as per exchange guidelines.
• Refund of Blocked Amount: If you do not receive an allotment, the blocked amount will be refunded within 10 days or till the end date of the mandate.
• Bank Account for Refund: The mandate refund amount, if applicable, will be reflected in the bank account used to block funds for the IPO.

Understanding these important notes will help you avoid any potential issues during your IPO application.

How to Check IPO Application Status on Upstox

After applying for an IPO, you can check your application status using these methods:

Through Upstox App:

1. Login to the App: Log in to the Upstox app using your 6-digit PIN or Biometrics.
2. Go to 'Discover' Tab: Click on the ‘Discover’ tab from the navigation bar at the bottom of the screen.
3. Go to 'IPO': Click on the 'IPO' option.
4. Click on 'Status': Click on the ‘Status’ tab to view your application status.
5. View Application Details: Click on 'View More' to see other details of the application.

Through Upstox Web Portal:

1. Login to Upstox Pro: Log in to the Upstox Pro using your 6-digit PIN or Biometrics.
2. Click on 'IPO': Click on the ‘IPO’ tab at the top of the page.
3. Redirection: You will be redirected to the Upstox IPO portal.
4. View My IPOs: Under ‘IPO’, click on ‘My IPOs’ to view your application status.

These steps make it easy to monitor your application's progress directly from the Upstox platforms.

How and When to Check Allotment Status on Upstox

Once the IPO is closed, you will want to know if you were allocated shares. You can check your allotment status within one week of the public issue closing date. Here’s how:

1. Login to Upstox App: Log in to the Upstox app using your 6-digit PIN or biometrics.
2. Go to 'Discover' Tab: Tap the ‘Discover’ tab from the bottom navigation bar, then click on ‘IPO’.
3. Go to 'My Applications': Click on the ‘My applications’ tab, where you will see your allotment status i.e. received or not received.
4. Check Status Details: Click on ‘Status’ to see the IPO journey.
5. Successful Allocation: If successful, your allotted shares will be credited to your Demat account on the next working day.
6. Unsuccessful Allocation: If unsuccessful, your refund will be automatically processed within the next 10 days.
7. Bank Mandate Release: Some banks may wait until the end date of the mandate to complete revocation. If you have not received an allotment of shares, you can raise a request with your bank to release funds anytime after the allotment date.

Knowing how to check your allotment status ensures you know when your shares are credited or when your blocked funds are released.

Frequently Asked Questions (FAQs)

Here are some frequently asked questions about applying for IPOs through Upstox:

Q: Can a beginner apply for an IPO?

A: Yes, a beginner can apply for an IPO. The process is designed to be simple and accessible for everyone.

Q: How can I buy an IPO before it goes public?

A: To buy an IPO before it goes public, ensure you have a Demat and trading account, meet all eligibility requirements, and place an order. If you are allotted shares, you will get them. Otherwise, your money will be refunded.

Q: How much should I invest in an IPO?

A: Generally, a retail investor’s investment amount can be at most ₹2 lakhs. Retail investors are allocated 35% of the total issue size.

Q: Is buying an IPO a good idea?

A: While IPOs can be good investment opportunities, it’s important to research and not invest solely based on hype. Consider if the company's valuation and long-term prospects align with your investment goals.

Q: Are IPOs high-risk?

A: Yes, IPOs can be high-risk investments as the company's stock can be volatile in the initial months after listing.

Q: Can you sell IPO shares immediately?

A: If you buy IPO shares in the open market on the listing day, you can sell them whenever you want. However, if you had received shares from the IPO allotment, you may have to adhere to a lock-up period.

Q: Is IPO money refundable?

A: No, IPO money is not refundable once your application is submitted. The funds will be blocked until allotment, and will be debited if you receive shares, or unblocked in case of unsuccessful allotment.

Q: How do I know if an IPO is overpriced?

A: Check the company's stock price relative to its sales per share and net income per share. If these ratios are higher than the company's competitors, the IPO might be overpriced.

Q: Why can an IPO application get rejected?

A: Common reasons for rejection include incorrect PAN or Demat account details, mismatched names or account numbers, or applying multiple times for the same IPO.

Q: Can I sell IPO shares on the listing day?

A: Yes, you can sell your IPO shares after trading begins on the listing day but not before trading hours start.

Q: How many lots should I apply for an IPO?

A: As per the SEBI mandate, you can apply for one lot of shares per account and documents.

Q: Where can I check my IPO application status?

A: You can check your application status on the Upstox app or web portal by navigating to the 'IPO' section and clicking on the 'Status' tab.

Q: When can I check my allotment status?

A: You can check your IPO allotment status within one week of the public issue closing date on the Upstox app or web portal under the 'My applications' tab.

By addressing these FAQs, you can gain more clarity and confidence in the process of applying for IPOs through Upstox.

Conclusion

Applying for an IPO through Upstox is a simple and efficient process that allows both new and experienced investors to access potential growth opportunities. By following the step-by-step guidance provided in this article, you will have a solid understanding of how to apply for an IPO, how to check your application and allotment status, and what factors to consider when investing in an IPO. With this knowledge, you can confidently navigate the IPO market and make informed investment decisions. Happy investing!