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What is an initial public offering (IPO)?

Through an Initial Public Offering, a privately held company would go public. This is done by offering shares of the private company to the public by issuing new stock. An IPO enables the company to raise capital from the stock market for various business related activities such as expansion, clearing debts, investing in new manufacturing capacities etc. However, such a company would also have to adhere to strict compliances and reporting guidelines laid down by a regulatory body. SEBI is the regulatory body for the Indian securities market.

How IPOs Work?

In India, companies can file for an IPO in the following manner:

  • a) Company which wishes to file for an IPO (Initial Public Offering) hires an investment bank or files by itself
  • b) The company along with its under writers will file a registration document with SEBI. The registration document would contain all the financial information and the business plans of the firm. If the document is aligned with SEBI’s expectations, it is approved. Otherwise it would undergo revision
  • c) The estimated price per share along with other details are shared with stakeholders involved in the IPO. This is called a red herring document.
  • d) Prior to the IPO, the senior executives of the company travel across the country to market the upcoming IPO to potential investors. Most of these investors are QIBs (Qualified Institutional Buyers)
  • e) Price of IPO is fixed
  • f) IPO is made available to the public
  • g) Shares begin to trade in the stock market

Benefits of IPO investment?

Here are some benefits of IPO investment:

  • Cheapest price: If you have invested in the IPO of a credible company, it is possible that you may have bought its shares at the cheapest possible price before these stocks come under coverage of media glare and strategic investors.
  • Short and long term profit: There have been companies which have offered stellar short term gains to IPO investors immediately after being listed in the exchanges. Fundamentally strong companies offer market beating returns on your IPO investment over a longer period
  • You can augment your SIP in stocks strategy to create wealth by subscribing for IPOs of credible companies.

How to apply for IPO online through reliancesmartmoney.com - IPO Application Process?

This is how you can apply for an IPO online:

  • Visit reliancesmartmoney.com > More Products > IPO
  • Select the IPO which you are interested in and click on Apply.
  • Fill the required details and click on Submit.
  • Enter the UPI ID. (Ensure that the UPI ID is among the list of valid UPI IDs mentioned)
  • Confirm the Order.
  • A mandate will be received in the bank-enabled app through which the IPO is applied.
  • Accept the mandate to successfully apply in the IPO.