Stocks

In this episode, we cover the most fundamental questions about IPOs. What is an IPO in the first place, and the whole process a company needs to go through before coming out with an IPO. Finally, we also understand why do companies issue an IPO.

What is an IPO and why companies go public?

This episode explains all the key terms related to an IPO. We cover everything which you must know for understanding an IPO - from Price band, Lot size, and Listing date to RHP and Grey market price, you will learn everything in this episode.

Key terms related to an IPO

Here, we understand the four main categories of investors who participate in an IPO namely, Qualified Institutional Investors, Anchor Investors, Non-institutional investors and Retail Individual Investors.

Types of buyers in an IPO

Do you often get confused if you should apply for an IPO or not? Well, not anymore! In this episode, we will help you understand the Red Herring Prospectus (RHP) of a company coming out with an IPO. We will start with basics about RHP and then cover the main segments which you must focus on.

What to look for in an RHP before investing in an IPO?

Now that we have learnt everything about an IPO, we address the most important question - How to apply for an IPO? Furthermore, we will also give you insights on how to increase your chances of getting an IPO allotment.

How to invest in an IPO?

In this episode, we dive deeper into dividends. We explain the basics of dividends, and various dates associated with them. Not only this, we also touch upon the impact of dividends on stock prices, the taxation on dividend income.

All you need to know about dividends 

This module covers everything you need to know about IPOs including the various terms associated with an IPO, types of buyers, how to read the RHP document of a company and how to invest in an IPO

All about IPOs

Introduction:Till now, we have covered everything you need to know before you invest in an IPO. But how do you apply for an IPO? How do you increase your chances of getting shares allotted in an IPO? Listing gains vs Long term gains? We will answer all these questions now.&nbsp;How to apply for an IPO on Groww?<ul><li style="font-weight: 400;">Ok, so let&rsquo;s talk about how you can apply for an IPO on the Groww app.</li><li style="font-weight: 400;">First, you need to go to the stocks page of your Groww App and scroll down. Here you will find an IPOs section. Please click on it</li><li style="font-weight: 400;">In the IPOs section, you will find open, upcoming and recently closed IPOs. On the IPO opening date, you will find your IPO in the Open IPOs section. Here you can find the listing date, issue size, lot size and the Red Herring Prospectus of the IPO.&nbsp;</li><li style="font-weight: 400;">After this, you can click on the apply button and apply for the IPO. Once you click here, the bid page will open wherein the minimum order quantity and bid price of the IPO is automatically selected. If you want, you can increase the number of shares or click on add bids to place multiple bids</li><li style="font-weight: 400;">If you check below, then you can see the amount to be blocked which is blocked in your UPI account till the shares are allotted</li><li style="font-weight: 400;">You need to enter your UPI ID and click on continue. Post this, your details are confirmed, and you can click on continue to complete your IPO application</li><li style="font-weight: 400;">After this, you need to go to your UPI app and confirm the amount to be blocked</li><li style="font-weight: 400;">You can check the order status of your IPO anytime on the Groww App.&nbsp;</li></ul>How to increase your chances of getting shares allotted in an IPO?:<ul><ul><li style="font-weight: 400;">Many times investors complain that they apply for an IPO but don&rsquo;t get shares. Here, we will tell you how you can increase your chances of getting shares allotted in an IPO which is oversubscribed. Please don&rsquo;t think that by following these practices you will definitely get the shares, but you can surely improve your chances</li><li style="font-weight: 400;">Many times people use the same PAN on different platforms to submit multiple IPO applications. Please avoid this. If you use multiple Demat accountslinked to different PAN cards, then you can increase your chances of getting shares allotted in the IPO. This is why a lot of investors use the Demat accounts of their family and friends to place bids for an IPO</li><li style="font-weight: 400;">To increase your chances of getting the shares allotted in an IPO, you should place a bid at the maximum price of the IPO. For example, if the price band is 100 to 105 Rs per share then you must place a bid at 105 Rs per share. In the Groww App, the maximum price in the price band is automatically selected which you can change if you want&nbsp;</li></ul></ul><ul><li>Please avoid last moment rush. If you want to see the IPO response in the first 2 days and want to apply on the third day, then please do so before 3 pm. If you apply in the end, then you may face problems in processing your bid application because of a lot of traffic on the servers or banks.&nbsp;</li><li style="font-weight: 400;">Please be extremely carefulwhen you fill in your details while applying for an IPO so that your application isn&rsquo;t rejected on technical grounds. A lot of applications are rejected on small issues like the name being different on the Pan card and your bank account.&nbsp;</li><li style="font-weight: 400;">If the parent company of the company launching its IPOis listed on the stock exchange, then you canbuy the shares of the parent company to increase your chances of getting the shares. This is because you will be applying from the shareholder category instead of applying as a retail investor. This IPO is only available for a few IPOs. For example, when the IPO of SBI cards came out then SBI shareholders had this advantage</li><li style="font-weight: 400;">Many people believe that if they bid for more lots then the chances of them getting the shares allotted increase. But this isn&rsquo;t the case as all bids are treated equally, be it for one lot or many lots.&nbsp; </li></ul>Listing Gains vs Long Term Gains:<ul><li style="font-weight: 400;">Now that we have talked about how to increase your chances of getting shares allotted in an IPO, let&rsquo;s talk about why you want to apply for the IPO in the first place. Before applying for an IPO, you will have to decide whether you want to apply for listing gainsor whether you want to hold the shares for the long term. If you are applying for listing gains, then you will have to track the share price on a listing day. This is because a lot of times IPOs may give good listing gains, but they can reverse very soon too. If you want to hold the shares for the long term then you shouldn&rsquo;t be affected by these short term price fluctuations </li></ul>Conclusion:<ul><li>We hope that we have cleared all your doubts with respect to IPOs.</li><li>In the next few videos, we will cover a few common corporate actions like dividends, buybacks, stock splits, bonuses, rights issues, etc. We will see their impact on stock price and the reasons why companies take these actions in the first place.</li></ul>

How to invest in an IPO?

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