1. Is It Good To Invest In IPO In India

IPOs seemed to be great investment opportunities in retrospect. Both beginner and experienced investors can profit greatly from their IPO investments. They do have certain drawbacks, though, which is the reason some individuals are hesitant to make investments . If you're one of them, you might assess the benefits and drawbacks of initial public offerings (IPOs) and determine whether Is It Good To Invest In IPO In India or not.

2. What is IPO

Let's talk about IPOs before moving on to the benefits and drawbacks of investing in them. An initial public offering, or IPO, comes about when a private firm issues its shares for sale to the general public for the first time. This is regularly what a business does in order to raise finance for general corporate goals, working capital needs, debt repayment, or expansion funding.

Investors can use the Application Supported by Blocked Amount (ASBA) mechanism to subscribe to an initial public offering (IPO). The shares are credited to your Demat account if they are allotted. You may benefit by selling these shares at a higher price in the secondary markets after they list.

3. Company Qualifications for listing Initial Public Offerings

The paid-up equity capital of the applicant shall not be less than 10 crores * and the capitalization of the applicant's equity shall not be less than 25 crores**

3.1 Conditions for Listing:

The Securities Contracts (Regulations) Act 1956, the Companies Act 1956/2013, the Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under each of these statutes, as well as any circulars, clarifications, and guidelines issued by the appropriate authority under the mentioned statutes, must have been complied with by the Issuer prior to listing.

3.2 A minimum of three years' experience with either:

The applicant seeking listing; or
The promoters****/promoting company, incorporated in or outside India or
Partnership firm and subsequently converted into a Company (not in existence as a Company for three years) and approaches the Exchange for listing. The Company subsequently formed would be considered for listing only on fulfillment of conditions stipulated by SEBI in this regard.

For this reason, the applicant or the marketing firm must give the NSE annual reports from the three previous financial years in addition to a certificate addressing the following to the Exchange:

That the company has not referred to the Board of Industrial & Financial Reconstruction (BIFR) &/OR No proceedings have been admitted under Insolvency and Bankruptcy Code against the issuer and Promoting companies.
The company has not received any winding up petition admitted by a NCLT
The net worth of the company should be positive. (Provided this criteria shall not be applicable to companies whose proposed issue size is more than Rs.500 crores)

[*Net Worth – as defined under SEBI (Issue of Capital and Disclosure Requirements) Regulations , 2018.

Promoters are defined as one or more individuals who, individually or collectively, have at least 20% of the post-issue equity share capital and have at least three years of expertise in the same industry.

3.3 The applicant desirous of listing its securities should satisfy the exchange on the following:

Redressal Mechanism of Investor grievance

The points of consideration are:

Details of pending investor grievances against Issuer, listed subsidiaries and top 5 listed group companies by Market Cap.
Arrangements or mechanism evolved for redressal of  investor grievances including through SEBI Complaints Redress System.

Defaults in payment.

When assessing a company's application for listing, defaults in the form of principal and/or interest payments to holders of debentures, bonds, or fixed deposits by the applicant, promoters or promoting company(ies), group companies, or subsidiary firms will also be taken into account. The applicant company's securities may not be listed until all outstanding debts relating to principle and/or interest payments have been cleared.

3.4 Rejection cooling off Period

The application of the applicant company should not have been rejected by the exchange in last 6 complete months.

• Take note: If a firm files an application for listing with the Exchange within six months of an IPO, the securities may be accepted for listing if they were qualified for listing at the time of the IPO. In the event that the company applies for listing with the Exchange six months following its initial public offering (IPO), market capitalization will be calculated using the time frame from the IPO to the listing.

4. Does IPO give profit?

An IPO does not necessarily result in financial success. However, there is a good potential of making money if you invest in the correct business.

Whether to invest in an IPO depends on your risk appetite and investment goals. IPOs are excellent opportunities to make quick money or gain long-term profits. However, before investing in an IPO, you must analyze certain factors, such as the issuing company’s fundamentals, offer objectives, valuation

4.1 Takeover ownership in promising companies

Through IPO investments, you can become the owner of start-up businesses that show promise and have room to grow in the future. These businesses typically have strong long-term performance, which raises the value of their stock.

4.2 Maximize long-term success and your financial objectives

If you are investing to meet your long-term financial goals, IPOs could be your best option. You can acquire IPO shares at a very reasonable rate and gain multi-bagger returns in a few years.

4.3 Market knowledge is not required

You must have sufficient market understanding to trade or invest in equities that are already listed on stock exchanges. With IPOs, however, things are different. You don't need to perform a thorough stock analysis because these are the ones that haven't been listed yet. All you have to do is consider the company's fundamentals and determine whether or not you want to invest based on how well they look.

4.4 Invest for listing gains

IPO investments can also enable you to profit quickly from listing gains. In order to profit, you can subscribe to an IPO and then sell the shares on the listing day. More than 50% listing gains can be obtained from a strong IPO.

Risks associated with IPOs

4.5 Your money gets blocked

The ASBA facility supports all IPO applications. It means your money remains blocked in your account for seven to ten days until you get a refund or allotment.

4.6 Risk of selling shares

The stock market is extremely volatile. Consequently, you can never be assured of the returns on your IPO investments. If you are unhappy with the listing, you may decide to sell your shares at a loss.

4.7 No surety of allotment

There’s no guarantee that you will receive the allotment of IPO shares. For oversubscribed IPOs, the allotment is finalised through a lottery.

5. Eligibility criteria for IPO apply

1. Resident Indian individual.

2. The investor can be from any of the approved categories eligible to apply for IPO, as per SEBI norms.

3. Demat account with NSDL or CDSL.

4. Valid Permanent Account Number (PAN).

5. The investor can maintain a Internet enabled Savings or Current account

6. The investor can have sufficient clear credit balance in his/her account to block funds to the extent of application money.

7.The total bid amount for the application will remain locked until the allotment is done. The investor cannot utilize the money during the locked period.

7. The investor can apply only at cut off price which is the higher of the bid price.

6. How to invest in IPO through zerodha broker

Zerodha offers UPI based online IPO application. You should have the UPI id of your bank account to invest in IPO using the Zerodha IPO application. Zerodha IPO application doesn't allow you to invest in IPO using Minor, HUF, or corporate account as UPI doesn't support it

To apply for an IPO from Kite app, follow these steps:

1. Tap on Bids.

2. Tap on IPO.

3. Select the IPO from the ongoing list of IPOs and tap on Apply.

4. Tap on Apply again and enter the UPI ID.

5. Enter or edit the Quantity and the Price.

6. Tap on the undertaking tick box and swipe the Submit button.

7. Accept the mandate on the UPI app.

To apply for an IPO, from Zerodha web follow these steps:

1. Log in to kite.zerodha.com.

2. Click on Bids.

3. Click on IPO.

4. Click on Apply.

5. Select investor type.

6. Enter the UPI ID.

7. Enter the Qty and Price. The quantity should be a multiple of the lot size, and the price entered should be within the issue price range.

8. Click on the undertaking checkbox and click on Submit.

9. Accept the mandate on the UPI app. The UPI mandate can be accepted until 5 PM on the closing day of the IPO.

The exchange will send an SMS confirming the application by the end of the day. The bid details can be verified one day after applying.

7. How to invest in ipo through YONO App

Below given for applying IPO through SBI YONO App

1. Request

Click on the request option from the home page after successful login

2. IPO (equity/Rights)

Click on the IPO (equity/Rights) option.

3.Apply IPO

on the next can you can see the following option

Apply IPO , Edit IPO, IPO History, now you can click on the apply IPO option

4.Terms and Conditions

Click come back side button after reading the terms and conditions

5.Now Select the IPO

This page will provide you with a list of companies issuing IPO at the time with open and closing data of a wedding you will need to choose the IPO and then click on the go button.

6. Accept

Click on the upset button after reading the terms and conditions.

7.Select the category

You need to choose from individual or employees if we are employed in the same company you can choose employee or if you are not an employee of that company then choose individual.

8. Select the applicant’s name

If you have awarded yourself as an applicant then select the applicants name.

Once the applicants is selected other information like Pan and depository name will be automatically populated then click on the continue option.

9.Enter IPO Details

Now enter the IPU details like quantity Beed price etc.

Ticking on "cut-off price" means that you are proof to accept the allotment at the price decided by the organization unit to choose the amount.

10. Submit the application.

You will receive the reference number after the successful submission of the request the page will have the list of IPO successfully applied and you can verify the IPO details

11.IPO History

You can view shares allotted through the IPO history option.

IPO Rejection cooling off Period