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

Before rushing to apply for any IPO, take the time to read the company's Red Herring Prospectus (RHP), which details its business model, financial history, risk factors, and how it intends to use the funds raised. Applying purely because an IPO is generating buzz on social media, without understanding the underlying business, is one of the most common mistakes new investors make.

To apply for an IPO in India, you'll need:

• A Demat account, where allotted shares will be credited

• A trading account linked to your Demat account

• A bank account enabled for UPI or ASBA (Applications Supported by Blocked Amount), which is now the standard method for IPO applications

• A PAN card, which is mandatory for all stock market-related transactions

• Log in to your broker's app or net banking portal that supports IPO applications

• Navigate to the IPO section and select the specific IPO you wish to apply for

• Enter the number of lots you want to apply for (IPOs are sold in fixed "lot sizes," not individual shares) and your bid price within the specified price band

• Confirm your UPI ID or authorize the ASBA mandate, which blocks the required amount in your bank account without actually debiting it until allotment is finalized

• Approve the mandate request that appears in your UPI app within the specified time window

• Wait for the allotment process, which typically concludes a few days after the IPO subscription period closes

IPO shares are sold in predetermined lot sizes, not as individual units, meaning you must apply for a minimum number of shares as a bundle, with the option to apply for multiples of that lot size. Most retail investors apply "at cut-off price," meaning they agree to pay whatever the final issue price turns out to be within the announced price band, which maximizes their chances of allotment compared to bidding at the lower end of the range.

Your bank account shows the bid amount as blocked (not debited) until the allotment process is finalized. If you're allotted shares, the corresponding amount is debited and shares are credited to your Demat account before listing day. If you're not allotted any shares — a common outcome for retail investors in heavily oversubscribed IPOs due to the lottery-based allotment system — the blocked amount is simply released back to you with no financial loss beyond the temporary blocking of funds.

• Apply at the cut-off price rather than a lower bid within the price band

• Apply using multiple, separate demat accounts under different family members (each counted as an individual application) if you have several eligible individuals in your household

• Apply early within the subscription window, though this doesn't guarantee allotment, which remains a randomized process for oversubscribed retail categories

• Failing to approve the UPI mandate within the required time window, which can invalidate your application entirely

• Applying for IPOs without reading the prospectus, based purely on hype or subscription numbers

• Over-leveraging or applying for amounts beyond what you can comfortably afford to have blocked

Rather than treating every IPO application as a lottery ticket, informed investors evaluate whether the company's fundamentals genuinely justify the offer price. Powered by Mahir Research, you can dig into a company's financial health well before deciding to apply, positioning your IPO applications as informed decisions rather than speculative bets. The Mahir Approach to investing extends even to IPO applications — apply because the fundamentals convince you, not because everyone else is applying too.