What is IPO? How to INVEST in IPO?

IPO: These days there is a flood of Initial public offerings ie (IPO) in the Indian stock market. To take advantage of this market boom, more IPOs are expected to come. So let’s know, what is IPO, how it works, and what are the investment possibilities in it.

What is IPO?


When a company issues its stock or shares to the public for the first time, it is called IPO, Initial Public Offering. An initial Public Offer is brought by a company to raise capital from the market.

It is the process of converting a private company into a public company. When companies need money, they list themselves in the stock market. Listing of shares on stock exchanges helps the company to get a proper valuation of its worth.

How to invest in IPO?

If you want to invest in the IPO of a company as an investor, then for your convenience, SEBI, the Corporate Ministry of the Government of India, has prescribed some rules and guidelines, it is important to keep in mind.

If you want to invest in IPO, then you will have to open a trading or Demat account for this. To invest under IPO, you must have a bank account, Demat account and PAN number.

When you choose to buy an IPO of a company, then first of all your broker should be the best. Try to select the company together with the broker. Compare three to four other companies with the company you are choosing.

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The opinion of the rating agency also matters a lot. View the company’s IPO price.

IPO Glossary

When a company brings its IPO to the market, some special technical terminology is used while bidding, which is as follows-

  • Price Band: The price band is the range according to which you can bid for an IPO.
  • Issue size: This means the total number of shares on which you can bid.
  • Registrar: Registrar is that particular corporate body which is given the responsibility related to the work of IPO. He handles the investment, refund of customers’ money and the entire IPO process as per SEBI.
  • Bid Lot: Bid lot refers to the minimum share quantity according to which or in its multiple, the customers have to bid for the IPO.
  • Retail: The amount of shares kept for bidding by retail investors is called retail.
  • QIB: The share percentage that is kept for bidding by the investing institutions is called QIB.
  • Listing: The lists on which the IPO opens and is available for trading are called listings.
  • NIB: The percentage of shares kept for bidding by non-investors is called NIB.

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