IPO 2024 - Initial Public Offerings

An Initial Public Offering (IPO) is the process through which a privately-held company offers its shares to the public for the first time, enabling investors to purchase equity in the company. This allows the company to raise capital by selling shares to public investors, marking its transition from private to public ownership.
In India, IPOs are classified into two categories: Mainboard IPOs and SME IPOs. Mainboard IPOs are listed on major stock exchanges like the NSE and BSE, while SME IPOs are listed on specialized SME platforms such as the NSE SME. The minimum investment requirement for a Mainboard IPO is typically up to ₹1.5 lakh, whereas SME IPOs generally require a minimum investment of ₹2 lakh.
Recent notable Mainboard IPOs include companies such as Tata Technologies Ltd., Bajaj Housing Finance Ltd., and Life Insurance Corporation of India (LIC).

IPO funding allows you to use a loan to invest in more shares during an Initial Public Offering (IPO), giving you a better chance of getting a larger allotment. It helps bridge the gap between how much money you need and what you currently have. You only need to pay a small portion, called the margin, and the lender will cover the rest. With IPO financing, you can apply for more shares than you would with your own funds, increasing your potential returns if the IPO does well. After the shares are allocated, they are added to your demat account. You can then choose to sell them for a profit once they are listed on the stock exchange. If the IPO is oversubscribed and you don’t get any shares, your money will be returned to you within 10 days. This funding option gives you flexibility, but it’s important to act quickly before the shares are oversubscribed.

A Book Building IPO allows companies to set a price band, with a lower and upper limit, for their shares (e.g., ₹100-₹120 per share), and investors can place bids within this range. Through the bidding process, investors indicate how many shares they wish to purchase and at what price within the specified range. The final price, or Cut-off Price, is determined based on the demand and bids collected over a defined period. Investors who have bid at or above this price are then allotted shares. The book-building process is more transparent than traditional fixed-price IPOs, as it provides the issuing company with real-time demand data, enabling adjustments to pricing. Both institutional and retail investors can participate, with retail investors having the option to bid at the cut-off price to receive shares at the final price set through the book-building process. This method offers benefits such as market-driven pricing, which ensures better price discovery, and reduces the risk of underpricing or overpricing shares. As a result, book building is the most common approach for IPOs in India, offering a more efficient and responsive way to price shares.

Yes, you can revise or cancel your IPO subscription application untill the IPO closing date. To modify your IPO application on the Motilal Oswal Mobile trading application, go to the IPO section, select your application, select the option to modify your bids, and submit the application. Post this submission, you will have to approve the mandate with your choosen UPI app and your application will be sent to the exchanges with revised changes. To cancel your application, you will simply opt to cancel your subscription.

IPO investments are open for all individuals, institutions, corporate bodies and other firms. However, it is mandatory that all firms and individuals who wish to apply for the IPO must have an operational demat account.