First-Time Investors! How To Apply For IPOs Using UPI, ASBA? Check Out Step-By-Step Guide

The IPO market has been booming since 2023, and the new year is expected to be no different. After a quiet first week in 2024, the primary market is all set to be flooded with a host of IPOs. In the trading week between January 8th to 12th, four IPOs and one listing have queued up. 2023 which was the year of bulls and record-high gains with double-to-triple-digit returns across indices, mainboard and SME IPOs has shown robust performance.

However, applying for IPOs is not the same as investing in already listed equity shares. In its latest blog, Ventura Securities said, many first-time investors start their equity market journey with IPOs. Nowadays, the IPO online application process has become extremely simple, fast and effective. Nonetheless, it added, "Before you think of applying to all upcoming IPOs blindly, here's a caution. Not all IPOs can make you money."

Ventura highlighted a few pointers that need to be remembered before applying for IPOs. These are:

- Stick to the main-board IPOs - here, the minimum ticket size is under Rs 15,000

- Consider SME IPOs only selectively-they have a ticket size above Rs 1 lakh and are lesser-known companies

- Read RHPs carefully

- You may also refer to Ventura's IPO research notes. They are crisp and actionable

- Pay attention to market conditions and

- Check the grey market premium before applying - the higher the better

If you're planning on applying for IPOs via UPI, Ventura gives a step-by-step guide. Here's what they are:

Step 1: Go to your trading app and search for the IPO section

Step 2: Select the IPO you want to bid for

Step 3: Choose the category

Step 4: Retail (applications below Rs 2 lakh are treated as retail applications)

Step 5: Non-Institutional Investor (individual applications above Rs 2 lakh)

Step 6: Enter the quantity and price (you can tick the cut-off price box for applying under the retail category, otherwise, select the highest price in the offer price range.)

Step 7: Enter your UPI ID and create a mandate (Even HNI investors can use UPI IDs to create mandates for applications up to Rs 5 lakh.)

Step 8: Open your UPI App and accept the mandate to conclude the IPO application process

Meanwhile, to apply for IPOs using ASBA (Application Supported by Blocked Amount), here's what Ventura said:

Step 1: Open your net-banking facility

Step 2: Click on "IPO application through ASBA"

Step 3: Fill in your Depository Participant (DP) details correctly

Step 4: Select the right quantity and bid at the highest price in the range

Step 5: Choose the right bank account number if you have more than one account

Step 6: Accept the terms and conditions

Lastly, Ventura's blog said, "It's noteworthy that the IPO amount gets deducted from your bank account only on the successful allotment and until then it continues to earn interest. If you don't get an allotment, nothing changes for you except that your money gets unblocked."

Last year, as per primedatabase.com, a total of 57 companies raised Rs 49,434 crore through mainboard IPOs, which was down by 17% from Rs 59,302 crore raised in 2022. However, this was not the case with SME IPOs, as a total of 182 small and midsize enterprises raised about Rs 4,681 crore, which was up by 150% from Rs 1,875 crore raised with 109 IPOs in 2022.