How to Bid for an IPO in India (2026)

Whenever a new company enters the stock market and gets itself listed, it becomes very popular among the investors. Investors generally find the IPO application process confusing; therefore, understanding the IPO bidding process is essential before making any IPO application and increasing the chances of successful allotment. 

In today’s blog post, we will give you an overview of IPO bidding, along with the steps on how to bid for an IPO.

What is IPO Bidding?

IPO bidding is a mechanism or process through which an investor applies for shares in an Initial Public Offering (IPO). They place bids by mentioning the quantity of shares to apply for, along with the price. During the IPO, the company provides a price band or price range within which the applicant can apply.

Key Feature of IPO Bidding

The key features of IPO bidding are as follows:

• Lot Size: The IPO bidding can be placed in lots or fixed quantities defined by the companies during the IPO. Investors cannot apply for a random number of shares and can only bid in lots, and the minimum bid can be for at least one lot.
• ASBA Process: ASBA or an application supported by a blocked amount is the only process through which an investor can apply for an IPO. In this process, the amount is blocked in the investor’s bank account until the completion of the allotment process.
• Price Band: In the IPO process, the company announces a minimum and maximum price band, and investors can place bids within that range.
• Category of Investors: IPO bidding is divided into different categories of investor groups, such as retail individual investors, non-institutional investors, etc. However, each category of investor has a reserved portion in the IPO.

How Does IPO Bidding Work

The steps of the IPO bidding process are as follows:

• Announcement of IPO: Whenever the companies plan to raise funds from the public, they announce an IPO in which details such as market lot, price band, etc. are given.
• Placing Bids: Investors can apply for the IPO through their broker’s platform through ASBA. For this, an investor is required to choose the quantity and price at which they want to invest.
• Blocking Amount: The amount of the application is blocked in the bank account of the investor through the ASBA process. The amount will be deducted from the account only upon the allotment of shares; otherwise, it will be refunded.
• Allotment of Shares: Once the entire allotment process is completed, the successful bidder will get the shares based on the subscription. If the IPO is oversubscribed, shares are allotted on the basis of a lottery system, whereas if the IPO is undersubscribed, every applicant gets the shares.
• Listing of Shares: This is the last step in the entire IPO bidding process. Once the allotment is completed, shares are listed on the stock exchanges.

Read Also: Strategies To Boost Your IPO Allotment Chances

How to Bid for IPO

To bid for an IPO, one can follow the steps mentioned below:

• Open a Demat and Trading Account: To apply for an IPO, one is required to have a demat and trading account. Pocketful offers you an opportunity to open a lifetime free demat and trading account and execute zero brokerage delivery trades.
• Identify the IPO: Then, the next step is to identify the IPO in which one wishes to invest. The selection of IPO will be based on various parameters such as the objective of the issue, price band, company fundamentals, etc.
• Log in to the Mobile Application: After you select the IPO, you need to log in to the mobile application provided by your broker, visit the IPO section and choose the IPO in which you wish to apply.
• Enter Details: Once the IPO is selected, you need to select the category of investor, enter the desired quantity or market lot, and choose the bidding price.
• Payment: After entering the details, you need to enter the UPI ID and make the payment. Once the payment is made, the amount will be blocked in your bank account through ASBA, commonly known as application supported by blocked amount.

Types of Bid Price in IPO

The two main types of IPO bids are as follows:

• Cut-Off Price: This is the price at which the investor agrees to buy the shares at the final issue price, which is decided by the company after the bidding process is completed. This method of bidding is commonly used by retail investors as it increases the chance of their allotment.
• Specific Price: In the specific price of bidding, the investor enters a specific price within the price band of the IPO. An investor in the specific price bidding process will receive the shares only when the final issue price decided by the company is equal or less than the bidding price. This method is generally useful for the investor who has strong market analysis. 

Factors to Consider before IPO Bidding

The key factors which an investor should consider before IPO bidding are as follows:

• Business Model of Company: The company’s business model plays a key role in deciding the company’s performance for IPO. If the company has a long and sustainable business model, it is expected to perform well in the long-run.
• Financial Performance: The financial performance of a company, such as profit, revenue, etc., must be evaluated before making any investment in an IPO. One should conduct detailed research about the company’s financials and should opt for companies having consistent and growing profit margins, etc.
• Valuation of IPO: Before opting for investing in an IPO, an investor is required to check its valuation with other listed companies of the same industry. An overvalued or expensive IPO may contain a higher risk after listing.
• Objective of IPO: One must look for the objective of the company’s issue. The common objective of the company’s IPO issue is business expansion, debt repayment, and meeting the requirements of working capital.

Mistakes to Avoid During IPO Bidding

The key mistakes which an investor should avoid during the IPO bidding process are as follows:

• Account Balance: IPO bidding is completed through the ASBA process, in which funds are blocked in your bank account. Therefore, if the investor is applying for an IPO, they must maintain a sufficient balance in their respective bank account.
• Short-term Gains: Commonly, there is a certain category of investor who generally invests in an IPO only for the listing gains. However, one must understand that not every IPO delivers strong listing gains. Hence, one must analyse IPO for both long-term and short-term strategies.
• Following Rumours: There are certain IPOs which can be overhyped on social media, and any unofficial tips related to such IPOs can cause significant loss for the investors.
• Ignoring Market Conditions: If the market conditions are not favourable, then there are high chances that even good IPOs can also perform poorly. Therefore, one should consider broader market conditions before investing.

Read Also: What are the Different Types of IPO in India?

Conclusion

On a concluding note, bidding for an IPO is a simple process once you understand it. It requires checking the company’s fundamentals, the correct price for bidding, blocking funds using ASBA, etc. However, applying for an IPO using the correct bidding process does not always guarantee profit; an investor should focus on the company’s fundamentals, the objective of the IPO, etc. An investor must avoid common mistakes before applying for an IPO. And it is advisable to consult your investment advisor before making any investment in an IPO.

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