IPO Subscription & What Does it Indicates? | Espresso

IPO Subscription & What does it Indicates?

IPOs have become extremely popular these days, with many companies going public during the year. Many companies recorded record-breaking subscriptions. Many IT companies, BFSI companies, food and beverage companies, etc., captured the limelight when it came to IPO. Thus, IPOs have gained momentum in recent years and seem like they will continue to do so.

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IPO means that a private company offers shares to the public for the first time. The company offloads a specific percentage of the ownership of the company. IPO offers the investors an opportunity to buy shares of a company at lower prices and then make gains on the shares once these shares are listed on the stock exchange. Also, investors can keep the shares and profit from them as they gain in value over the years.

If you want to invest in a company’s IPO, you can do so at the time of the subscription period and then check the status of your IPO subscription on a pre-decided date. First, let us get into the details of what is an IPO subscription and the IPO subscription status.

What is the Process of IPO?

Every Initial Public Offering has to go through similar steps before it is listed on the stock exchange. In the first step, the company decides to go public and hires an underwriter. Then the application for registering the IPO is sent to SEBI. SEBI verifies all the details and checks whether the application follows all the norms.

Once the approval comes from SEBI(Securities and Exchange Board of India), the company then chooses to list the IPO at either one stock exchange or more than that. The company tries to woo the investors and make a decision on the price of each share. Then, the company’s issue is opened for subscriptions for the investors. After this subscription period gets over, the shares are allotted by the underwriter. In case there is an oversubscription, the investors receive the partial allotment. In the end, the IPO gets listed.

Why is it Important to Understand the IPO Subscription Status?

Let us first understand what an IPO subscription is. An IPO subscription means the actual no. of times the IPO of the company is subscribed at the stock exchanges. The bid for the IPO can be placed with either NSE or BSE. The recent IPO subscription can be checked by going to the stock exchange website. Although the figures encounter constant change at the time when the subscription process is ongoing, you can check the final details of the bidding on the end day of the subscription process of the IPO.

In general, there are five types of investors who invest in an IPO. These include Qualified Institutional Buyers(QIB), retail investors, Non-Institutional Bidders(NII), employees of the company, and some others.

It is essential to know the IPO subscription status for the reasons mentioned below:

  • It will help you understand the demand in the stock market, which will help you know the listing price. Of course, the more the demand of the stock, the more the listing price will be.
  • Seasoned investors check the participation figure of the retail investors to make a decision regarding investing in the stocks of the company.
  • Once you know the allotment status of the IPO, you can then decide on other things. For example, if you get lucky and receive the allotment, you will have to wait until the day of the listing if you wish to sell off your shares. While if you are not able to get an allotment, the money will be refunded, and you can utilise it for other goals.
  • The data regarding IPO subscription determines the IPO’s rates in the grey market.

How to Check the IPO Subscription Status and Allotment Status?

You can visit the BSE IPO subscription website to check the subscription status of the IPO of the company. In addition, stockbrokers, as well as newspapers, publish reports on the subscription status of the IPO. This makes it easy for you to check the IPO status, understand the sentiments of the investors, and make a decision to invest.

Here are some steps that you can take to check your IPO subscription status:

  1. Visit the BSE (Bombay Stock Exchange) IPO subscription website.
  2. Go to the tab that mentions issue type and select Equity. You can also check the status of debt investment there.
  3. Next, choose the IPO name. You have to select the IPO from the drop-down menu.
  4. Now, put in the application no. on the receipt of acknowledgement provided by the exchange.
  5. Type in your PAN number.
  6. Check the box that says ‘I am not a robot. ’Then click on Search. You will see the allotment of shares, including the shares that have been allotted to you.

If you get an allotment of the shares, they will be transferred to your respective Demat account. However, in case you have not received an allotment, the money will be refunded to you.

Conclusion

Knowing the IPO subscription status becomes essential when you wish to understand the sentiments of the public towards the IPO. It will help you invest in IPOs in a better manner. Also, stock markets carry risk, so it is essential to understand everything carefully before you invest.

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Frequently Asked Questions

Generally, the prices of stocks tend to rise after an IPO listing which leads to gains for the investors. This is the reason that when one of the promising companies issues an IPO, people rush to subscribe to it.

If you purchase stocks in an IPO, you become one of the shareholders of the company. You can then earn money when you sell your shares at a profit, or you can earn dividends on the shares that you own in the company.

Like any other investment in the stock market, investing in an IPO depends upon your investing goals and risk-taking ability. You must understand the previous financials of the company, its weaknesses and strengths, potential in the market, how the proceeds from the IPO will be used, etc. before you choose to invest. Also, read the red herring prospectus carefully. Always be sceptical and informed when you invest in the stock market.