Initial Public Offerings (IPOs) are opportunities for investors who want to participate in the growth of profitable companies. However, the process of IPO allotment, wherein shares are distributed among prospective investors, can be difficult for laymen to understand. Checking the status of presently listed IPOs as well as following those that are bound to be listed in the near future is crucial to determine whether they have been allocated shares and at what quantity. In this article, we look at the process of BSE India IPO allotment status and its importance for investors to have a fruitful investment experience.
All About BSE India IPO Allotment Status
BSE (Bombay Stock Exchange) was founded by Premchand Roychand in 1875 with Sethurathnam Ravi serving as Chairman. Bombay Stock Exchange is the oldest Exchange in India and in Asia. Also, it does have eleventh largest market capitalization with a market valuation of $2.2 trillion.
BSE was initiated with three objectives that are:
- To ensure availability of public capital to entrepreneurs.
- To safeguard higher returns to the investors.
- To create, promote and develop a transparent market for ethical stock trading.
In 1986, BSE introduced its stock index names as SENSEX. Sensex had 100 stocks listed at five major stock exchanges of Bombay, Calcutta, Delhi, Ahmedabad and Madras. Later, National Index, BSE 200 and Dollex 200. It provides trading in multiple financial institutions including mutual funds, debt instruments, Currencies, equities and derivatives.
Trading directly in the BSE share Market is only allowed to the preferential investors opting in for huge volumes of transactions. All other people can trade through stockbrokers in BSE or NSE. BSE is regulated by SEBI.
What does IPO Allotment Mean?
Allotment typically refers to the process of distributing equity, specifically the allocation of shares granted to an underwriting firm involved in an initial public offering (IPO). Various forms of allotment occur when new shares are issued and assigned to either new or existing shareholders. Companies carry out allotments of shares and other resources when the demand exceeds the available supply.
To learn the real meaning of the term, let us understand the process of IPO first.
Requirements of BSE India IPO Allotment
- Demat Account: A Demat account is necessary for investing in IPOs as it serves as a storage facility for your allotted shares.
- Trading Account: Prior to applying for an IPO online, it is mandatory to have a trading account, which can be opened with any SEBI certified Depository Participant.
- UPI ID: You can utilize an existing UPI ID linked to your bank account or create a new UPI ID through the BHIM app.
- Bank Account and ASBA: A bank account is required for making payments for the shares applied in an IPO. With the implementation of ASBA (Application Supported by Blocked Amounts) by SEBI, a specific amount is blocked in your bank account based on the number of shares you bid for. After allotment, the cash is debited from your bank account, and any unutilized amount is unblocked if you receive fewer shares than you initially bid for.
Eligibility of BSE India IPO
- Compliance with SEBI guidelines: You must be an approved investor according to the regulations set by the SEBI. Currently, four types of investors are eligible to participate in an IPO: Qualified Institutional Buyer (QIB), Non-Institutional Buyer (NII), Retail Individual Investor, and Employees.
- Demat and trading account: You must possess a Demat account and a trading account with a recognized Depository Participant in India, such as 5paisa. These accounts facilitate the holding and trading of securities in electronic form.
- Permanent Account Number (PAN): PAN is a unique identification number issued by the Indian Income Tax Department, and it is mandatory for financial transactions, including IPO investments.
- Linkage of bank account: Your bank savings or current account should be linked to your Demat account. This linkage allows seamless transfer of funds during the IPO application process.
- Sufficient credit balance: Your bank account must have a sufficient credit balance to fund the IPO application. Although the application amount is not debited instantly, it remains locked until the allotment date. If you are allotted shares, the required amount will be transferred from your bank account to the company’s account.
How to Apply for an IPO
Step 1. Begin by logging into your broker’s online account. If you don’t have an account, you’ll need to register using your email and phone number. We will take example of Kite by Zerodha.
Step 2. Once logged in, navigate to the IPO tab and access the current IPO section. From there, click on Apply for an IPO.
Step 3. Specify the lot size or the number of stocks you wish to bid for. Additionally, select the bid price. For a higher chance of IPO allotment, it is advisable to bid at the cut-off price or the upper end of the price band.
Step 4. Provide your UPI ID and click the submit button. You’ll be required to approve the transaction on your UPI app, and the exchange will confirm your bid.
Step 5. After submission, wait for the mandate notification within your UPI app. The application money will be held until the IPO allotment date.
You can also apply through internet banking app:
Step 1. Access your Internet Banking account by entering login ID and password.
Step 2. Navigate to the ASBA (Application Supported by Blocked Amount) section and tap on it.
Step 3. Choose the Apply IPO option and select the desired IPO from the available list.
Step 4. Provide the applicant’s name, PAN (Permanent Account Number), bid quantity, and price, then tap on the submit button. If you submit the bid before 2 PM on a business day, it will be accepted on the same day. However, if you place your bid after 2 PM, it will be scheduled for the next day.
Can You Apply for IPO via Offline Mode?
If you are not comfortable with applying for an IPO online, an alternative option is to visit the nearest branch of the broking firm or bank and submit your IPO application there. You will need to complete an ASBA application form and provide necessary KYC details. Subsequently, your funds will be blocked, and the invested amount will be debited from your bank account once the shares are allotted. For instance, if you invested 3 lakh rupees and received shares worth 1 lakh rupees, only 1 lakh rupees will be deducted from your bank account.
On the allotment date, you will either receive all the shares you applied for, or you will receive a partial quantity based on the allotment determined by the company. There is also a possibility of your application being fully rejected. If your application is rejected or partially accepted, the blocked amount will be unblocked in your account accordingly. In the case of full acceptance, the allotted shares will be automatically deducted from your account.
This situation arises when a company’s IPO is oversubscribed, meaning there is higher demand for shares than the available supply. In such cases, companies establish a basis for allotment and allocate shares accordingly. For instance, LIC (Life Insurance Corporation of India) implemented this method where many retail individual investors who applied for two lots were only allotted one lot, and some received no allotment at all.
Things to Know before Applying for IPOs
Although investing in IPOs is a popular trend, it’s important to approach it with caution and not simply follow the crowd. Examples like Paytm and LIC have shown that even highly anticipated IPOs can disappoint investors. Therefore, it’s crucial to consider the following factors before applying:
- Thoroughly read the prospectus: Every company issuing an IPO provides a prospectus that contains essential information about the IPO and the company itself. Just like when we join a new school or college and review the prospectus to understand the institution, it’s essential to study the IPO prospectus. Familiarize yourself with important dates and key details.
- Research the company: Before investing, learn about the company, its recent decisions, and its overall portfolio. For example, if you’re considering investing in Tata Motors, explore other significant segments of the Tata Group as well. Understanding the company as a whole and its future plans is crucial to assess its potential performance over the next five years.
- Evaluate the risk: Assess the risk associated with the IPO and align it with your risk appetite. Don’t be swayed solely by popular trends, as many hyped organizations have failed to meet long-term expectations in the stock market. Consider both renowned and lesser-known companies, focusing on their strengths rather than just their fame.
- Seek expert opinions: If you’re new to investing or lack sufficient knowledge, it’s helpful to read expert comments and analysis about the IPO you’re interested in. This can provide insights that may not be apparent from a layman’s perspective.
- Learn from experiences: If you regret investing in a particular IPO or missed out on one you should have invested in, don’t dwell on it. Instead, view it as a learning experience. Financial markets go through cycles, including recessions and crises, so it’s essential to adapt and grow from these experiences.
Steps to check BSE India IPO Allotment Status
IPO allotment refers to the procedure in which the registrar to the offer assigns IPO shares to individuals or entities who have applied for subscription. This allocation process typically occurs within a week of the IPO release date for large-cap IPOs. However, for small-cap IPOs, the allotment process may take more time if the subscription level does not meet a specific threshold. You can check BSE India IPO allotment status by following the below steps:
Step 1. Visit the BSE website.
Step 2. Check the Equity option in the Issue Type.
Step 3. Select the IPO name you want to check.
Step 4. Enter your application number and PAN number in the provided fields.
Step 5. Click on the Search button.
Step 6. The screen will display your IPO allotment details. Take a screenshot or note them down for future use.
Other Ways of IPO Status Check
There are alternative methods to stay informed about IPO status apart from checking on BSE India.
1. Through Email
One such method is to monitor your email inbox, as you will receive a notification if you have been allotted shares. It is important to regularly check both your primary inbox and spam folder to ensure you don’t miss any important messages regarding IPO allotment.
2. Through Registrar’s Website
Step 2. Find and click on the IPO allotment link.
Step 3. In the drop-down menu bar, select the name of the IPO you are interested in.
Step 4. Choose one of the following options: PAN Number, Application Number, or Demat Account.
Step 5. Enter the corresponding account/card number based on your selection.
Step 6. Enter Captcha as visible on the screen.
Step 7. Click on the Submit button to initiate the search.
Step 8. The screen will display your IPO allotment details, which you can note down.
3. Through Demat Account
Please contact your broker or access your Demat account/trading account to verify if the stock has been credited to your account. In case you have received the allotment, the credited shares will be visible in your Demat account.
4. Through Internet Bank Account
Step 1. Log in to your bank account that you used to apply for the IPO.
Step 2. Navigate to the Balance tab or section.
Step 3. Check if the amount has been debited from your account.
If you have been allotted shares in the IPO:
- Your account will be debited with a specific amount.
- You will receive an SMS notification stating: Dear Customer, your Bank Name Account 00000 has been debited with INR 00000 on Date. IPOName details: Info: IPOName. Your Available Balance is now INR 000000
If you have not been allotted any shares:
- The amount will be released back to your account.
- Your account balance will remain unchanged.
The allotment of IPO shares is not determined solely based on the order of application submission. It is influenced by the level of investor interest in the IPO. If the IPO fails to attract sufficient demand and is undersubscribed, you may receive the full number of lots you applied for. However, in the case of oversubscription, where there is greater demand than available shares, the allocation to retail investors is calculated by dividing the number of shares in the retail category by the minimum lot size.
Also Read: Rainbow IPO Subscription Status
Pros of IPO Allotment
- Early involvement: Investing in an IPO allows you to enter a company at its initial stage, offering the potential for rapid profit and long-term wealth growth.
- Long-term goals: IPO investments, being equity investments, have the potential to generate significant returns over time, aiding in achieving long-term financial objectives like retirement or purchasing a house.
- Price transparency: IPO order documents clearly state the price per security, providing individual investors with the same information as larger investors.
- Affordable opportunity: IPO prices are often lower, especially for small companies with significant growth potential, as they may offer discounted rates. Missing the IPO window may make it challenging to invest in such promising companies later when the stock price could significantly increase.
Cons of IPO Allotment
- Initial Public Offering involves significant expenses, including payments to underwriters, legal fees, accounting fees, and listing fees.
- Conducting legal due diligence and investigating the company’s details mentioned in the prospectus require time and effort.
- There is a risk of not finding potential buyers in the market when investors want to sell their shares soon after the listing.
- After an IPO, founders may have less control over the company’s organization, as shareholders’ votes and negative public perception can lead to changes in leadership.
- Customer satisfaction becomes crucial for a publicly traded company, as public perception can impact its operations and decision-making.
Also Read: GR Infra IPO Listing Date, Status, Price
Checking the IPO allotment status of companies is necessary to determine their share allocations. By keeping track of such allotment status, investors can make well-informed decisions and speculations regarding investments and future strategies.