Introduction
If you’ve never bid in an IPO, it can seem complex. But it is simple once you get the hang of it. This guide shows you the IPO bidding process explained step by step. You will learn how to bid in IPO, what rules to follow, and how allotment works in India.
What is an IPO and Why Bid?
An IPO (Initial Public Offering) is when a private company offers its shares to the public for the first time. Companies do this to raise funds. Investors buy shares hoping the price will rise after listing. Retail investor IPO bidding offers a chance to own early. But risk exists. First-time IPO investors should know the dangers and rewards.
IPO Bidding Process
- Open a Demat Account
You must have a Demat + trading account. Without it, you cannot bid. - Read IPO Prospectus / RHP
It contains information on price band, lot size, timelines, risk factors, use of proceeds, and other relevant details. It gives clues about the IPO’s potential. - Choose Retail or Other Category
In India, there are categories like Retail Individual Investors (RII), Non-Institutional Investors (NII), and Qualified Institutional Buyers (QIB). If you are applying for retail, you fall under RII. (example: what falls under this category) - Submit Bid via ASBA / UPI
You use ASBA (Application Supported by Blocked Amount), so money stays in your bank until allotment. UPI-based IPO bidding has also become common. - Specify Number of Lots
Lot size = set number of shares per application. You bid in multiples of that. - Wait for Subscription Closure
IPO bidding time is fixed (usually 3-5 days). During this period, you can’t modify the bid after applying unless IPO allows revisions (rarely). - Check IPO Allotment
After bidding ends, the allotment process begins. If the IPO is oversubscribed, the share allotment may use a lottery or proportional method for retail. The allotment process is explained in the RHP or by the registrar. - Refunds and Listing If you don’t get the full allotment, excess money is released. If you are allotted shares, they will get credited to your Demat account after this stock gets listed on the exchange on the listing date.
Some Real Data & Recent Examples
- The VMS TMT IPO in 2025 drew strong retail demand. By Day 3, retail individual investors subscribed 31.6 times their allotted portion, while overall investors subscribed 43.36 times the issue. It illustrates the increasing competitiveness of IPO bidding.
- In 2024, SEBI released a study showing that investors sold approximately 54% of IPO shares (excluding anchor investors) within a week of allotment. Retail investors sold 42.7% of their shares, while NIIs sold as much as 63.3% by value. Highlights how quickly many investors flip IPO shares for listing gains.
- The Urban Company IPO in 2025 attracted overwhelming demand, with investors bidding 103.6 times the total issue. Retail investors subscribed nearly 39 times their portion, NIIs placed bids 74 times, and QIBs went as high as 140 times.
These examples illustrate the intense nature of retail bidding. You must plan well.
Key Rules, Charges, and Mistakes to Avoid
- Minimum Investment: You must buy at least one lot. See lot size in RHP.
- Charges & Fees: Usually, brokerage or bank fees are small. ASBA doesn’t charge much. However, there may be fees associated with UPI or transactions.
- Taxation & Gains: Selling shares within one year attracts Short Term Capital Gains (STCG) tax. If you hold for more than one year, gains may be taxed differently under Long Term Capital Gains (LTCG) rules. Remember, not all gains are guaranteed.
- Mistakes:
• Not reading the RHP carefully (price band, lot, risk).
• Applying without thinking of oversubscription means you may get nothing.
• Missing bank or UPI mandates; wrong application details.
• Getting tempted by hype alone.
IPO vs IPO Application vs Allotment
- IPO bidding vs IPO application: Bidding is the act of placing your bid at a price band. The application is filling out forms or an online process. They are part of the same process.
- How IPO allotment works: If the IPO is oversubscribed, retail bids are allocated proportionally, or via lottery. Check category quotas.
Retail quota bidding strategy: Some IPOs reserve 35% of shares for retail investors. If you bid early (on Day 1 or 2) and bid at the upper price band (if allowed), your chances may be better.
Why IPOs Can Be Good for Beginners
- Chance to invest in companies early.
- Potential listing gains if IPO performs well. For example, a strong subscription often correlates with a price jump on listing day.
Low entry barrier: Many IPOs allow small investments (in one lot).
Conclusion
The IPO bidding process explained clearly matters for investors making their first bid. IPOs offer good opportunities but also risks. For first-time investors, understanding the steps (from reading the RHP to allotment), paying attention to charges, avoiding common mistakes, and utilizing UPI or ASBA effectively all help increase the chances of success.
At Equentis Investech, we guide you through every step. We help you pick IPOs wisely, fill applications correctly, and understand allotment rules. With the proper knowledge, IPOs can become a strong part of your investment journey.
