IPO Subscription

IPO subscription is a very simple concept for every stock market investor. It shows the total demand for the shares of a company. A company brings an IPO to raise money from the public. The IPO subscription data tells us how many people want to buy those shares. This data shows the total number of applications and shares requested by investors. You can see IPO subscription status live during the bidding period. It is available on the websites of BSE and NSE.

IPO Subscription Types, Process, Charges, Time, and Calculator

There are two main types of IPO subscription.

The IPO Subscription Process

The process of IPO subscription involves several steps. You start by placing a bid through your bank or stock broker.

• You submit your online application through platforms like Zerodha or ICICI Bank. Your broker or bank sends this data to the stock exchange. The stock exchange collects all bids from different brokers.
• The exchange shows the live demand on its website between 10 AM and 5 PM.
• The exchange sends the final data to the Registrar (RTA) after the closing date. The Registrar checks the applications and decides the allotment of shares.
• The Registrar instructs the banks to unblock the money if you do not get shares. You receive the shares in your demat account one day before the listing date.

IPO Bidding Options

When you apply for an IPO, you have to make certain choices. You must decide the number of shares and the price.

• Lot Size: You cannot buy a single share in an IPO. You must apply for a minimum group of shares called a lot.
• Price Band: The company gives a range like Rs 100 to Rs 105. You can bid at any price within this range.
• Cut-off Price: This is the most popular option for retail investors. You select this to tell the exchange that you are willing to pay the final price decided by the company. This increases your chances of getting the allotment.
• UPI Mandate: Most retail investors use the UPI method. You submit your ID and then approve the payment request on your mobile app. The bank blocks the money in your account. The money only leaves your account if you get the shares. You can also opt for an ASBA IPO from net banking.

IPO Subscription Charges and Timing

Investors do not have to pay any fees for subscribing to an IPO. The stock brokers and banks provide this service for free. They get a small commission from the company for processing your application. You only pay brokerage and taxes when you sell the shares in the secondary market.

The IPO window usually stays open for 3 to 10 business days. You can submit your bid online 24 hours a day during this period. However, the bank only uploads your bid to the exchange between 10 AM and 5 PM. Most brokers close the window around 2 PM or 3 PM on the last day. They need this extra time to process your request and send it to the exchange before the 5 PM deadline.

Investors can submit IPO bids anytime during the IPO period. Banks/brokers upload bids to the exchange between 10 AM and 5 PM on the IPO close date only after the UPI mandate is approved.

IPO Subscription Calculator

The calculation of the subscription rate is very easy. You take the total number of shares bid for by investors. You divide this by the total number of shares offered by the company.

Subscription Rate = Total Shares Bid}/{Total Shares Offered}

For example, if the bid is for 4,38,36,954 shares and the offer is for 1,88,30,372 shares, the rate is 2.33x. Most investors check these numbers directly on financial websites like IPO INDEX.

Investor Categories

The stock market has different buckets for different types of investors. The company reserves a specific percentage of shares for each group. You can check the IPO subscription status NSE/BSE data for below categories.

• Retail Individual Investors (RII): This category is for small investors. You belong here if your total investment is less than Rs 2 lakhs. Companies usually reserve 35% of the issue for this group.
• Non-Institutional Investors (NII): This group includes wealthy individuals and companies. They invest more than Rs 2 lakhs. NIIs are further divided into two parts. Small NIIs bid between Rs 2 lakhs and Rs 10 lakhs. Big NIIs bid more than Rs 10 lakhs.
• Qualified Institutional Buyers (QIB): This group includes banks, mutual funds, and insurance companies. They are professional investors with big capital.
• Anchor Investors: These are big QIBs who invest more than Rs 10 crores. They buy shares before the IPO opens for the general public.
• Employee and Shareholder: Some companies reserve a small portion for their own employees or existing shareholders of the parent company.

IPO Subscription Relation with Listing Price and GMP

The IPO subscription status live is a powerful tool for predicting the future price of the stock. A high subscription number shows strong interest from the public.

• A high GMP usually leads to a high subscription rate.
• Investors see the high GMP and feel confident about the profit.
• If the subscription stays low despite a high GMP, it might be a warning sign.
• Both factors together help you decide if you should borrow money to invest in the IPO.