India's SmartestIPO IntelligencePortal

An Initial Public Offering (IPO) is the process through which a private company offers its shares to the general public for the first time on a stock exchange. This allows the company to raise capital from public investors, and gives the public an opportunity to own a piece of the company. After the IPO, the company's shares are traded on stock exchanges like NSE and BSE.

You can apply for an IPO through three methods: (1) ASBA (Application Supported by Blocked Amount) via your bank's net banking — this is the most common method where funds are blocked in your bank until allotment; (2) Through your stockbroker's trading platform like Zerodha Kite, Upstox, or Angel One using UPI; (3) Through your broker's UPI-based IPO application. You need a valid PAN card, Demat account, and bank account to apply. Applications above ₹5 lakh must use ASBA; below ₹5 lakh can use UPI.

GMP (Grey Market Premium) is the premium price at which IPO shares are traded informally before the official listing date. It reflects the unofficial market's estimate of how much above (or below) the issue price the shares will list. For example, if an IPO has an issue price of ₹500 and a GMP of ₹100, the grey market expects listing around ₹600. GMP is not regulated and can be misleading — it should be used only as one of many indicators when making investment decisions.

Kostak (or Kostak Rate) is the price at which an IPO application is bought or sold in the grey market before allotment — regardless of whether the application gets allotted or not. For example, if the Kostak for an IPO is ₹2,000, an investor can sell their entire IPO application for ₹2,000 to a buyer, regardless of allotment outcome. The buyer takes on the allotment risk. Kostak trading is unregulated and carries significant risk.

"Subject to Sauda" (also called "Sub-To") is a grey market transaction where an investor sells their IPO allocation at a premium that is conditional on getting allotment. Unlike Kostak (where the seller gets paid regardless of allotment), in Subject to Sauda, the transaction only executes if the seller receives allotment. The buyer pays a premium per share only for the shares that are allotted.

IPO allotment is done by the registrar appointed by the company. For oversubscribed IPOs in the retail category (RII), a computerized lottery is used — each applicant applying for the minimum lot has an equal chance of getting one lot. Applications for multiple lots don't increase your probability in the retail category. For the NII (HNI) category, allotment is proportional. QIB allotment is discretionary by the company.