There are basically two ways from which you can buy shares you can either apply for them from the Primary Market or you can buy them from the Secondary Market also called the Stock Market. In the primary market, the companies sell their shares for the first time to the public whereas in secondary market shares are bought and sold many times between buyers and sellers.

What is IPO?

Before learning how to apply and earn from IPO we have to understand what is IPO.
IPO means Initial Public Offering when the company issues shares for the first time it is called IPO. Before issuing shares to the public the company is called a Private Company and they use PVT. LTD. after their name which indicates that company is Private Company but after issuing shares to the public the company becomes Public Company so they use PUBLIC LTD. after their name but the use of the PUBLIC word is not necessary so companies use only LTD. word after their name which indicates that company is a Public Company.

Reasons for IPO

Why a private company became a public company? why they need huge funds? The answer is, there are so many reasons for which company needs funds such as for expansion of business, diversification of business, repay old debts, investing in new projects, investing more funds in an existing project, releasing early investors or promoters who invested early in the formation of the company, increase public visibility and making brand name popular.

when a company requires funds then it can arrange it from many resources like from retained earnings, borrow from banks, a borrow from finance institutions, private arrangement, filing for  IPO, etc..but What makes the company go for IPO?

If a company takes loan from bank or private financers they have to pay interest on loan and repay the principal amount as well and also some collateral has to be given but in issuing shares company don't have to pay interest and repay the principal amount and no collateral is also not required but they lose some share in the company which is not in case of loan. A company who desires to go IPO must appoint a merchant banker, who will assist the company with the process of IPO.

Investors point of view

 But if we look from the side of investors IPO is a very good opportunity for short gains. In the IPO shares are issued at a lower price and are listed at a usually higher price but it depends on market conditions also and quality of IPO means reasons for which funds are being raised, growth potential, etc..

IPOs are easy to invest for retail investors as it involves amount not more than 15k (it may seem high for some investors) and gains are quite high.

How to apply for an IPO?

You can apply for IPO through Net Banking or UPI ID for both you should have Demat account.

For applying through Net Banking through ASBA(Application Supported by Blocked Amount)

● Login to your Net Banking Account.

● Go to ASBA options and click on IPO/ Apply IPO.

● Select the IPO to be applied.

● Enter your depositary details and bid for the IPO.

● Agree to the terms and conditions by clicking the tick button.

● Click on Apply now button.

For applying through UPI ID you have to approach your stockbroker with whom you have your Demat Account, he will provide you with application form, you have to fill in all the details like no. of shares applying for, bidding price, UPI ID, depository details.etc.. then your broker will bid on your behalf, if you get allotment then allotted shares will be credited to your Demat account which you can sell after listing in any of the stock exchange.

How to select a good IPO?

Not all IPOs are worth investing for retail investors so you should be careful about applying. below are some tips you can consider before investing:-

● Consider expert advice available online if all experts are saying to apply for IPO then one should go for it.

● Consider the Red Herring prospectus of the company which contains details about company background, future plans, financial statements, how they will utilize the amount raised by IPO.

● Should consider the various ratios like Earning Per Share (EPS), Price Earning ratio(P/E), Price     Book ratio(P/B), Return on Net Worth ratio(RONW), etc..

● Retail investors should bid at the cut off the price by this way you can increase your chances of getting an allotment of shares whatever may be final allotment price.

● MOST IMPORTANT- Always wait and apply on the third day 2'o clock for an IPO as the subscription figure for the first two days will be available till 1 p.m.. if IPO is over-subscribed it is an indicator of goos IPO.

An IPO or, initial public offering, is the very first sale of stock issued by a company itself to the public. Prior to the issuance of an IPO the company is considered to be private, with a small number of stakeholders made up of early investors who started that company (such as the founders, promoters, angel investors, etc.) they are not required to disclose financial and accounting information in public.

The public, on the other hand, consists of everybody else – any individual or institutional investor/ private placement, offer for sale through issuing houses or stockbroker who was not involved in the initial days of the company and who is interested in buying shares of the company. Until a company’s stock is offered for sale to the public, the public is unable to invest in it. If you wish to invest in any private company you can potentially approach the owners of a private company about investing, but they can't be forced to sell you anything. Public companies, on the other hand, have sold at least a portion of their shares to the public to be traded on any stock exchange. This is why an IPO is also referred to as "GOING PUBLIC."

A private company has some benefits which they get loose once they go for the public. For example, as said its owners do not have to disclose much financial or accounting information about the company, don't have to share profits with shareholders. 

Public companies have many shareholders and are bind to stick to rules and regulations. They must form a group as the board of directors and they must report financial and accounting information every quarter. In INDIA, public companies report to the Securities and Exchange Board of India(SEBI). In other countries, public companies are overseen by governing bodies similar to the SEBI. In addition, public companies must stick to regulations and requirements set by the stock exchanges where their shares are listed. Being on a major stock exchange carries a great amount of prestige. 

Why Have an IPO?

Why go public, then? Going public raises a great amount of money for the company in order to grow and expand. Private companies have many options to raise capital – such as borrowing, finding additional private investors, or by being acquired by another company. But, the IPO option raises the largest sums of money for the company and its early investors without creating any burden on the company.

Being publicly traded also opens many financial doors: Because of the increased observation of analysts and investors, public companies can usually enjoy lower interest rates when they issue debt.

For investors, trading in open markets means liquidity. If you are a shareholder of a private company, it is very difficult to sell your shares, and even more difficult to value your shares, because investors prefer to invest more in public company. A public company trades on a stock market, with ready buyers and sellers and known price and transaction data. The stock market is therefore referred to as the secondary market since investors are buying and selling stock from other public investors and not from the company itself. Public markets and liquidity also makes it possible for a company to implement benefits like employee stock ownership plans (ESOPs), which help to attract top talent. Now let us know about some pros and cons of IPO:

Pros and Cons of an IPO

Pros:

1. A large number of investors to raise capital.
2.  The company gets capital at a lower cost.
3.  Increase the company’s prestige, and public image, which can help the company’s sales and profits.
4.  Public companies can attract and retain better management and skilled employees through liquid equity participation (e.g. ESOPs).
5.  Raises the largest amount of money for the company compared to other options available.

Cons:

• 1. The companies are required to disclose financial, accounting, tax, and other business information in public.
• 2. Significant legal, accounting, and marketing costs, many of which are ongoing increased time, effort and        attention required of management for reporting
• 3. The risk that required funding will not be raised if the market does not accept the IPO price, and sending the stock       price lower right after the offering
• 4. Loss of control and stronger control problems due to new shareholders, who obtain voting rights and can effectively control company decisions via the board of directors.
• 5. Increased risk of legal or regulatory issues, such as private securities class action lawsuits and           shareholder actions 

CAN A COMPANY OFFER IPO MORE THAN ONCE?

Yes, it can but this time it is not called IPO it is called as FPO(Follow-on Public Offer)