How to Apply for IPO in Nepal 2026: Step-by-Step Guide, Allotment Tips & Mistakes to Avoid

Part 3 of 5 in the Nepal Share Market Academy: Zero to Expert series. If you have not opened your accounts yet, read Part 2: How to Open Demat, Meroshare & TMS Account in Nepal first.

Ram's First Big Moment

Ram's Demat account is ready, Meroshare is working, and his bank is linked. One morning a colleague shows him a newspaper notice: "IPO opens today." Everyone in the office seems excited. Some say, "Apply for everything, it is free money." Others say, "IPOs are a lottery, do not waste your time."

Who is right? Neither fully. An IPO can be a good, low-cost way to start, but it is not guaranteed profit and not guaranteed allotment. In this guide you will learn exactly what an IPO is, how to apply on Meroshare step by step, how allotment works, how to read a prospectus like a beginner-turned-analyst, and what mistakes to avoid. Every term is explained.

What Is an IPO?

IPO stands for Initial Public Offering. It is the first time a company sells its shares to the general public. Before the IPO, the company is owned by a small group such as founders and a few investors. After the IPO, ordinary people like you can become part-owners, and the company's shares are listed on NEPSE for trading.

In Nepal, IPO shares usually have a face value of Rs. 100, and many IPOs are offered at that price. Some offers are made at a higher price, called a premium, because the company is considered more valuable.

Why it matters: The IPO price is the entry price. Everything after depends on how the market values the company once it starts trading. A cheap price does not automatically mean a good company.

IPO vs FPO vs Right Share

IPO: The first-ever public sale of a company's shares.
FPO (Further Public Offering): A company that is already listed sells more shares to the public to raise more money.
Right share: A company offers new shares only to its existing shareholders, as covered in Part 1.

Who Is Involved in an IPO?

The company (issuer): The business that wants to raise money.
SEBON: The regulator that must approve the offering.
Issue manager: A licensed merchant bank that prepares the offer and handles the process. Its name appears in every IPO notice.
Credit rating agency: Gives the company or issue a rating that tells you about its risk.
Collecting banks: The banks where your application money is blocked.
CDSC and Meroshare: Record the applications and shares electronically.

How an IPO Works: The Timeline

Approval: SEBON approves the prospectus and the issue.
Announcement: The issue manager publishes the opening notice, including the price, the number of shares, and the dates.
Application period: The IPO stays open for a limited number of days. You apply during this window only.
Closing and checking: The issue closes and applications are verified.
Allotment: If more people apply than there are shares, a lottery is held to decide who gets shares.
Result: You can check whether you got shares, and your blocked money is released if you did not.
Credit to Demat and listing: Allotted shares are credited to your Demat account, and the company is listed on NEPSE, after which the shares can be traded.

Who Can Apply, and How Many Shares?

Every IPO notice states the rules, and these can differ between issues. Common points:

Minimum application: Generally 10 units (kitta).
Maximum application: Set in the notice, and it varies by issue.
Reserved portions: A part of the offering is often kept for specific groups such as employees, mutual funds, Nepali citizens working abroad, or local residents near a project. The remainder goes to the general public.
One application per Demat account per issue. Your family members can apply from their own accounts.

Why it matters: Always read the notice to confirm which category you fall in. Applying in the wrong category can lead to rejection.

Step-by-Step: How to Apply for an IPO on Meroshare

Before you start, check that your bank balance is at least the total application amount (units multiplied by the issue price), that your Demat and Meroshare renewals are paid, and that your bank is linked with the correct details.

Log in to the official Meroshare website or app with your DP, username and password.
Open the application section called My ASBA.
Find open issues. The list of IPOs currently open will appear. Check that the company, type of share (ordinary, for example) and category match your intention.
Click Apply next to the issue.
Fill in the form: select your bank, check your account number, confirm your CRN, enter the number of units, and tick the declaration box.
Enter your transaction PIN and submit.
Check the status. Return to the application report. A successful application usually shows as submitted or verified, and the amount is blocked in your bank.

Button names can change when CDSC updates the system, but the order stays about the same. Take a screenshot or note of your application for your own record.

Safety reminder: Only enter your transaction PIN on the official Meroshare site or app. Nobody should ever ask you to share it.

How Does Allotment Work?

This is the part that confuses people most, so here is a simple example.

Suppose a company offers 5,00,000 units to the general public, and the minimum application is 10 units. That means the company can serve about 50,000 applicants at 10 units each.

If only 30,000 people apply, the issue is undersubscribed. Everyone gets what they applied for, and the unsold portion is handled according to the issue rules.
If 5,00,000 people apply, the issue is oversubscribed. Only about 50,000 of them can be given shares, so a computer lottery picks them. That is roughly a 1-in-10 chance.

When an issue is heavily oversubscribed, the lottery usually gives the minimum number of units to the selected applicants. That is why many people who apply for 10 units and for more units end up with the same small allotment. In such cases, applying for a very large number of units does not improve your chances and only blocks more of your money.

Why it matters: Allotment is mostly about luck when the issue is popular. This is why smart investors do not depend on IPOs alone, and why the secondary market, covered in Part 4, matters.

How to Check Your Result

After the lottery, you can check your allotment result using your BOID on the official CDSC result page, through Meroshare, or on the issue manager's website. Always use official sources. If you receive shares, they appear in your Demat account and your bank deducts the amount. If you do not, the blocked amount is released within the stated time.

How to Read a Prospectus Like a Beginner Who Wants to Become an Expert

The prospectus is the official document that describes the company and the offer. It can look long and heavy, but you can find most of what matters in a few sections.

What does the company do? Understand how it makes money. If you cannot explain it in two sentences, be careful.
Who runs it? Read about the promoters (founders) and the board. Experience and reputation matter.
Why is it raising money? Look for the "use of proceeds." Money for real expansion is healthier than money to repay old loans without growth.
Financial strength: Check profit trends, EPS (earnings per share), and net worth. For banks and finance companies, also check the NPL (non-performing loans) ratio, a measure of loan quality.
Price versus similar companies: Compare the offer price with the market price and valuation of similar listed companies. A big premium needs a strong reason.
Credit rating: A higher rating generally signals lower risk, though it is not a guarantee.
Risk factors: Companies must list the risks. Read them. This is the most honest part of the document.
Lock-in: Check which shareholders cannot sell for a period. Lock-in means shares that are not allowed to be sold for a set time, which protects the market from a sudden flood of selling by insiders.

Why it matters: Reading even these few sections puts you ahead of many applicants who apply only because "everyone is applying."

A Simple IPO Strategy for Beginners

Apply regularly, but selectively. Applying costs very little because your money is only blocked. Still, prefer companies you understand and consider reasonable.
Treat IPO as one part of your plan, not your whole plan.
Decide in advance whether you will hold or sell. Holding good companies for dividends and growth is different from selling quickly after listing. Know your goal before you apply.
Do not borrow money to apply. The interest cost and pressure can ruin the benefit.
Use only your own and your family members' real accounts. Do not give your Demat, PIN or bank details to "agents" who promise guaranteed allotment. This is a common scam.
Keep the amount blocked in mind. If you apply for many IPOs together, your bank balance may be tied up and unavailable for emergencies.

After Allotment: What Happens Next?

Once you receive shares, your Demat account shows them, and after listing on NEPSE they can be bought and sold like any other share. On the first trading days, prices can swing sharply because many people want to sell for quick profit, and others rush to buy out of excitement. The price can go up, but it can also fall below your purchase price.

A listed company also reports its results every quarter. Over time, these results, not the IPO excitement, decide whether your investment grows.

Common IPO Mistakes to Avoid

Applying blindly without reading the notice or prospectus.
Entering a wrong BOID, CRN or unit number and having the application rejected.
Expecting guaranteed listing profit. Some IPOs list at a gain, some at a loss.
Applying for far more units than needed in the hope of better odds. In heavily oversubscribed issues, it usually does not help.
Not having enough balance in the bank on the application day.
Forgetting renewals of Demat and Meroshare, and losing the chance to apply.
Sharing PIN or login with others.
Falling for "sure allotment" offers from strangers.

Your IPO Checklist

Read the issue notice: price, dates, category and unit limits
Skim the prospectus: business, promoters, financials, risks
Check your bank balance and ASBA-enabled account
Confirm Meroshare renewal and CRN
Apply with the correct units and your PIN
Check your result only on official sources
Decide your plan if you receive shares

Terms Explained: Quick Glossary

Term	Simple Meaning	Why It Matters
IPO	A company's first sale of shares to the public	A common entry point for beginners
FPO	A listed company offering more shares to the public	Another way to buy shares at an issue price
Right share	Offer of new shares to existing shareholders	Needs a decision and fresh money
Prospectus	Official document describing the company and the offer	Your main source of facts
Issue manager	Merchant bank that manages the offering	Appears in notices and results
Issue price	Price per share in the offering	Your entry price
Premium	Price above face value	Shows how the company is valued
ASBA	Application where money is blocked, not withdrawn	Keeps your funds safe until allotment
Oversubscribed	More applications than shares available	Allotment depends on a lottery
Undersubscribed	Fewer applications than shares	Applicants usually get all they applied for
Allotment	Giving shares to selected applicants	Decides if you receive shares
Lock-in period	Time during which certain shares cannot be sold	Protects the market from sudden selling
Listing	Start of trading of the share on NEPSE	The point from which you can sell
Credit rating	Independent assessment of risk	A quick indicator of reliability
EPS	Earnings per share	Shows profit for each share
NPL	Share of loans that are not being repaid	Key quality check for banks

Frequently Asked Questions

Is IPO a guaranteed profit in Nepal?
No. Many IPOs have performed well after listing, but nobody can guarantee it. Prices depend on the company and market mood.

How many shares can I apply for?
The minimum is generally 10 units, and the maximum depends on the specific issue. Read the notice for the exact limits.

What is the best time to apply?
Anytime during the open period works. Avoid waiting until the very last hour, because heavy traffic and errors are possible.

Is my money lost if I do not get shares?
No. With ASBA, your money is only blocked, and it is released if you are not allotted shares.

Can I apply for IPO for my family members?
Each person must apply from their own Demat and bank account. Using someone else's account without their knowledge is risky and improper.

Can I sell IPO shares immediately?
You can sell after the shares are credited to your Demat account and the company is listed, unless they are covered by a lock-in.

Do I need a TMS account to apply for an IPO?
No. You need a TMS account only to trade in the daily market. For IPOs, a bank account, Demat and Meroshare are enough.

Should I apply for every IPO?
You may, since applying costs little, but you should still check the company and be comfortable holding it if you are allotted shares.

What's Next?

You now know how to enter the market through the primary door. In Part 4: How to Buy & Sell Shares in Nepal: Fees, Taxes, Capital Gain & WACC, we follow Ram into the daily market, where he places orders, pays costs, and learns how to calculate his real profit.

Disclaimer: This article is for education only and is not financial advice. IPO rules, quotas, fees and procedures differ by issue and change over time, so verify current details with SEBON, CDSC, the issue manager or your DP before acting.

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