IPOs in India: everything you should know

An Initial Public Offering is when a company sells its shares to the public for the first time and then lists them on a stock exchange (NSE and/or BSE). Before the IPO, only founders, employees and private investors own the company; after listing, anyone can buy and sell its shares in the market.

Mainboard IPOs are larger companies listing on the main NSE/BSE markets, with fuller disclosure rules and a small minimum investment (1 lot, usually about ₹15,000).

SME IPOs are small and medium enterprises listing on NSE Emerge or BSE SME. Disclosure rules are lighter, issues are small, shares trade in big lots, trading can be thin, and individuals must apply for at least 2 lots (above ₹2 lakh). They can list with big gains but carry noticeably higher risk. SMEs can later migrate to the mainboard.

• A PAN card.
• A demat account (with any broker) where the shares will be credited.
• A bank account in your own name, with UPI or net banking, to block the money.

Any resident individual with the above, as well as HUFs, companies, institutions and NRIs (NRIs apply through their NRE/NRO-linked accounts; check with your broker, as UPI support for NRIs varies). Each application is identified by the PAN of the first demat account holder.

The price band is the range within which you can bid, e.g. ₹258–272. The final issue price is set after bidding, almost always at the top of the band.

The lot size is the minimum number of shares per bid; you apply in multiples of it.

Bidding at cut-off means “I’ll pay whatever the final price is”. Only retail investors (and employee / shareholder quotas) can bid at cut-off, and it’s what most retail investors should do: a bid below the final price is simply not allotted. The amount blocked is at the upper end of the band; any difference is released.

1. Open your broker app (Zerodha, Upstox, Groww, Angel One…) or your bank’s net banking.
2. Pick the IPO, your category (usually Individual/Retail), number of lots and tick “cut-off”.
3. Enter your own UPI ID and submit. (Through net banking, the bank blocks the money directly: no UPI step.)
4. Approve the UPI mandate in your UPI app (GPay, PhonePe, your bank app…). The request can take a few minutes to hours to arrive. Your application is only valid once the mandate is accepted.

ASBA (Application Supported by Blocked Amount) means your money is blocked, not debited. It stays in your account (and keeps earning savings interest) until allotment. If you get shares, only the allotted amount is debited; the rest is unblocked by T+2. With UPI, you authorise the block by accepting a mandate; UPI applications are allowed up to ₹5 lakh.

Bids are accepted from 10 AM to 5 PM on each bidding day (SME issues may close earlier, often 4 PM, on the last day). The UPI mandate must be approved by 5 PM on the closing day, or the application is rejected. Apply at least a day early: brokers and banks get congested on the last afternoon.

Only one application per PAN per IPO counts; extra applications with the same PAN, even through different brokers, are rejected. Family members can each apply with their own PAN, demat account and their own UPI ID: an application paid from someone else’s bank account or UPI is rejected.

Yes, until bidding closes. Most broker apps let you modify the bid or cancel it; cancelling releases the blocked amount. Some brokers also offer “pre-apply” a day or two before the issue opens: your bid is sent on day one.

For retail investors in an oversubscribed issue, allotment is a computerised lottery: the aim is to give the minimum 1 lot to as many applicants as possible, so applying for more lots doesn’t improve your chances. Since 2022 the sNII/bNII categories work similarly, on the minimum application size for that category. QIB allocation is proportionate, at the company’s discretion for anchors.

• Apply for 1 lot at cut-off in the retail category (more lots don’t raise retail odds).
• Apply from each eligible family member’s own PAN and demat account, each paying from their own bank or UPI.
• If you hold shares of a listed parent company, the shareholder quota can add a second chance.
• Apply early and make sure the UPI mandate is approved: a surprising number of bids fail on this step.

Allotment is finalised on T+1, usually by the evening. Check on the registrar’s website (KFin Technologies, MUFG Intime / Link Intime, Bigshare, Skyline, Cameo, Purva, Maashitla…) or on the BSE/NSE application-status pages, with your PAN or application number. On this site, every closed IPO’s page has an Allotment box with the right registrar link. Your broker app also updates, and the bank block is released if you didn’t get shares.

The blocked amount is released to your account by T+2. Nothing is charged.

A mainboard issue needs at least 90% of the fresh issue subscribed. If it falls short, the IPO fails and all blocked money is released. Companies sometimes extend the bidding period or revise the price band instead.

Since December 2023, SEBI requires IPOs to list within 3 working days of closing (T). Allotment is on T+1, shares reach your demat and refunds are released on T+2, and the shares list on T+3. Holidays push these dates.

On listing day there’s a special pre-open session (roughly 9:00–10:00 AM) where buy and sell orders are collected and a single opening price is discovered. Normal trading starts at 10 AM. That opening price is the “listing price”; the gain over the issue price is the “listing gain”. On NSE Emerge (SME) the opening price is capped at 90% above the issue price.

That’s your decision. Some investors book listing gains; others hold for the long term if they believe in the business. Look at the company’s fundamentals and valuation, not just the listing pop. This site’s Listed tab shows how every IPO since 2023 performed at listing and since.

Anchors are large institutions allotted shares a day before the IPO opens, at the issue price. Half their shares are locked in for 30 days and half for 90 days after allotment. Selling pressure is sometimes watched around the day those lock-ins end. Promoters also have lock-ins on their post-IPO holdings.

The DRHP (draft red herring prospectus) is filed with SEBI months before the IPO; the RHP is the final document with the price band. Both are on the NSE/BSE and SEBI websites (and linked from each IPO’s page here). Worth reading:

• Objects of the issue: what the money will be used for.
• Financial statements: revenue, profit, debt and cash flow trends.
• Risk factors and pending litigation.
• Basis for issue price: EPS, P/E, return on net worth and the peer comparison.
• Promoters, their background and how much they are selling.

A fresh issue creates new shares; the money goes to the company for growth or repaying debt. An offer for sale is existing shareholders (promoters, private-equity funds) selling their shares; that money goes to them, not the company. Many IPOs mix both. A large OFS isn’t bad in itself, but it’s worth knowing who is selling and why.

• Revenue and profit growth over the last 3 years, and whether profits are consistent.
• Return on equity / RoNW: above about 15% is generally healthy.
• Debt to equity: lower is safer.
• P/E at the upper band compared with listed peers in the same sector.
• Subscription, especially QIB demand, as a signal from informed investors.

Each IPO gets a data-based score out of 10 from 16 factors in four groups: demand & sentiment, company fundamentals, valuation & ownership, and issue & market. Open any IPO to see every factor explained. It’s a way to organise the data, not a recommendation: it can’t judge the business itself or compare valuation with sector peers.

The grey market premium is the unofficial premium at which dealers trade an IPO’s shares before listing. A GMP of ₹50 on a ₹200 issue suggests the market expects a listing around ₹250. It’s quoted by trackers and changes daily.

It’s a sentiment gauge, not a promise. It usually points the right way for strongly demanded issues, but the actual listing often lands well above or below it, and it can swing sharply in the last few days before listing. The Listed tab has a live “How accurate was GMP?” panel comparing the final GMP with the real listing for every IPO since 2023.

Other grey-market deals: kostak is a fixed amount paid for an application regardless of allotment; subject-to-sauda is a price paid only if the application gets allotment. The grey market is unofficial and unregulated, deals aren’t legally enforceable, and SEBI doesn’t recognise it. Treat it as information only.

For listed equity shares, under the rules effective from 23 July 2024:

• Sold within 12 months (including listing-day sales): short-term capital gains, taxed at 20%.
• Held over 12 months: long-term capital gains, taxed at 12.5% on gains above ₹1.25 lakh a year.

Plus cess, and STT on the sale. Losses can be set off as per income-tax rules. Tax rules change with budgets: check the current rules or a tax adviser.

• Only apply through your own broker or bank. Nobody can “guarantee allotment”, for any fee.
• Never share your demat login, OTP or UPI PIN. Approve only mandates for applications you made.
• Beware of WhatsApp/Telegram groups promising “institutional” or “pre-IPO” allotments, and of fake trading apps.
• Check a company’s filings on the SEBI, NSE or BSE websites.

No. Many IPOs list below their issue price, and some fall a long way after listing. Heavy subscription and a high GMP improve the odds of a good listing but guarantee nothing. Only invest money you can afford to have tied up or lose, and read the risk factors.