What is an IPO?

An IPO — Initial Public Offering — is the moment a private company sells its shares to the public for the first time and lists on a stock exchange. Before the IPO, only founders and early investors own it. After it, anyone can.

Why companies do it

Two main reasons: to raise money for the business (a "fresh issue"), or to let early investors sell some of their stake (an "offer for sale", or OFS). Many IPOs are a mix of both. A pure fresh issue means all the money goes into the company; an OFS means some goes to existing shareholders cashing out.

How the process works in India

1. The company files a DRHP (Draft Red Herring Prospectus) with SEBI, disclosing its finances and risks.
2. After SEBI's review, it sets a price band (e.g. ₹98–₹103) and lot size (the minimum number of shares you can apply for).
3. The IPO opens for 3 days. You apply through your broker using ASBA, where the money is only blocked in your bank account, not debited, until shares are allotted.
4. If demand exceeds supply, shares are allotted by lottery. You either get a full lot or nothing.
5. The stock lists a few days later — its first trading price can be above or below the issue price.

Mainboard vs SME

Big, established companies list on the mainboard. Smaller companies list on the SME platforms (NSE Emerge, BSE SME) — these have larger minimum lots, thinner liquidity, and higher risk. Know which one you're applying to.

Before you apply

Read the prospectus, not the hype. Check what the money is for, whether it's fresh issue or OFS, the valuation versus listed peers, and the risks the company itself lists. Grey-market premium (GMP) is rumour, not research — see What is IPO GMP?.

Want to see what's open right now? Our live IPO alerts track the details so you don't have to dig.