How IPO Works in India

An Initial Public Offering is the route a private company uses to sell shares to public investors for the first time. In India, the IPO process is designed to make important business, financial and risk information available before investors apply.

1. DRHP filing and review

The company first appoints merchant bankers and files a Draft Red Herring Prospectus, commonly called the DRHP. This document explains the business model, promoters, financial statements, risk factors, objects of the issue and offer structure. Investors should read the risk section carefully because marketing headlines rarely show the full picture.

2. Price band and bidding window

After review, the company announces the price band, lot size and IPO dates. Retail investors usually apply through broker apps using UPI or through bank ASBA. The amount is blocked in the bank account and is debited only if shares are allotted.

3. Allotment, refund and listing

When bidding closes, the registrar finalizes the basis of allotment. If the retail category is oversubscribed, allotment is usually lottery-based. Successful applicants receive shares in their demat account; unsuccessful applicants get the blocked amount released. The shares then list on NSE or BSE, where market demand decides the opening price.

IPO investor checklist

• Read the DRHP or RHP risk factors before applying.
• Compare valuation with listed peers instead of relying only on GMP.
• Check whether the issue is fresh issue, offer for sale, or both.
• Use the OpenIPO calendar to track open date, close date, allotment date and listing date.