IPO basics

What Is an IPO? How Public Issues Work in India

What an initial public offering is, why Indian companies go public, who regulates the process, and what happens between filing and listing.

By Niva Market Watch Editorial · Published 30 Sep 2026

An initial public offering (IPO) is the first time a company offers its shares to the public and applies to have them traded on a stock exchange. In India that means listing on the National Stock Exchange (NSE), BSE, or their platforms for small and medium enterprises. After listing, anyone with a demat and trading account can buy or sell the shares through a broker.

This guide explains why companies go public, who is involved, how an Indian IPO moves from filing to listing, and what an IPO does and does not tell you.

Why companies go public

A company usually lists for one or more of these reasons:

To raise money for the business. New shares are issued and the proceeds go to the company — for example to build a plant, repay loans or fund working capital. This is a fresh issue.
To let existing shareholders sell. Founders, private-equity funds or early investors sell part of their holding to the public. This is an offer for sale (OFS), and the company itself receives none of that money.
To create a market for its shares. Listed shares can be valued daily and used for acquisitions or employee stock options.
Visibility and credibility with customers, lenders and partners, in exchange for ongoing disclosure obligations.

Many Indian IPOs combine a fresh issue with an OFS. The split is disclosed in the offer document and matters: an issue that is mostly OFS is primarily an exit for existing investors.

Who is involved

Participant	Role
The company (issuer)	Decides to list, prepares disclosures, and is responsible for the accuracy of the offer document.
SEBI	The Securities and Exchange Board of India regulates public issues under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 — often called the ICDR Regulations. For mainboard issues it reviews the draft offer document and issues observations.
Book-running lead managers	Merchant bankers who run the issue: due diligence, drafting the offer document, marketing to investors and managing the book of bids.
Registrar to the issue	Processes applications, finalises the basis of allotment with the exchange and handles refunds. Examples include KFin Technologies, MUFG Intime (formerly Link Intime) and Bigshare Services.
Stock exchanges	NSE and BSE run the bidding platform and, after allotment, list the shares.
Banks and brokers	Accept applications. Money is blocked in the applicant's bank account through ASBA or UPI rather than paid upfront.

How an IPO moves from filing to listing

Draft offer document. The company files a Draft Red Herring Prospectus (DRHP) with SEBI and the exchanges. It is published for public comments. See DRHP vs RHP.
SEBI observations. SEBI reviews the DRHP and issues observations that the company must address before launching.
Red Herring Prospectus. Shortly before the issue, the company files the RHP with the Registrar of Companies. It contains almost everything except the final price.
Price band and anchor book. The price band is announced a few days before opening. Large institutions can bid as anchor investors one working day before the public issue opens.
Bidding. The issue is open for at least three working days. Investors bid through their broker or bank, and subscription figures are published during bidding.
Pricing and allotment. After bidding closes, the final price is fixed within the band and the registrar finalises the basis of allotment.
Refunds, credit and listing. Unallotted money is unblocked, allotted shares are credited to demat accounts, and the shares list. Under SEBI's T+3 rule this all happens within three working days of the issue closing — see the IPO timeline.

Mainboard and SME IPOs

India has two IPO tracks. Mainboard issues list on the main NSE and BSE platforms and go through SEBI review. SME issues list on BSE SME or NSE Emerge, have their offer documents vetted by the exchange, and usually involve smaller companies, larger minimum applications and thinner trading. The differences are covered in Mainboard vs SME IPOs.

What you need to apply

A demat account (to hold the shares) and a trading account, usually opened together with a broker.
A bank account that supports ASBA, or a UPI ID linked to your bank account.
Your PAN, which must match the demat account.

The mechanics are covered step by step in How to apply for an IPO using UPI or ASBA.

Common misconceptions

“Applying guarantees shares.” It does not. When an issue is oversubscribed, retail and small non-institutional allotments are decided by a lottery.
“IPOs always list at a profit.” Many list below the issue price or fall afterwards. The listing price is set by the market on listing day; see how the listing price is determined.
“The grey market premium tells you the listing price.” GMP is an unofficial quote from an unregulated market. It changes quickly and can be far off — read why GMP can be unreliable.
“SEBI approval means SEBI endorses the company.” SEBI's review is about disclosure, not about whether the business or price is good. The offer document itself states this.

Where to go next

If you are looking at a specific issue, start with its offer document: what the DRHP and RHP contain and how to read IPO financials. To see which IPOs are open now, visit the IPO list.

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