IPO Process in India

Understanding the IPO Process in India

An Initial Public Offering (IPO) is the process through which a private company offers its shares to the public for the first time and gets listed on a recognised stock exchange in India.

In India, the IPO process is highly regulated to protect investors and ensure transparency. It involves multiple stages from internal preparation and regulatory filings to pricing, subscription, allotment, and listing.

This guide explains the IPO process in clear, practical terms, helping both business owners and retail investors understand how IPOs work in India and what to expect at each stage.

Who This Guide Is For

The IPO process involves different considerations for different participants. This guide is structured to address the needs of both business owners and investors, without mixing or overcomplicating information.

For Business Owners & Promoters

This guide helps if you are:

Evaluating whether your company is ready for an SME or Mainboard IPO
Trying to understand the steps, timelines, and regulatory requirements
Looking for clarity on Pre-IPO preparation, filings, and approvals
Planning capital raising, listing, or long-term public market growth

For Retail Investors

This guide helps if you want to:

Understand how IPOs work in India
Know when and how to apply for an IPO
Learn about subscription timelines, allotment, and listing
Decode IPO terms such as DRHP, RHP, ASBA, cut-off price, and lot size

Pre-IPO Phase: Internal Preparation (Before Any SEBI Filing)

The IPO process in India begins well before any documents are submitted to SEBI. This phase focuses on preparing the company internally so it is legally, financially, and structurally ready for public markets.

Key Steps in the Pre-IPO Phase

Conversion to a Public Limited Company

A private limited company must be converted into a public limited company before initiating the IPO process.

Board and Shareholder Approvals

Formal resolutions are passed to approve the IPO, including decisions on a fresh issue, offer for sale (OFS), or a combination of both.

Corporate and Capital Structure Review

Shareholding, promoter stakes, and group structures are reviewed and streamlined to meet regulatory expectations.

Appointment of Key Advisors

Companies appoint professional intermediaries, including:

Merchant Banker (Book Running Lead Manager – BRLM)
Legal advisors
Statutory auditors
Registrar to the issue

Most IPO delays and rejections happen due to gaps in this early preparation stage — not during SEBI review. (Highlight in anyway)

Filing Stage: DRHP, Confidential Filing & SEBI Observations

Once internal preparation is complete, the company formally enters the regulatory phase of the IPO process by submitting its disclosures to the market regulator.

Draft Red Herring Prospectus (DRHP)

The DRHP is the preliminary offer document filed with SEBI. It contains detailed information about the company, its business model, financials, promoters, risk factors, and the proposed IPO structure. At this stage, the issue price and size are not final.

Confidential Pre-Filing (An Emerging Practice in 2026)

Companies may choose to file the DRHP confidentially with SEBI. This allows sensitive business information to remain private while the company evaluates market conditions and regulatory feedback before making the IPO public.

SEBI Review and Observations

SEBI examines the DRHP to ensure that all material information is disclosed clearly and accurately. Importantly, SEBI does not approve or recommend IPOs; it issues observations that companies must address before proceeding.

Key takeaway

SEBI’s role is to ensure transparency and investor protection not to assess the investment merits of the IPO.

Launch & Marketing Phase: Pricing, Roadshows & Demand

After SEBI observations are addressed, the company prepares to take the IPO to the market. This phase focuses on building investor awareness and determining the issue price through market demand.

Red Herring Prospectus (RHP)

The RHP is the final offer document filed with the Registrar of Companies (ROC). It includes updated disclosures and confirms that the issue is ready to open for subscription.

Investor Roadshows

Company management, along with the merchant banker, meets institutional investors to explain the business model, growth plans, and financial performance. These interactions help gauge demand and investor interest.

Price Discovery Methods

Book Building: Investors bid within a price band, and the final issue price is determined based on demand.
Fixed Price Issue: The issue price is decided in advance and disclosed upfront.

Grey Market Premium (GMP)

GMP refers to the unofficial price at which IPO shares trade before listing. While widely tracked by retail investors, it is unregulated and not an official indicator of IPO performance.

Key takeaway

IPO pricing is driven by investor demand and market conditions, not by the company alone.

Subscription & Listing Timeline: The T+3 Rule Explained

In India, IPOs follow a mandatory T+3 listing timeline, which ensures faster allotment, refunds, and listing for investors.

IPO Subscription Window

IPOs are typically open for 3 working days
Investors apply through the ASBA process, where funds remain blocked in the bank account until allotment

Role of Anchor Investors

Before the IPO opens for public subscription, a portion of the issue may be allotted to Anchor Investors (qualified institutional investors).

50% of anchor shares are locked in for 30 days
The remaining 50% are locked in for 90 days

The T+3 Timeline

T-Day: IPO subscription closes
T+1: Basis of allotment is finalised
T+2: Refunds initiated / shares credited to demat accounts
T+3: Shares are listed and trading begins on the exchange

Key takeaway

India’s T+3 framework ensures quicker access to funds and faster market participation for investors.

Mainboard IPO vs SME IPO: Key Differences Explained

In India, companies can list either on the Mainboard or the SME platforms of stock exchanges. The choice depends on company size, capital requirements, and regulatory readiness.

Key Differences at a Glance

Feature	Mainboard IPO	SME IPO
Listing Platform	NSE / BSE	NSE Emerge / BSE SME
Post-Issue Capital	Minimum ₹10 crore	Not mandatory (issue size up to ₹25 crore)
Company Size	Larger, mature companies	Small and medium enterprises
Minimum Application Size	~₹14,000–₹15,000	Usually ₹1,00,000 or higher
Investor Participation	Retail, HNIs & institutions	Mostly HNIs & informed investors
Compliance Burden	Higher	Relatively lighter

Key takeaway

SME IPOs are designed to help growing businesses access capital with proportionate regulatory requirements.

How Investors Should Read an IPO Prospectus

The IPO prospectus is the primary document that explains the company, the risks involved, and how the funds will be used. Understanding a few key sections can help investors make more informed decisions.

Key Sections to Focus On

Objects of the Issue
Understand how the company plans to use the IPO proceeds for growth, expansion, or debt reduction.
Risk Factors
Review business, industry, and legal risks disclosed by the company.
Promoter & Management Background
Check the experience, track record, and shareholding of promoters and key management.
Financial Performance
Look at revenue trends, profitability, and cash flows over recent years.
Litigation & Regulatory Disclosures
Identify any ongoing legal or regulatory matters that could impact operations.

Common IPO Terms Explained

IPO-related terms can be confusing for first-time investors and promoters. Below are simple explanations of commonly used IPO terms in India.

Key IPO Terminology

ASBA (Application Supported by Blocked Amount)
A process where the IPO application amount remains blocked in the bank account until allotment.
Cut-off Price
The final price at which shares are allotted in a book-built IPO.
Lot Size
The minimum number of shares an investor must apply for in an IPO.
Fresh Issue
New shares issued by the company to raise capital.
Offer for Sale (OFS)
Shares sold by existing shareholders, where proceeds do not go to the company.
QIB / HNI / Retail Investors
Investor categories defined by SEBI based on investment size and eligibility.

How This IPO Process Connects to Expert Guidance

While the IPO process in India follows a defined regulatory framework, the experience can vary widely depending on a company’s preparedness, structuring, and execution discipline.

Many businesses seek expert support to:

Assess IPO readiness before entering the filing stage
Navigate regulatory requirements and documentation accurately
Coordinate advisors and timelines efficiently
Plan for post-listing compliance and long-term growth

For businesses exploring structured guidance, the IPO process typically connects with:

Pre-IPO Advisory — to prepare the company before filing
SME IPO Execution — to manage regulatory and market-facing stages
Business Transformation — to support post-listing growth and governance

FAQs on the IPO Process in India (2026)

1. How long does the IPO process take in India?

The IPO process typically takes 12–24 months, depending on the company’s readiness, regulatory reviews, and market conditions.

2. Does SEBI approve IPOs in India?

No. SEBI does not approve or recommend IPOs. It reviews disclosures and issues observations to ensure transparency and investor protection.

3. What is confidential filing in an IPO?

Confidential filing allows companies to submit IPO documents privately to SEBI before making them public, helping protect sensitive information.

4. What is the minimum investment required for an SME IPO?

SME IPOs usually have a higher minimum application size, often around ₹1,00,000 or more, depending on the issue.

5. Is Grey Market Premium (GMP) a reliable indicator?

GMP is an unofficial and unregulated indicator. It reflects market sentiment but should not be the sole basis for investment decisions.

6. What happens if an IPO is undersubscribed?

If an IPO does not receive sufficient subscription, it may be withdrawn or restructured, and application funds are returned to investors.