LG Electronics India saw its $1.3 billion issue fully subscribed within six and a half hours, the quickest in 17 years. The response reflects a maturing market and a shift in investor sentiment. Ever wondered how IPO works in India? From eligibility checks and regulatory approvals to pricing and listing, the IPO process in india follows a detailed structure.
What is an IPO & Why Companies Go Public
An Initial Public Offering is a defining moment in any company’s journey. It represents the point when a private firm invites the public to buy its shares for the first time. It converts the organisation into a listed company, giving it access to a wide investor network. Once trading begins, it operates under regulatory supervision, ensuring openness and investor confidence.
Companies choose to go public for several reasons, few are as follows:
- Access to Growth Capital: Listing enables firms to secure fresh funds to scale operations, strengthen balance sheets or finance new ventures.
- Building Market Credibility: Public listing elevates your company’s stature. It signals trust, discipline and long-term intent to investors and partners alike.
- Creating Liquidity: Public markets create flexibility for founders and early investors to convert part of their holdings into cash.
- Expanding Global Reach: Becoming publicly traded enhances brand visibility and helps connect with global markets and strategic partners.
For many businesses, an IPO represents both a growth opportunity and a milestone of maturity.
IPO Process in India (Step-by-Step)
Before understanding how to apply IPO India, it’s important to understand the steps involved in the process.
Step 1 – Company Board Approval & Appointment of Merchant Bankers
The process begins with a formal resolution passed by the board, granting management the authority to invite public investment. It confirms intent, sets direction, and initiates compliance with market regulations.
Once approved, the issuer engages merchant bankers, naming one as the lead. Their judgment guides valuation, due diligence, and coordination with regulatory bodies to ensure procedural accuracy.
- Selecting the Right Partners: Each participant in the issue must be registered with SEBI. The lead banker assesses their capability and suitability before confirmation to maintain efficiency and governance standards.
- Defining the Terms: Contracts are executed to define scope, obligations, and liabilities between the issuer and intermediaries. These legal arrangements secure accountability throughout the issuance.
- Clarifying Roles: When several bankers are involved, their respective functions, covering disclosures, allotment, and investor refunds, are clearly stated in the offer document.
For example, take Meesho, in its IPO preparations announced in 2025, Meesho passed a board resolution to convert into a public company and appointed global and Indian banks such as Kotak Mahindra Capital, Morgan Stanley, JP Morgan, and Citi to manage the offer.
Step 2 – Draft Red Herring Prospectus (DRHP) Preparation
Once the board’s consent is secured, the next phase focuses on drafting the preliminary prospectus. This document presents a complete view of your organisation, its structure, performance, operations, and compliance posture. It allows regulators and investors to assess readiness for listing with clarity and confidence.
The draft leaves out the final price and issue size but must include audited financials, operational details, and legal disclosures. Your lead merchant banker will coordinate the process, ensuring accuracy, compliance, and coherence across every section.
- Financial and Legal Clarity: Audited statements, contractual obligations, and outstanding matters are compiled. Each disclosure is validated to maintain accuracy and uphold regulatory standards.
- Business Story and Risks: Your competitive position, sector outlook, and growth drivers are explained, along with potential vulnerabilities that could influence future performance.
- Filing and Review: After internal checks, the document is submitted to SEBI for review and opened to public feedback. Any queries raised must be addressed before advancing to the final prospectus.
For example, in 2025, Meesho confidentially filed its Draft Red Herring Prospectus with SEBI as part of its plan to go public. The company aims to raise around ₹4,250 crore through this offering, outlining its business model, revenue structure, and operational risks in the draft submission. This filing marked a significant milestone in its preparation for India’s upcoming IPO season.
Step 3 – SEBI Review & Observations
Once the preliminary prospectus reaches the regulator, scrutiny begins. The Securities and Exchange Board of India- SEBI evaluates every aspect of the submission to verify authenticity, adequacy, and alignment with disclosure standards. This assessment ensures that the company is prepared to enter the public domain responsibly.
The process examines the accuracy of financial records, governance structure, and operational information. It also ensures that potential investors receive complete, fair and comprehensible insights before participating in the issue.
- Regulatory Assessment: Each disclosure is reviewed for reliability and relevance. SEBI examines business details, legal confirmations, and risk explanations to detect any discrepancy or omission.
- Stakeholder Input: During the review period, the document remains accessible for public comment. Observations from analysts, investors, or institutions are considered before the regulator issues its response.
- Outcome and Response: Once the evaluation concludes, SEBI releases its remarks or recommendations. Companies must implement these adjustments before moving to the next stage of the listing process.
Step 4 – Roadshows & Investor Presentations
With regulatory approval in place, attention turns to presenting your company to the investment community. The roadshow is where you introduce your business to institutional investors, explain your growth strategy, and gauge market appetite for your upcoming issue. It’s a platform to shape perception, clarify your value, and build credibility before listing.
These sessions, organised by your lead merchant bankers, include detailed presentations, financial overviews, and Q&A interactions. Executives, alongside underwriters, travel across major financial centres or host virtual meetings to engage potential investors. The discussions help refine demand, gather insights, and adjust pricing expectations ahead of the public offer.
Step 5 – Final Red Herring Prospectus (RHP) Filing
After receiving regulatory consent, your focus turns to investor engagement. This is where you introduce your organisation to institutional buyers, outline your market position, and convey the strength of your leadership. The objective is to inspire confidence and generate genuine interest in your upcoming issue.
The team, guided by the lead merchant banker, conducts sessions across major financial centres or hosts them virtually. Each interaction serves as an opportunity to present data, clarify strategy, and build credibility among serious market participants.
- Framing the Narrative: You craft a coherent storyline highlighting growth levers, governance standards, and future direction. The presentation must remain factual and aligned with prior disclosures to ensure consistency and compliance.
- Investor Dialogue: Engagements revolve around detailed discussion. Potential buyers evaluate leadership vision, operational capability, and financial discipline before forming their views on participation.
- Maintaining Compliance: All materials undergo legal vetting to confirm adherence to SEBI rules. Transparency and precision here directly influence investor sentiment and regulatory assurance.
Step 6 – IPO Opens for Subscription
Once pricing is finalised, the offer becomes available to the investing community. This stage tests market appetite and signals how confident participants are in your company’s fundamentals. The subscription period generally stays active for a few working days, in line with SEBI guidelines.
Issuers decide the pricing structure that best suits their capital goals and investor base. The choice lies between a fixed rate or a flexible range guided by demand.
- Fixed Price Approach: The company, with its underwriters, determines a definitive value for each share after evaluating capital needs and market expectations. Applicants know the exact investment required when they submit their bids.
- Book Building IPO India: A price range is established where the ceiling can be up to twenty per cent higher than the floor. Investors then submit bids within this band, indicating both quantity and preferred rate. The process concludes with a cut-off point that balances overall demand with available shares.
Once bidding opens, investors apply through ASBA-enabled bank accounts (Applications Supported by Blocked Amount) or authorised platforms. The issue is divided across categories:
| Category | Full Form | Description | Investment Range |
| QIB | Qualified Institutional Buyer | Comprises major financial entities such as banks, insurance firms, and asset managers that commit substantial funds to public issues. | No defined ceiling |
| NII | Non-Institutional Investor | Covers affluent individuals or corporate applicants investing beyond the retail limit, usually seeking higher allotments. | Above ₹2 lakh |
| RII | Retail Individual Investor | Refers to smaller applicants placing modest bids within the prescribed retail segment. | Up to ₹2 lakh |
Each segment contributes to shaping the final subscription outcome.
The timing of the offer is equally strategic. Companies often choose stable market conditions to attract stronger participation and achieve full subscription. Alongside pricing, the issuer finalises the stock exchange where shares will be listed and completes the necessary applications.
This phase decides market sentiment. The depth of subscription, the strength of bids, and the final pricing together determine how the company will be received when it enters public trading.
Step 7 – Price Discovery / Book Building
After the subscription window closes, attention turns to determining the final offer value. This phase establishes the level at which investor demand aligns with the available shares. It is a process guided by data, not assumption, and reflects genuine market sentiment.
Under the book-building framework, investors submit bids within the prescribed range, each indicating how many shares they want and at what rate. The point where total demand matches the supply becomes the cut-off, forming the basis for share allotment. Those who bid at or above this mark receive allocation, while others are refunded.
- Process Overview: The issuer and lead managers examine all bids received during the period. Patterns of demand, price concentration, and institutional participation are analysed to identify the most balanced outcome. The results are then formalised in the Red Herring Prospectus for public disclosure.
- Regulatory Context: The range is fixed beforehand, with the ceiling not exceeding 20% of the lower threshold. Investors may modify their applications until closure. This ensures flexibility without compromising transparency.
- Post-Determination Steps: Once the final value is confirmed, it becomes the benchmark for allotment. In case of oversubscription, shares are distributed proportionately and excess funds returned to applicants.
Step 8 – Allotment of Shares
Once bidding closes, the process shifts to IPO allotment process India. The registrar, working with the designated stock exchange, determines how shares are allocated among valid applicants. The outcome, called the Basis of Allotment, is finalised and published within a few days of the issue’s closure. Investors can check the results using their PAN, application number, or demat ID on the registrar’s website.
Only valid applications submitted at or above the cut-off price are considered. If the issue is undersubscribed, all valid bidders receive shares in full. If oversubscribed, the allotment follows regulatory norms and investor category rules.
Allocation Rules and Process
- The registrar prepares the Basis of Allotment in coordination with the exchange and the lead manager to ensure fairness.
- Invalid or duplicate applications, or those with incorrect demat details, are rejected.
- If one investor segment is undersubscribed, its quota may be adjusted against another (except for QIBs).
Category-wise Allocation:
- RII: Retail applicants typically receive at least one lot if available. In case of oversubscription, allotment happens through a computerised draw and proportionate distribution.
- NII: The category is split into Small (₹2–10 lakh) and Big (above ₹10 lakh). Minimum bid lots are allotted first, and the remaining shares, if any, are distributed proportionately.
- QIB: Institutions such as banks, insurance firms, and mutual funds receive proportionate allocation. Mutual funds are allotted a defined percentage within the total QIB quota.
- Anchor Investors: Anchors receive up to 60% of the QIB portion. A third of this share is reserved for domestic mutual funds, subject to mandatory lock-in periods.
- Employees and Shareholders: Allocation capped at specified investment limits and restricted to valid categories.
For example, in the Sah Polymers IPO, oversubscription required a combination of proportional and lottery-based allocation.
| Category | Shares Offered | Applications Received | Allotment Method | Observation |
| Retail (RII) | 10,20,000 | 1,38,971 | Proportionate + Lottery | Each successful applicant received at least one lot of 230 shares. |
| NII | 15,30,000 | 4,578 | Proportionate | Allocations were made based on minimum lot (3,220 shares) and remaining balance distributed proportionately. |
| QIB | 30,60,000 | Institutional bids | Proportionate | Full allotment to eligible QIBs at or above cut-off. |
| Anchor Investors | 45,90,000 | Selected investors | Pre-allocation | 60% of QIB quota reserved; one-third assigned to domestic mutual funds. |
The BOA was completed within five working days of the close of the issue, after which shares were credited to investor accounts.
Step 9 – Share Credit to Demat Accounts
Once the distribution is finalised, the focus moves to transferring ownership. The registrar coordinates with depositories such as NSDL and CDSL to ensure eligible applicants receive their holdings seamlessly. Every entry undergoes verification to confirm accuracy and eliminate inconsistencies in PAN or account details.
Transfers are completed within a short window, usually one or two trading sessions after allotment confirmation. This aligns with the T+1 settlement mechanism that enhances efficiency across post-issue operations. Although investors can view their securities before the company lists, trading access opens only on the listing date.
The registrar submits validated records to the depositories, which then initiate credit to respective accounts through linked depository participants. Once credited, investors are notified through formal intimation from their DP, confirming the entry in their demat statement.
| Event | Typical Schedule | Description |
| Event Confirmation | T Day | Registrar finalises the Basis of Allotment and initiates processing |
| Share Credit | T+1 | Depositories update investor accounts after compliance checks |
| Market Listing | T+2 | Trading becomes available once the security is admitted to exchange trading |
Investors should verify their account identifiers beforehand to prevent transaction errors. Any delay or discrepancy can be addressed promptly by contacting the depository participant or registrar.
Consider an example. An investor receives an allocation of 200 shares. After validation, the registrar transmits details to the depository. Within a day, the credited shares appear in the portfolio, confirming entitlement. The investor can view them but will trade only once the scrip is officially listed.
This final step bridges allocation and market entry, ensuring transparent transfer and secure ownership for every participant.
Key Regulatory Bodies & Laws Governing IPOs in India
- Securities and Exchange Board of India- SEBI IPO guidelines, governs the disclosure, eligibility and pricing norms through its Issue of Capital and Disclosure Requirements Regulations of 2018. It monitors intermediaries such as merchant bankers and ensures all public offers meet compliance standards.
- Ministry of Corporate Affairs (MCA) administers the Companies Act of 2013, which outlines statutory obligations on share capital, corporate governance and financial statements before a firm enters the market.
- Stock Exchanges (BSE & NSE) evaluate listing applications and verify adherence to prescribed norms before trading begins. Together, these institutions create a regulatory ecosystem that upholds fairness, encourages participation and strengthens confidence in the country’s capital markets.
Eligibility Requirements for Companies to Launch an IPO
A firm preparing to access public capital must comply with defined financial and governance norms that ensure transparency and protect investors. The IPO eligibility in India focuses on stability, performance, and preparedness for market participation.
Key conditions include:
- Maintaining tangible assets of at least ₹3 crore over the previous three financial years, with limited cash holdings
- Recording an average profit before tax of ₹15 crore in any three of the last five years
- Demonstrating a net worth above ₹1 crore across the same period
- Generating at least half of annual income from the new business if the company has recently changed its name
Additionally, the issuer must obtain exchange clearance, dematerialise all securities, and confirm that the majority of project funding is secured. These measures reinforce market discipline and public confidence.
Types of IPOs in India: Mainboard, SME, Fixed Price vs Book Building
| Type | Meaning | Key Points |
| Mainboard IPO | For large and well-established companies listed on NSE or BSE. | Needs minimum post-issue capital of ₹10 crore and market value above ₹25 crore. Follows SEBI’s full disclosure rules. |
| SME IPO | For small and medium-sized businesses raising funds for growth. | Listed on NSE Emerge or BSE SME with capital between ₹1 crore and ₹25 crore. Has easier listing and reporting rules. |
| Fixed Price Issue | The company sets one fixed price for all investors before the issue opens. | Investors know the price in advance. Demand is known only after the issue closes. |
| Book Building Issue | The price is decided based on bids placed by investors within a price range. | The final price is based on demand. Gives both the company and investors more flexibility. |
FAQ‘s
A firm must have tangible assets of at least ₹3 crore for the past three years and a net worth above ₹1 crore. It should earn an average profit of ₹15 crore in three of the last five years. At least half of its revenue must come from the current business, and all shares must be dematerialised before listing.
In a fixed-price issue, investors know the share price before the offer opens. In book building, the price is discovered through investor bids within a set range. The first gives clarity from the start, while the second allows flexibility based on demand.
ASBA allows investors to block the required amount in their bank account while applying for shares. The money stays in the account until allotment is finalised. Funds are debited only for the approved shares, and the rest remain accessible throughout the process.
After the offer closes, applications are verified and shares are assigned based on availability. If demand exceeds supply, allotment is done through a computerised draw to ensure fairness. Unused funds are released once the final list of investors is confirmed.
From the time a company files its draft prospectus, the process usually takes two to three months. SEBI reviews the document, followed by marketing activities and investor bidding. After allotment, shares are listed on the exchange within six working days from the issue’s closure.
Expenses include fees for merchant bankers, legal advisors, auditors, and regulatory filings. Marketing, underwriting, and listing charges also add to the total cost. Promoters must retain at least 20% of post-issue capital, with a lock-in period of three years for that portion.
From 1 April 2025, issuers must disclose standardised KPIs in draft and final offer documents.
ICDR changes in March 2025 require reporting any pre-IPO placement within 24 hours, a public announcement within two working days for confidential filings, and a 21-day comment window for UDRHP 1.
For very large listings, the minimum offer chunk was reduced, and companies have longer to meet the 25% public float.
Anchor participation now includes insurers and pension funds, with reservations raised to 40%.
Individual investors can subscribe to new share offerings through their bank or broker using the ASBA facility. The required amount stays blocked in their account until shares are allotted. Applications can be made online or via physical forms linked to a demat and trading account.
