Learn how companies launch IPOs, how shares are allotted to investors, how listing works on NSE and BSE, and how IPO prices move after listing in stock market.
IPO stands for Initial Public Offering.
It is the process where a private company offers its shares to the public for the first time.
Through IPO, companies raise money from investors for:
Suppose a company wants ₹1000 crore to expand factories and business operations.
Instead of taking a large bank loan, it sells ownership shares to public investors through IPO.
Company management decides to raise money from public investors.
Merchant bankers help the company manage IPO process, pricing, and regulations.
Company submits Draft Red Herring Prospectus (DRHP) containing business details, risks, financials, and IPO plans.
SEBI reviews documents and approves IPO if regulations are satisfied.
Company announces price range for investors to apply.
Investors apply for shares through brokers or banking apps.
Shares are allotted based on investor demand and lottery system if oversubscribed.
Shares start trading publicly on stock exchanges.
IPO shares are offered within a price range called Price Band.
IPO price band may be:
₹95 to ₹100 per share
Investors can bid within this range.
If more investors apply than available shares, IPO becomes oversubscribed.
| Subscription Level | Meaning |
|---|---|
| 1x | Demand equals available shares |
| 5x | Demand is 5 times higher |
| 50x | Extremely high investor demand |
Company offers 1 crore shares.
Investors apply for 10 crore shares.
IPO becomes subscribed 10 times.
On listing day, IPO shares start trading on NSE and BSE.
Market demand and supply decide the opening stock price.
IPO price = ₹200
Huge demand after listing pushes stock to ₹280.
This difference is called Listing Gain.
| Investor Category | Description |
|---|---|
| Retail Investors | Normal public investors |
| HNI Investors | High Net Worth Investors |
| QIB | Qualified Institutional Buyers |
| Anchor Investors | Large institutional investors before IPO opening |
Yes. If demand weakens or market conditions become negative, stock may trade below IPO price.
No. In oversubscribed IPOs, allotment may happen through lottery system.
Yes. Beginners can apply through broker apps or banking ASBA facility.
Listing gain is the profit earned if stock opens above IPO issue price on listing day.