In 2024, India’s primary market set a new record. A total of 317 Initial Public Offerings (IPOs) raised ₹1.8 trillion, which marked an increase of 2.6 times from the previous year. Clearly, more companies are tapping into public markets, and more investors are lining up to grab early opportunities.
Taking a company public involves more than just offering shares. In India, the IPO process follows a well-defined and tightly regulated structure. Companies planning to launch IPOs must go through multiple stages, from appointing advisors to finalising share allotment. Each step plays a crucial role in shaping investor confidence and the success of the listing.
Take a detailed look at all the steps involved in the IPO process.
Appointment of investment bankers/underwriters
The IPO process starts with choosing the right investment banker, often referred to as an underwriter. These financial experts help the company at several stages of the IPO process.
They analyse the company’s financial position, future growth, and business model before deciding how the IPO should be structured. These professionals also estimate how much money can be raised and guide the company on the number of shares to issue.
Drafting the prospectus
Next, the company prepares a Draft Red Herring Prospectus (DRHP), a preliminary document which offers critical details about the company’s:
- Business model
- Financials
- Legal matters
- Future plans
- Risk factors
This prospectus is then filed with the Securities and Exchange Board of India (SEBI).
SEBI review and cooling-off period
SEBI carefully checks the DRHP to see whether all material information has been disclosed transparently. If any errors, omissions, inconsistencies, or discrepancies are spotted, SEBI can seek clarifications or revisions. Once SEBI approves the application, the company can proceed.
Application to the stock exchange
The company then applies to the stock exchange, where it plans to list the initial issue. Some options include the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The exchange thoroughly reviews the company’s compliance with eligibility norms.
Listing ensures that investors will be able to buy and sell the company’s shares through an IPO app or other formal trading platforms.
Roadshows and advertisements
Through roadshows, whether physical, virtual, or both, the company’s leadership meets institutional investors, fund managers, and analysts. These meetings across cities (and sometimes globally) can include live QA sessions, one-on-one discussions, and group presentations. The purpose of roadshows and advertisements is simple, i.e., to generate interest and build credibility.
This stage is crucial for understanding how interested investors are, which directly affects demand estimation and pricing decisions.
Pricing the IPO
Look at the two main methods companies use to price an IPO:
- Fixed price: The price per share is announced beforehand.
- Book building: A price band is declared (say, ₹150–₹180). An investor has to bid within this range, and the final price (cut-off price) depends on the demand for the shares, the bids received, and the capital the company aims to raise.
Allotment and listing
The IPO opens to the public on its launch date and remains available for a set period, generally five working days. You can easily invest in ongoing or upcoming IPOs through trading apps and online portals offered by several brokers.
Once the bidding period is over, the money blocked in your account will be debited if you receive shares. If not, the blocked amount gets released or refunded. Once the allotment is done, the company is listed on the stock exchange, and its shares start trading publicly.
To conclude
The initial public offering process in India is detailed because each stage is designed to protect investors, build trust, and maintain transparency. As an investor, you must conduct thorough research before investing in any IPO. The MO RiiSE app makes this step easier.
The app is backed by the legacy of Motilal Oswal, a SEBI-registered public entity trusted by over 40 lakh users. It offers expert research, financial reports, and growth projections for both ongoing and upcoming IPOs. This helps you compare options, track performance, and invest with confidence.
Don’t delay anymore! Begin your IPO journey today with the MO RiiSE app!
