Here We have explain all question answer about Indian Stock Market IPO according my experience. If you are investing into IPO or want to details about IPO GMP, so IPOO.in website is best for you.
What is IPO & How does IPO Work in India?
An Initial Public Offering (IPO) is when a private company offers its shares to the public for the first time to raise capital. In my experience tracking Indian markets, companies use IPOs primarily for two reasons: raising funds for business expansion and providing an exit route for early investors.
Here’s how the process works: A company files documents with SEBI (Securities and Exchange Board of India), gets approval, opens the IPO for public subscription for 3 days, and then lists on stock exchanges like NSE, BSE and MSE. You can apply during these 3 days, and if you get allotment, the shares are credited to your demat account before listing.
How & Who Decides the Price Band in IPO?
The price band is decided by the company’s promoters along with merchant bankers (lead managers) through a detailed valuation process. They analyze the company’s financials, growth prospects, industry comparisons, and market conditions.
From what I’ve observed, they typically set a price range (like ₹100-₹105) based on book building method. The final price depends on demand from institutional investors during the bidding process. SEBI monitors this to ensure fair pricing and prevent manipulation.
What is the Difference Between IPO Cut-off Price & Floor Price?
The floor price is the minimum price in the price band (for example, ₹100 in a ₹100-₹105 band). The cut-off price is the final price discovered after the bidding closes, based on demand and supply.
In my experience, when you apply at “cut-off,” you’re agreeing to pay whatever final price is determined. This is actually beneficial for retail investors because it maximizes your chances of allotment. If you bid at the floor price and the cut-off is higher, you won’t get shares.
What is the Difference Between Fresh Issue & Offer for Sale?
Fresh Issue: The company issues new shares, and the money raised goes directly to the company for business expansion, debt reduction, or working capital.
Offer for Sale (OFS): Existing shareholders (promoters or early investors) sell their shares. The money goes to these sellers, not the company.
I’ve noticed many IPOs have both components. For investors, fresh issues are generally better as the capital strengthens the company, while OFS is just a transfer of ownership.
Who Decides on the IPO Dates?
The company and its merchant bankers propose IPO dates, but final approval comes from SEBI and the stock exchanges (NSE/BSE). They coordinate to avoid market holidays and ensure no clash with major market events.
From my observation, companies prefer launching IPOs during positive market sentiment. They typically open on Monday and close on Wednesday to give investors the full subscription period.
What is the Role of the IPO Registrar?
The registrar (like KFin Technologies or Link Intime) handles all the administrative work. They process applications, manage the bidding platform, conduct allotment, handle refunds for unsuccessful applications, and credit shares to demat accounts.
In my experience, you’ll interact with the registrar’s website to check your allotment status. They’re essentially the bridge between investors and the company during the IPO process.
What is the Role of IPO Lead Managers?
Lead managers (merchant bankers like Kotak, ICICI Securities, Axis Capital) are crucial for IPO success. They help with valuation, prepare regulatory documents, market the IPO to institutional investors, manage the book building process, and ensure regulatory compliance.
I’ve seen that strong lead managers can significantly impact IPO pricing and subscription levels. They bring credibility and investor confidence to the offering.
What is the Primary & Secondary Market?
Primary Market: Where new securities are created and sold for the first time. IPOs happen in the primary market. Money goes directly to the issuing company.
Secondary Market: Where existing securities are traded between investors on stock exchanges. This is where you buy/sell shares daily after IPO listing.
From my experience, understanding this distinction is fundamental. IPO is primary market participation; trading on NSE/BSE post-listing is secondary market activity.
What is the IPO Prospectus Life Cycle?
The prospectus evolves through stages: Draft Red Herring Prospectus (DRHP) is filed with SEBI for initial review, Red Herring Prospectus (RHP) is updated after SEBI observations, and the Final Prospectus is issued post-IPO with the final price.
In my experience, serious investors should read at least the RHP to understand the company’s business model, financials, risks, and fund utilization plans.
What is DRHP?
DRHP (Draft Red Herring Prospectus) is the preliminary document filed with SEBI. It contains comprehensive company information but doesn’t have the final price band. “Red Herring” refers to the red-colored text disclaimers on the cover.
I always recommend checking the DRHP on SEBI’s website when a new IPO is announced. It gives you early insight into the company’s operations and helps in making informed decisions.
What is RHP?
RHP (Red Herring Prospectus) is the updated version filed after incorporating SEBI’s observations. It includes the price band and complete details needed for investors to make decisions. This is released before the IPO opens.
From my analysis, the RHP is your go-to document. It’s available on the company’s website, BSE/NSE websites, and registrar’s portal during the IPO subscription period.
Do You Need a Demat Account to Apply for an IPO?
Yes, a demat account is absolutely mandatory. You cannot apply for an IPO without one. Additionally, you need a linked bank account and PAN card.
In my experience, if you don’t have a demat account, open one with a reliable broker like Zerodha, Groww, or Angel One at least a week before the IPO you want to apply for. The account opening process takes 2-3 days.
What is DP Name in IPO Online Form?
DP (Depository Participant) is your broker or bank through whom you hold your demat account. The DP Name is required in the application form to identify where your allotted shares should be credited.
I’ve noticed applicants sometimes get confused here. Simply put, if you have a demat account with Zerodha, your DP is Zerodha. Check your demat account statement for the exact DP name and ID.
Is PAN Card Mandatory to Apply for an IPO?
Yes, PAN card is absolutely mandatory. It’s your unique identifier for all financial transactions in India. Without a PAN, you cannot apply for any IPO.
From my experience, ensure your PAN is linked with your bank account and demat account. Mismatches can lead to application rejection.
Can I Apply for Multiple IPO Applications on a Single PAN Card?
You can apply for multiple different IPOs using one PAN card simultaneously. However, you cannot submit multiple applications for the same IPO using one PAN card.
In my experience, if you try multiple applications for the same IPO with one PAN, all applications will be rejected, and you’ll lose processing time and potential allotment.
How Many IPO Applications via One PAN Number?
For the same IPO, only one application per PAN is allowed in each category (RII, NII, etc.). Multiple applications with the same PAN for the same IPO will result in rejection of all applications.
I’ve seen investors make this mistake repeatedly. The rule is strict: one PAN = one application per IPO in your chosen category.
How Many IPO Applications Can Be Made from One Bank Account?
You can make multiple applications from one bank account if they’re for different family members with different PAN cards. However, each application must have a unique PAN and demat account combination.
From my observation, families often use one bank account for funding but ensure each member has their own PAN and demat account for separate applications.
Is It Possible to Apply for an IPO via BHIM UPI?
Yes, UPI is now the most popular method for IPO applications, especially for retail investors. You can use BHIM UPI, Google Pay, PhonePe, or any UPI app. The amount is blocked (not debited) until allotment.
In my experience, UPI applications are faster, more convenient, and the refund process is quicker compared to ASBA. I highly recommend this method for amounts up to ₹5 lakhs (current UPI limit for IPOs).
What is the Difference Between Book Building & Fixed Price?
Book Building: Price is discovered through bidding. Investors bid within a price band, and the final price is determined based on demand. Most IPOs now use this method.
Fixed Price: The company sets one fixed price. No bidding process. Less common nowadays.
I’ve noticed book building is fairer and more transparent as it reflects true market demand. Fixed price IPOs were more common in the past but are rare now.
What is the Difference Between RII, NII, QIB, Anchor Investors?
These are investor categories with different allocation quotas:
RII (Retail Individual Investors): Investment up to ₹2 lakhs. Gets 35% quota. Highest allotment probability.
NII (Non-Institutional Investors/HNI): Investment above ₹2 lakhs up to ₹10 lakhs (sNII) or above ₹10 lakhs (bNII). Gets 15% quota.
QIB (Qualified Institutional Buyers): Mutual funds, insurance companies, banks. Gets 50% quota.
Anchor Investors: Large institutional investors who invest a day before the IPO opens. Provides confidence signal.
From my experience, retail category offers the best odds for getting allotment, while HNI category often faces high competition with lower allotment chances.
As a Retailer, How to Apply in NII Category?
To apply in the NII (HNI) category, you simply bid for an amount exceeding ₹2 lakhs. However, you need multiple demat accounts or apply through different family members’ accounts since one PAN allows only one application.
I’ve seen some investors use HUF (Hindu Undivided Family), company accounts, or family members’ accounts to get additional applications. But remember, NII allotment is proportionate, often giving only 10-20% of applied shares in oversubscribed IPOs.
How Many Days Does the IPO Open?
Standard IPO subscription period is 3 working days (not calendar days). Typically opens on Monday or Tuesday and closes on Wednesday or Thursday.
From my experience, the opening and closing dates are clearly mentioned in the RHP and all IPO platforms. Plan your application accordingly, and don’t wait until the last minute.
What is the Market Lot Size?
Market lot size is the minimum number of shares you must apply for. It’s set to ensure the minimum application amount is around ₹10,000-₹15,000 for retail investors.
For example, if the IPO price is ₹100 and lot size is 150, you must apply for at least 150 shares (₹15,000). I’ve noticed companies adjust lot sizes to make IPOs accessible to retail investors while meeting minimum investment thresholds.
Is There Any Guarantee to Get the IPO Application Success with Allotment?
No, there’s no guarantee. Allotment depends on subscription levels and the allotment method. In oversubscribed IPOs, many applicants don’t get shares.
From my experience, retail category has better allotment odds due to proportionate allocation rules. Grey market premium, company fundamentals, and subscription levels can indicate your chances, but nothing is guaranteed until allotment results.
What is the Basis of Allotment?
The basis of allotment determines how shares are distributed:
For RII (Retail): If oversubscribed, computerized draw of lots. You either get full allotment or nothing (or minimum lot in highly oversubscribed IPOs).
For NII (HNI): Proportionate allotment. If 10x oversubscribed, you get approximately 10% of what you applied for.
For QIB: Discretionary allocation by lead managers.
I’ve observed that SEBI ensures fairness through the registrar’s lottery system for retail investors, making it transparent and unbiased.
Should I Do Multiple Applications for One IPO?
No, you should not. Multiple applications with the same PAN for the same IPO are strictly prohibited and will result in rejection of all your applications.
From my experience, this is a common mistake that costs investors their allotment opportunity. If you want more applications, use different family members’ PAN and demat accounts legally.
How to Cancel the IPO Application?
You can cancel/withdraw your IPO application before the issue closes by logging into your broker’s platform or net banking (if applied through ASBA) and selecting the withdraw option.
In my experience, withdrawal is straightforward during the subscription period. However, once the IPO closes, you cannot withdraw. The blocked amount will be unblocked for non-allotted applications automatically.
Can a Minor Apply in an IPO?
Yes, minors can apply through a guardian’s demat account. The guardian (parent/legal guardian) operates the account on behalf of the minor. The PAN card must be in the minor’s name.
I’ve seen many parents open minor demat accounts for their children to invest in IPOs. The shares transfer to the minor’s individual account once they turn 18.
How to Choose the Right IPO?
Based on my experience, evaluate these factors:
Business Model: Do you understand what the company does? Is it sustainable?
Financials: Check revenue growth, profitability, debt levels, and cash flows in the RHP.
Valuation: Compare PE ratio with industry peers. Is it reasonably priced?
Fund Utilization: How will the company use IPO proceeds? Fresh issue for growth is positive.
Management Quality: Research promoter background and corporate governance.
Grey Market Premium: Indicates demand but don’t rely solely on it.
Subscription Levels: Strong institutional interest is a good sign.
I always recommend reading at least the key sections of the RHP and avoiding IPOs purely based on listing gains hype.
How Many Ways to Apply for an IPO?
You have several application methods:
- Online via Broker: Zerodha, Groww, Upstox, Angel One platforms (easiest and most popular)
- UPI Apps: Through NSE or BSE ASBA facility with UPI payment
- Net Banking: Through ASBA in your bank’s net banking portal
- Offline: Physical application form submission at bank branches (rare nowadays)
From my experience, applying through your broker’s app with UPI is the fastest and most convenient method. I use this for 90% of my applications.
What Are the Risk Factors in an IPO?
IPO investments carry several risks:
Listing Loss Risk: Shares may list below issue price, causing immediate loss.
Overvaluation Risk: Company might be overpriced compared to fundamentals.
Lock-in Risk: Anchor and promoter shares are locked, but they’ll sell later.
Business Risk: Unproven business model or deteriorating financials.
Market Risk: Overall market crash can affect even good IPOs.
Liquidity Risk: Low trading volumes post-listing.
In my experience, the biggest mistake is chasing listing gains without understanding the business. I’ve seen many investors lose money in poor-quality IPOs that crashed post-listing.
What Are the Minimum and Maximum Amounts for the Retailer Category in an IPO?
Minimum: The cost of one lot. Usually ranges from ₹10,000 to ₹15,000 depending on lot size and price band.
Maximum: ₹2,00,000 (₹2 lakhs) to remain in the retail category. Anything above shifts you to NII category.
From my observation, most retail investors apply for 1-2 lots to maximize their chances. Applying for the maximum (up to ₹2 lakhs) doesn’t increase your allotment probability in the retail category.
How to Withdraw an IPO Application?
Log into the platform where you applied (broker app, net banking, or UPI app) and select the withdrawal/cancellation option. This must be done before the IPO closes.
I’ve withdrawn applications when I discovered negative information about a company or when market conditions deteriorated. The blocked funds are released immediately upon withdrawal.
How to Sell on Listing Day?
Once shares are credited to your demat account (usually a day before listing), you can sell them on listing day through your trading app just like regular shares. Place a limit order or market order based on listing price.
From my experience, if you want to exit immediately for listing gains, place a limit order slightly below expected listing price early in the morning. Market orders on listing day can be risky due to high volatility.
Should I Be Able to Sell the Allotted IPO Shares on the Listing?
Yes, you can sell allotted shares on the listing day itself. There’s no lock-in period for retail and HNI investors. Shares are credited to your demat account before listing day.
I’ve sold many IPO allotments on listing day when listing gains were attractive and fundamentals didn’t justify holding. However, for quality companies, I prefer holding for long-term wealth creation.
In Which Category Can a Private Limited Company Apply for an IPO?
A private limited company applies in the NII (Non-Institutional Investor) category, provided the investment exceeds ₹2 lakhs. Companies cannot apply in the retail category.
From my experience handling company investments, corporate entities need proper documentation including company PAN, board resolution, and authorized signatory demat account for IPO applications.
In Which Category Can a Private Family Trust Apply for an IPO?
A private family trust applies in the NII category if investment exceeds ₹2 lakhs. Some trusts might qualify as retail if applying for under ₹2 lakhs, but most are treated as NII.
I’ve seen trust applications require additional documentation like trust deed, trustee authorization, and trust PAN card. Verify with your broker before applying.
How Many Days Does the IPO Listing Take?
Typically, IPOs list within 6-7 working days from the closing date. The timeline is: Issue closes (Day 0), Basis of allotment (Day 3-4), Credit to demat (Day 5-6), Listing (Day 6-7).
From my experience, most IPOs follow this schedule, but it can extend by a day or two in case of holidays or regulatory delays. The exact listing date is announced after allotment.
How Many Days Does the IPO Allotment Take?
Allotment is finalized typically 3-4 working days after the IPO closes. You can check allotment status on the registrar’s website once the basis of allotment is declared.
I always check allotment status on Day 3 or 4 post-closure. The registrar’s website updates first, followed by SMS/email notifications.
Where to Check IPO Allotment Status?
Check on the registrar’s website (like KFin Technologies, Link Intime) by entering your PAN or application number. You can also check on BSE/NSE websites or your broker’s app.
From my experience, the registrar’s website is the most reliable source. I bookmark these websites for quick access during allotment season: IPO Check, KFin Tech, Link Intime, Bigshare, etc.
What is the Lock-in Time Period for Anchor Investors?
Anchor investors have a 90-day lock-in period from the date of allotment. They cannot sell 50% of their shares for 30 days and the remaining 50% for 90 days.
I’ve observed that anchor participation indicates institutional confidence, but be aware of selling pressure when lock-in expires, especially if the stock has rallied significantly.
What is the Lock-in Time Period for HNI or NII?
There is no lock-in period for HNI/NII investors. You can sell shares immediately on listing day just like retail investors.
From my experience as an HNI applicant, this flexibility is crucial for managing portfolio risk and booking profits on listing day if desired.
What is the Lock-in Time Period for RII or Retailers?
There is no lock-in period for retail investors. You’re free to sell shares on the listing day itself.
I’ve used this flexibility many times to book listing gains in overvalued IPOs while holding onto fundamentally strong companies for the long term.
Should I Apply for an IPO via My Current Account?
You can apply via current account, but I recommend using a savings account for better documentation and easier tracking. Current accounts work fine but are typically used by businesses and HNIs.
From my experience, savings accounts are sufficient for retail investors. Use current accounts only if you’re applying through a company or have specific banking arrangements.
How to Apply for an IPO via HUF?
HUF (Hindu Undivided Family) can apply by having a separate HUF PAN card and demat account. The Karta (head of HUF) operates the account on behalf of the HUF.
I’ve helped investors set up HUF accounts for additional IPO applications. You need HUF PAN, HUF demat account, and bank account in the HUF’s name. This gives you one additional application opportunity per IPO.
Should I Apply for an IPO on the Last Day & Till What Time Should I Apply?
You can apply until the closing time (usually 5:00 PM) on the last day, but I strongly recommend applying on Day 1 or Day 2 to avoid technical glitches, payment issues, or server overload.
From my experience, many investors miss out due to last-minute rush. I’ve seen UPI apps crashing, broker platforms slowing down, and payment failures on the final day. Apply early for peace of mind.
How to Find IPO Subscription Status?
Check real-time subscription status on NSE/BSE websites, financial news portals (Moneycontrol, Economic Times), or your broker’s app. Subscription data updates multiple times daily.
I track subscription levels to gauge demand. High retail and institutional subscription indicates strong interest, though it doesn’t guarantee listing gains. I check on Day 2 and Day 3 to assess IPO popularity.
How to Apply for an IPO Offline?
Visit your bank branch offering ASBA facility, fill the physical application form with details (name, PAN, demat account, bid quantity, price), attach required documents, and submit to the bank. They’ll block funds in your account.
From my experience, offline applications are time-consuming and mostly obsolete. I recommend this only if you’re uncomfortable with online platforms or face technical issues. Online is 100x more convenient.
How to Apply for an IPO Online?
The online process is simple:
- Log into your broker’s app (Zerodha, Groww, etc.) or net banking
- Navigate to the IPO section
- Select the IPO you want to apply for
- Enter number of lots, bid price (or select cut-off)
- Provide UPI ID or ASBA details
- Confirm and authorize payment via UPI
I apply 90% of IPOs through my broker’s app. It takes literally 2-3 minutes and is completely hassle-free.
If Retailers Apply in the NII Category, What is the Process?
To apply as a retailer in NII category, bid for more than ₹2 lakhs worth of shares. However, you’ll need either multiple demat accounts or apply through different family members since one PAN = one application.
From my experience, this strategy is used by investors wanting higher allotment. But remember, NII allotment is proportionate, so you might get only 10-20% of your bid amount in oversubscribed IPOs, while retail has better odds through lottery.
What is the Circuit Limit on the IPO Listing Day?
There’s typically no circuit limit on IPO listing day for the first few hours (cooling-off period). After that, regular circuit limits of 5%, 10%, or 20% apply depending on the stock category.
I’ve seen IPOs double on listing day without hitting circuits initially. This creates both opportunities and risks. Monitor carefully if you’re planning to sell on listing day.
Should I Be Able to Apply for an IPO on Sunday?
No, IPOs don’t open on weekends or market holidays. The 3-day subscription period consists of working days only (Monday to Friday, excluding holidays).
From my observation, IPOs typically open Monday-Wednesday or Tuesday-Thursday. Check the exact dates in the IPO prospectus, and plan your application accordingly.
How to Sell an IPO?
After listing, selling IPO shares is identical to selling any stock. Open your trading app, search for the stock, select your holdings, choose “Sell,” enter quantity, select order type (market/limit), and confirm.
I recommend using limit orders on listing day to avoid price volatility. For long-term holdings, I sell when fundamentals deteriorate or better opportunities arise, not just because of listing gains.
How to Get Updates on Upcoming IPO?
Follow these sources for IPO updates:
- Financial news websites: Moneycontrol, Economic Times, Livemint
- SEBI website: Official filings and announcements
- Broker platforms: Most apps have IPO sections with calendars
- IPO-focused websites: Chittorgarh, Investorgain
- Social media: Follow market experts and IPO trackers on Twitter/X
I subscribe to email alerts from my broker and follow key financial journalists. This ensures I never miss important IPOs.
How is the IPO Investment Taxed or Is the Capital Gains Tax Applicable on IPO?
Yes, capital gains tax applies to IPO investments just like regular stocks:
Short-term Capital Gains (STCG): If sold within 12 months, taxed at 20% (as per new tax rules from Budget 2024).
Long-term Capital Gains (LTCG): If sold after 12 months, taxed at 12.5% on gains exceeding ₹1.25 lakhs annually.
From my experience, listing gains (selling on listing day) are taxed as STCG at 20%. I factor in tax implications when deciding whether to book listing gains or hold for long-term appreciation. For wealth creation, holding quality IPOs beyond 12 months is tax-efficient.