Explore IPOs. Invest with Confidence.
Learn how IPOs work, how to apply online, how allotment happens, and what to check before investing in an IPO – all in one SEBI-regulated platform.
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Initial Public Offering: Invest in Emerging Market Opportunities
With Shriram Financial Services, applying for an Initial Public Offering (IPO) takes minutes. Pick the issue, place your bid and track allotment status without switching apps - backed by advisory insights that help you evaluate each issue before you commit. From SME issues to mainboard listings, our platform is built to keep pace with market momentum, giving both first time applicants and seasoned bidders a cleaner, faster route into a company's opening day on the exchange. New listings move fast. So, apply for IPOs with Shriram Financial Services and get in before the opening bell.
Key terms to know:
- Price Band
- The bidding price range, stretching from the minimum floor price to the maximum cap price.
- Lot Size
- The minimum number of shares an investor must bid for in an IPO. Retail investors must apply for at least one lot.
- Oversubscription
- When the total bids received exceed the shares available. usually triggering a lottery-based allotment for retail investors.
- Listing Date
- The date the company's shares are officially listed and begin trading live on NSE/BSE.
Types of IPOs in India
There are two ways to classify Initial Public Offerings in India - by company size and by pricing method.
By Size:
Mainboard IPO
For large, established companies listed on the NSE or BSE main boards. These IPOs meet higher SEBI financial thresholds and attract retail, High Net Worth Individual (HNI), and institutional investors.
SME IPO
For small and medium businesses listed on BSE SME or NSE Emerge. Entry requirements are lower, but post-listing liquidity can be limited - making due diligence especially important.
By Pricing Method:
Book-building IPO
Investors bid within a SEBI-approved price band. The final issue price is determined by market demand, making it the preferred method for price discovery in India.
Fixed Price IPO
The company sets the issue price before the subscription opens. Investors apply at this known price with no bidding involved - simpler, but with less flexibility.
Most IPOs in India today follow the book-building method for better price discovery and broader investor participation. Choosing between these types has direct implications on allotment probability, liquidity post-listing, minimum investment amount, and the level of SEBI oversight applied to the prospectus.
IPO Process in India: How It Works?
Understanding the IPO process helps investors participate with confidence. Here's a simplified step-by-step overview:
DRHP Filing & SEBI Approval
The company files a Draft Red Herring Prospectus (DRHP) with SEBI covering financials, risks, and business details. SEBI reviews and approves it, typically within 30 days.
Price Band & Subscription Window
Post-approval, a price band is announced and the IPO opens for bidding - usually for 3 business days. Anchor investors are allotted shares a day before the public subscription opens.
Allotment & Listing
After the subscription closes, shares are allotted - via lottery for retail investors, proportionally for HNIs and institutions. Listing on NSE or BSE happens within 6 business days.
Advantages of IPO
Investing in an Initial Public Offering in India carries a distinctive set of advantages, which are:
No.
Advantage
What It Means for You
1
Early-Stage Access
Invest at the issue price before the broader market sets its value - maximising potential for listing gains and long-term growth.
2
Listing Gain Potential
A fundamentally strong IPO at a reasonable valuation can deliver meaningful returns from Day 1 of listing.
3
Portfolio Diversification
Access sectors and companies not yet available in the secondary market, which expands your investment universe.
4
Transparent Disclosures
Every IPO comes with SEBI-mandated audited financials, peer comparisons, and a detailed risk register, so you invest with full information.
5
Access to Public Capital (for Companies)
Companies raise funds without taking on debt, signalling financial discipline and growth intent.
6
Brand & Talent Growth (for Companies)
Listing enhances brand credibility and enables Employee Stock Ownership Plan (ESOP), attracting better talent and institutional trust.
7
Promoter Monetisation
IPOs offer a structured, regulated exit path for early investors and promoters - a sign of business maturity.
8
Wealth Creation Potential
Fundamentally strong IPOs held beyond listing day have historically delivered significant long-term returns for patient investors.
Drawbacks of IPO
The drawbacks of an IPO are equally important to understand; here are a few:
No.
Risk / Demerit
What It Means for You
1
No Guaranteed Listing Gains
An aggressively priced IPO or one launched in weak market conditions can list below the issue price - listing-day losses are a real possibility.
2
Limited Price Discovery
Unlike listed stocks, there is no historical price data or mature analyst coverage to benchmark valuation - decisions rely heavily on prospectus disclosures.
3
Short-Term Volatility
Anchor investor lock-ins and the absence of trading history make new listings prone to sharp price swings in the early days post-listing.
4
Poor Post-Listing Liquidity (SME IPOs)
Secondary market volumes on SME counters can be very thin - making it difficult to exit at desired prices after listing.
Who can apply for an IPO?
SEBI mandates that every mainboard Initial Public Offering reservation is divided across the four IPO investor categories in India, each with distinct eligibility criteria, quota allocations, and allotment mechanisms, as highlighted below:
Parameter
Retail Individual Investors (RII)
HNI/Non-Institutional Investors (NII)
Qualified Institutional Buyers (QIB)
Anchor Investors
Who Can Apply
Individual investors
Individuals & non-institutional entities
Mutual funds, FIIs, insurance companies, banks
Large institutional investors (subset of QIB)
Application Amount
Up to ₹2 lakh
Above ₹2 lakh (sHNI: ₹2L-10L bHNI: above ₹10L)
No upper limit
No upper limit
Minimum Application
1 lot (as per RHP)
Above ₹2 lakh
As per SEBI norms
As per SEBI norms
IPO Quota (Mainboard)
Minimum 35%
Minimum 15%
Minimum 50%
Up to 60% of the QIB portion
Allotment Method
Computer-based lottery in oversubscribed issues
Proportional to application size
Discretionary by book runner
Discretionary - allotted a day before public subscription opens
Lock-in Period
None
None
None
30 days mandatory
Key Advantage
Equal chance for every applicant regardless of application size
A larger application improves the allotment probability
Priority access to large IPO allocations
First-mover allotment; signals institutional confidence
Key Risk
Lottery means no guaranteed allotment
Larger capital needed for meaningful allotment
Subject to SEBI eligibility criteria
Lock-in limits short-term exit flexibility
What is the Grey Market Premium in an IPO?
Grey Market Premium (GMP) is the unofficial price at which IPO shares are traded before the stock is officially listed on NSE or BSE.
For example, if an IPO is priced at ₹500 and the GMP is ₹80, the implied listing price is ₹580.
A rising GMP signals strong investor demand; a declining GMP may indicate fading interest.
Since GMP operates outside SEBI's regulatory framework, it is susceptible to manipulation and reflects sentiment, not fundamentals.
Note: Use it as a reference point - never as the sole basis for an investment decision.
How to Apply for an IPO?
Here are the steps to apply for an Initial Public Offering via Shriram Financial Services:
Log In
Log in to your Shriram Financial Services trading account or Antara app
Select the Open IPO
Navigate to the IPO section and select the open IPO
Enter Your Bid
Enter bid quantity and select bid price
Approve the UPI Mandate
Approve UPI mandate to block funds via ASBA
Track Allotment
Check allotment via registrar site & your registered email
How to Read an IPO Prospectus (DRHP/RHP)?
Draft Red Herring Prospectus (DRHP) and the final Red Herring Prospectus (RHP) are the primary documents any IPO investor should read. It explains the company's business model, financial position, risks and the purpose of the issue, helping investors assess whether the Initial Public Offering matches their investment approach. To evaluate an IPO effectively, pay close attention to:
Objects of Issue and Use of Proceeds
This section reveals why the company is raising funds - whether for expansion, debt repayment, or working capital. Specific, quantifiable deployment plans signal strong management intent.
Risk Factors and Promoter Background
IPO risk factors disclose business, regulatory, and sectoral risks that the company itself has acknowledged. Check the promoter's background for any litigation, penalties, or related-party transactions that could signal conflicts of interest.
OFS Ratio and What It Signals
The Offer for Sale (OFS) component means existing shareholders - not the company - are receiving the proceeds. A high OFS ratio may indicate promoters are using the IPO as an exit opportunity. A higher fresh issue component is generally more favourable for new investors.
Reading the IPO prospectus gives investors an analytical edge over investors who rely solely on news summaries or grey market buzz.
What is the IPO Allotment Process?
The IPO allotment process is the method through which shares are distributed to investors after an IPO closes. Once the subscription period ends, all valid applications are reviewed, and shares are allotted based on the demand in each investor category. If the IPO is oversubscribed, retail investors may receive shares through a lottery-based allotment system, while institutional and non-institutional allotment is generally done on a proportionate basis.
Key stages in the IPO allotment process in India include:
Verification of Applications
Invalid or incomplete applications are filtered out based on PAN, demat and payment details. Common rejection reasons include mismatched PAN details, incorrect UPI IDs, or bids outside the price band.
Basis of Allotment
Shares are allotted as per SEBI rules, through a lottery in the retail category or by proportionate allotment in other categories. The registrar publishes a basis-of-allotment document publicly, so you can verify exactly how shares were distributed.
Credit of Shares
Allotted shares are credited to the investor's demat account before listing. This typically happens within T+5 business days of the IPO closing date, giving you confirmed holding status before trading begins on NSE or BSE.
Refund/Fund Release
If shares are not allotted, the blocked amount is released back to the investor's bank account. Under the ASBA framework, this unblocking is automatic - no separate refund request is needed from the investor.
What are the IPO Risks?
Understanding IPO risks is what separates informed investors from speculative ones. Here are a few:
Overvaluation Risk
Promoters have an incentive to price IPOs at a premium. Without price history or mature analyst coverage, assessing true value relies heavily on prospectus disclosures.
SME IPO Liquidity Risk
Post-listing volumes on SME counters can be very thin, making it difficult to exit at desired prices.
Lower Regulatory Scrutiny
SME IPOs are subject to lighter SEBI oversight compared to mainboard issues, increasing the importance of independent due diligence.
Limited Analyst Coverage
Fewer analysts track SME-listed companies, making it harder to find reliable independent research to guide your investment decision.
How to Evaluate an IPO Before Investing?
Six parameters form the core of any rigorous pre-investment assessment, which are:
P/E Ratio vs. Sector Peers
Compare the company's price-to-earnings multiple at the issue price against listed peers in the same sector. A premium valuation is only justified if the DRHP substantiates it with superior growth rates or stronger margins.
OFS vs. Fresh Issue
A higher fresh issue component means more capital flows into the business, a positive signal for long-term investors. A high OFS ratio means existing shareholders are cashing out, not that the company is growing.
Business Model
Does the company have a proven, scalable business model? A resilient business model is one that can be replicated and expanded without a proportional rise in costs, generating efficiencies as it grows.
Revenue Visibility
Look for recurring revenues and a consistent growth trajectory over the last three to five years, not just a strong pre-IPO year. Sustainable revenue visibility reflects genuine business momentum rather than a one-time surge timed to the listing.
Fund Manager and AMC Credibility
For ETF or mutual fund IPOs, evaluate the AMC's track record, fund management experience, expense ratios, and how the strategy differs from existing products in the market.
Anchor Investor Participation
Strong anchor investor participation, especially from domestic mutual funds and marquee FPIs, signals institutional conviction and adds credibility to the issue.
How are IPO Gains Taxed in India?
Understanding IPO tax in India for 2026 is essential to calculate your actual post-tax returns and to ensure full compliance with your income tax obligations. Investors are required to disclose all equity capital gains, including those from IPO share sales, in their Income Tax Returns.
Parameter
Short-Term Capital Gains (STCG)
Long-Term Capital Gains (LTCG)
Holding Period
Shares sold within 12 months of allotment
Shares held for more than 12 months before selling
Tax Rate
20% (revised in Union Budget 2024)
12.5% (post-Budget 2024)
Tax Exemption Threshold
None - all gains are taxable
Gains up to ₹1.25 lakh per financial year are exempt
Indexation Benefit
Not applicable
Not applicable for listed equity shares
Applicable On
All listed IPO shares for which STT has been paid
All listed IPO shares for which STT has been paid
Applies To
Mainboard and SME IPO listings
Mainboard and SME IPO listings
Tax Slab Relevance
Not relevant - flat rate applies regardless of income
Not relevant - flat rate applies regardless of income
Investor Tip
Short holding periods attract higher tax - factor this into listing-day exit decisions
Planning your exit beyond 12 months and within the ₹1.25 lakh threshold can meaningfully improve post-tax returns
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Got Questions?
View All FAQsAn IPO (Initial Public Offering) is when a private company sells shares to the public for the first time and lists on the NSE or BSE. Investors can buy at the issue price and later trade shares on the exchange.
The minimum application amount varies by IPO and is determined by the lot size and price band. For mainboard IPOs, the minimum application value is approximately ₹10,000–₹15,000 in most issues. SME IPOs may have higher minimum lot sizes. The exact lot size is always disclosed in the Red Herring Prospectus.
IPOs carry market risk. Listing gains are not guaranteed. Evaluate the company's fundamentals, valuation, and promoter background before applying. SEBI regulation provides disclosure safeguards, not return guarantees.
The Draft Red Herring Prospectus is the detailed disclosure document filed with SEBI. It covers financials, risks, promoter background, and use of proceeds. Always read the DRHP before investing.
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