What Is IPO in India: A Complete Guide

Introduction for what is IPO

Wondering what is IPO in Stock Market…An Initial Public Offering (IPO) is when a private company offers its shares for sale to the general public for the first time, converting itself into a publicly listed company. In simple terms, an IPO is the “listing event” where a company raises capital by selling new (fresh issue) or existing shares to investors on a stock exchange. For example, India’s LIC IPO (2022) offered 3.5% of the insurer’s equity to the public, making it a public company listed on the BSE and NSE. This process is also called “going public” or “floating” the company. IPOs are tightly regulated by India’s securities regulator SE B I (Securities and Exchange Board of India) to protect investors and ensure transparency.

In an IPO, interested investors (retail individuals, high-net-worth individuals, or institutions) bid for a certain quantity of shares at a price (or within a price band). The company, with help from investment banks, fixes the share price and the number of shares on offer. Once the IPO closes, the shares are allotted and then listed on India’s stock exchanges (NSE/BSE), where they can trade freely. In essence, “IPO meaning in India” is the same as elsewhere: it’s the first-time sale of a company’s stock to the public.

Brief History of IPOs in India

India’s IPO market has grown steadily since independence. In the early decades (1960s–80s), public offerings were few and often confined to government-run enterprises. For example, Maruti Udyog Ltd. (now Maruti Suzuki) in 1973 and ONGC in 1974 were among the first high-profile public issues. Private-sector listings were rare due to strict regulations (“License Raj”). The first major private-company IPO was Reliance Industries Limited in 1977. In 1975, NT PC (a power PSU) listed, and many PSUs (HPCL, Maruti) went public in the 1980s and 1990s.

After India’s 1991 economic liberalization, IPOs accelerated. Technology and services firms like Infosys (1993) had landmark listings. The decade of the 2000s saw major public issues like Coal India (2010), which raised 15,200 crore and was the country’s largest IPO for many years. The mid-2000s (before the 2008 crash) saw frenzy, exemplified by Reliance Power’s IPO (2008). That IPO was oversubscribed within minutes at 450 per share, making it one of India’s biggest (11,700 crore). However, its post-listing performance plummeted (opening at 240 on the first day), illustrating early volatility in the IPO market.

Recent years have featured tech and startup IPOs. Some notable examples include:

IRCTC (2019) – India’s railway catering unit had a blockbuster IPO. Priced at 320/share, it soared to ~728 at close on debut (a 127% gain). It was subscribed over 100×, showing massive public interest.
Zomato (2021) – The food-delivery unicorn’s IPO priced at 72–76 listed at 115 on BSE (about 51% above issue) and peaked 81% over issue price. It was subscribed ~10×. This was one of the first big “new-age” tech IPO successes.
Nykaa (FSN E-Commerce, 2021) – Though not cited here, NYSE’s Indian beauty retailer IPO delivered similar strong listing gains.
Paytm (One97 Communications, 2021) – The fintech giant’s IPO (2,150 issue price) opened at 1,950 (about 9% below issue) and struggled, marking a notable IPO failure.
LIC (Life Insurance Corp, 2022) – India’s largest-ever IPO (21,000+ cr) also disappointed on debut. It opened at 867 on BSE, ~8.6% below the issue price of 949.
Others – Recent IPOs of SBI Cards, GIC Re (insurance), and ONGC have raised thousands of crores but often saw modest listing performance.

The IPO market remains active: newer companies like Hyundai Motor India (2024) led the charts with a 27,858 cr issue (oversubscribed ~2.4×) but listed slightly below issue. Altogether, India’s IPO history shows cycles of euphoria and caution, with some offerings delivering quick gains (e.g. IRCTC, Zomato) and others falling short (Reliance Power, Paytm, LIC).

Why Companies Go Public (Benefits of an IPO)

Companies choose to go public through an IPO mainly to raise capital. By selling shares to the public, a company obtains funds which can be used for expansion, R&D, debt repayment, or new projects. This infusion of equity can accelerate growth without incurring interest (unlike loans). For example, tech startups often go public to finance scaling up.

Other benefits include:

Liquidity and Exit for Owners: IPOs provide an exit route for early investors or private equity backers to sell shares at market prices. Founders and promoters can diversify their wealth by reducing personal stake gradually over time.
Credibility and Visibility: Being listed enhances a company’s public profile and brand. Shareholding by reputable institutional investors (anchor investors) and media attention build trust with customers and partners. It also makes it easier to raise future funds (e.g. follow-on offerings).
Employee Incentives: Public shares can be granted as stock options or ESOPs, aligning employee interests with company performance.
Currency for Acquisitions: Publicly traded stock can be used as currency to acquire other businesses.

However, these gains come with trade-offs. Companies must give up some ownership and comply with strict disclosure norms. SEBI requires extensive financial and business details (in the prospectus), and once public, the company faces shareholder scrutiny and governance standards. Despite these costs, the primary motivation remains capital and growth. As one Investopedia summary notes, “going public is primarily a way for companies to raise capital for growth”.

In the Indian context, many growing firms have leveraged IPOs to fund expansion. For instance, Coal India used its 2010 IPO proceeds to invest in new mines, while LIC’s 2022 IPO partly aimed to reduce government ownership and unlock value in the insurance sector.

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How the IPO Process Works in India

The IPO process in India follows a well-defined regulatory framework laid down by SEBI (via the ICDR Regulations) and company laws. Here’s a simplified overview of the steps and key players:

Appoint Merchant Bankers (Lead Managers): The company (issuer) selects investment banks or merchant bankers as Book Running Lead Managers (BRLMs). These banks manage the IPO end-to-end: due diligence, paperwork, regulatory filings, pricing, and marketing. They underwrite the issue (committing to buy unsold shares) and coordinate the sale.
Board Approval and Due Diligence: The company’s board approves going public and appoints advisors (lawyers, bankers, auditors). The bankers conduct a due diligence audit to prepare an offer document (prospectus).
Draft Prospectus (DRHP) and SEBI Filing: A Draft Red Herring Prospectus (DRHP) is filed with SEBI, containing detailed financial statements, business model, risks, and use of proceeds. SEBI reviews the DRHP and provides comments (observations). The prospectus format and disclosures are specified by SEBI.
Regulatory Approvals: The DRHP is also filed with the stock exchanges (NSE/BSE) and Registrar of Companies (RoC). SEBI’s approval is mandatory; RoC and exchanges verify compliance. Once all queries are addressed, SEBI clears the issue, allowing it to proceed.
Red Herring Prospectus & Price Band: With SEBI’s go-ahead, the Red Herring Prospectus (RHP) (final offer document) is issued. This includes the price band (floor and cap) for bids – SEBI permits up to a 20% gap between these limits. For example, if a band is 100–120, investors can bid anywhere in that range. The RHP also fixes the lot size (minimum shares per application).
Book Building & Bidding: The IPO is opened for subscription (usually 3–5 working days). In a book-building IPO (common in India), investors bid quantities and prices (within the band). Qualified Institutional Buyers (QIBs), High Net Worth Individuals (HNIs/NII), and Retail Investors have separate quotas (e.g. SEBI often mandates 50% QIB, 35% retail, 15% NII). Investors can place up to 3 bids (each within the band) via ASBA (Application Supported by Blocked Amount) – meaning their funds remain in their account but are blocked until allotment.
Anchor Investors: Before public bidding starts, some shares (up to 60% of the QIB portion) can be allocated to “anchor” investors (large funds) at the cut-off price. This happens a day before the IPO opens and signals confidence.
Closing and Allotment: After the IPO closes, the company (with its bankers and registrar) finalizes the cut-off (actual issue) price. If fully subscribed, it may use the cap price. Shares are then allotted. If oversubscribed, SEBI’s norms come into play. For example, under-subscription in one category can lead to spillover to others. For oversubscription, a fair lottery is held. As Zerodha explains, “when the number of applications exceeds the shares available, the registrar will conduct a lottery to allot shares”. Typically, retail investors often get a proportionate allotment (often as little as one or few lots each) if bids far exceed the quota.
Listing on NSE/BSE: Once allotments are finalized and shares are credited to investors’ demat accounts, the shares start trading on the designated exchanges. Listing usually happens 2–3 days after bidding ends. For example, Zomato’s IPO closed on July 14, 2021, and it listed on July 23, 2021. The listing price is determined by market demand. Exchanges (NSE/BSE) supervise the listing, ensuring at least the minimum free-float of shares is met.

Throughout this process, SEBI enforces strict rules. The SEBI (Issue of Capital and Disclosure Requirements) Regulations set eligibility criteria (minimum profit track record, net worth, etc.), mandatory lock-in periods for promoters and anchor investors, and the book-building mechanism. SEBI also regulates pricing: for a book-building IPO, the price band gap cannot exceed 20%.

In summary, the IPO mechanism in India involves multiple steps and entities (merchant bankers, exchanges, SEBI, registrars) to ensure that by the time an IPO reaches investors, most material information has been disclosed, and the allotment process is fair and transparent.

How to Apply for an IPO in India

Indian investors (retail or institutional) can apply for IPO shares primarily via the ASBA method, using either online banking or broker platforms. Here’s how retail and institutional investors typically participate:

Demat and Bank Accounts: You must have a Demat (electronic shares) account and a PAN card. Traditionally, you also needed a bank account in a Self-Certified Syndicate Bank (SCSB) for ASBA. Now, with UPI integration, a UPI-enabled bank account suffices up to 5 lakh (and 10 lakh for HNI/NII).
UPI-based ASBA (Online Brokers/Banks): SEBI now mandates that retail investors (up to 5 lakh) use UPI as the payment method. Most brokers (Zerodha, Groww, Angel One, etc.) and banks have integrated IPO applications via UPI 2.0 mandates. The typical steps on an online platform (e.g. Zerodha’s Kite) are: log in, navigate to the IPO or “Bids” section, select the IPO, choose investor type (Retail/HNI), enter your UPI ID and bid quantity and price (within the issue’s price band, in multiples of the lot size), then submit the bid. For instance, Zerodha’s instructions say: “Enter the UPI ID. Enter the Qty and Price. The quantity should be a multiple of the lot size, and the price entered should be within the issue price range.”. After submitting, you must approve the mandate payment request that appears in your UPI app (Google Pay/Paytm/PhonePe, etc.) before the IPO deadline. This effectively blocks the bid amount until allotment.
Bank Netbanking ASBA: Many banks offer an IPO subscription facility in their netbanking (ASBA portal). The investor logs into netbanking, finds the “IPO ASBA” section, selects the IPO, fills in demat and bid details, and allocates funds. The bank blocks (holds) the required amount in your account (without debiting it). If you’re allotted shares, the amount is debited; if not, it is released. This is the traditional ASBA method and is still available alongside UPI.
Physical ASBA Form: Less common now, but one can download the ASBA form from NSE/BSE websites, print it, fill it out manually, and submit to the SCSB bank branch. This freezes funds in the bank account until allotment.
Applying through Brokers like Zerodha: Brokers such as Zerodha automate the UPI/ASBA process. For example, Zerodha’s Kite platform even lets you place up to 3 bids (with different prices) – the highest bid amount is blocked in your bank. They give a scenario: if an IPO band is 100–105 and lot is 10 shares, you could bid 10 shares @102, 150 @101, and 50 @105 (cutoff). Zerodha then explains how the blocked amount is calculated. This integration makes IPO applications convenient for retail investors.
Retail vs Institutional Application: Note that qualified institutional buyers (QIBs) and non-institutional investors (NIIs/HNIs) bid in separate categories with higher bid limits (above 2–10 lakhs). Retail investors (bid value ≤ 2 lakhs as per old norms, though UPI relaxes this) have their own quota (generally 35% of issue).

Once the IPO closes, all applicants can check allotment status on the registrar’s website (e.g. KFintech, Link Intime, Bigshare) or on the exchange portals. The allotment (if any) is communicated a few days after bidding ends. If shares are allotted, they get credited to your Demat account by the listing date. If not, your blocked funds are unfrozen.

Key Points on IPO Application: Always bid in multiples of the lot size (you cannot bid for fewer than the lot). Enter bids within the price band (or at cutoff to accept any issue price). Retail investors can place up to 3 price bids (with the highest bid amount blocked). Ensure your bank or UPI account has sufficient funds to cover the bid (SEBI’s UPI mandate limits apply – up to 5 lakh per IPO application).

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IPO Success and Failure Stories in India

IPOs can be lucrative wealth generators – but not always. Here are a few notable case studies from India:

Success: IRCTC (2019) – This IPO is often cited as a wealth-creation story. The price band was 315–320; at 320 issue price, IRCTC opened above 700. As reported by Mint, “shares of IRCTC more than doubled on their listing debut… They rose as much as 132% to 743, compared to issue price of 320, before ending at 728 (up 127%)”. Retail investors who got shares at 320 saw immediate gains of over 100%. Analysts noted this as proof that “high quality business… leaves a lot on the table for investors”.
Success: Zomato (2021) – Marked the entry of Indian unicorns into public markets. Priced at 72–76, Zomato’s IPO was eagerly awaited. It was fully subscribed on Day 1, with retail bids 2.69× in the retail portion. It listed at 115 on BSE (a 51.3% premium) and briefly hit 138 (81% above issue). It closed Day 1 around 125.85 (up ~65%). Thus, retail investors gained handsomely: a 76 allotment became >125 overnight.
Modest Success: Coal India (2010) – Once the largest IPO, Coal India (15,200 cr) listed about 15% above issue price on debut (it was priced at 245 and opened around 280). Many long-term Coal India investors did well, though gains normalized over time. [Cited in historical context above]
Failure/Warning: Reliance Power (2008) – A cautionary tale. IPO issue price was 450; it opened at 240 on listing (nearly -47%). ICICI Direct notes that despite being oversubscribed instantly, “post-listing performance has been disappointing, and the stock plunged, causing huge losses for investors.” It concluded that Reliance Power’s IPO “showed everybody the risks associated with investing in high-profile offerings”. Those who bid at 450 lost nearly half their money by opening bell.
Failure: Paytm / One97 Communications (2021) – India’s first major fintech IPO. Issue price was 2,150, but it listed at 1,955 (BSE) – roughly 9% below issue. It ended Day 1 even lower. The tepid debut wiped out investor expectations; early investors who didn’t sell before listing faced losses. This highlighted that not all unicorn IPOs are instant winners.
Failure: LIC (2022) – Even with strong government backing, LIC’s stock “met its nightmare scenario” on debut. It was issued at 949 (with retail & employee discounts), but debuted around 867 (BSE) – an 8.6% loss. Despite 3× subscription, the listing price implied a GDP-tier IPO that disappointed investors. The day’s high was 918, still below issue price.
Mixed: SBI Cards (2020) – Priced at 755, SBI Cards listed at 736 (bumpy start, small loss). Over time it recovered. General Insurance Corp (GIC Re, 2017) similarly listed flat, but later gave good returns.

These examples illustrate that IPOs can grow wealth if the company’s prospects justify premium pricing (IRCTC, Zomato), but they can also hurt investors if hype outstrips fundamentals (Reliance Power, Paytm, LIC). A key lesson is to do one’s own research. As one commentator noted, Reliance Power’s IPO “brought out the fact that due diligence on the part of investors is very imperative”. Investors should treat every IPO critically, rather than assuming listing-day gains are guaranteed.

Important IPO Terms Explained

Price Band (Price Range): When an IPO opens for bidding, the company sets a floor price (minimum bid) and a cap price (maximum bid). This range is the price band. Investors can bid any price between these limits (or choose the “cut-off” option). The price band helps discover the final issue price through demand. SEBI allows a maximum 20% spread between floor and cap. For example, Zomato’s price band was 72–76.
Cut-Off Price: In a book-building IPO, retail investors can opt for the “cut-off” price. By doing so, they agree to pay the final issue price determined after bidding. If the issue is subscribed above the cap, the company often hits the cap price. Retail bidders selecting cut-off essentially bid at the cap price (they will get shares at that final price). This is why you see “Cut-off (105)” in examples.
Lot Size: This is the minimum number of shares you must bid for in an IPO. You cannot apply for fewer than one lot. For retail investors, the lot size is usually set so that the minimum investment is a few tens of thousands of rupees. For instance, if lot size is 100 shares and price band is 66–70, a retail investor must bid for at least 100 shares (investing 6,600–7,000) and then in multiples (200, 300, etc.). The lot size is decided by the company and mentioned in the prospectus.
Allotment: After bidding closes, shares are distributed (allotted) to successful applicants. If bids exceed available shares (oversubscribed), the IPO registrar conducts an allotment lottery among applicants. As Zerodha explains, in oversubscription “the registrar will conduct a lottery to allot shares to the applicants”. Thus, not everyone gets shares, and if you do, it’s often a smaller quantity than applied. For instance, if an IPO is 10× oversubscribed, a retail investor who bid for 100 shares might only get 10 or fewer. The basis of allotment is finalized by the registrar (usually 3-4 days post-close) and communicated on exchanges/registrar websites.
Grey Market Premium (GMP): This is the unofficial price of IPO shares in the unregulated “grey market” before listing. IPO GMP equals the expected listing price minus the issue price. For example, if GMP is 20 on an IPO priced at 100, the implied grey-market listing price is 120. A high positive GMP suggests bullish sentiment. However, GMP is a private, unofficial indicator and not sanctioned by regulators. It can fluctuate wildly. In India, investors sometimes refer to it for gauging demand, but SEBI warns investors not to rely on grey market deals (they carry legal risk). If you want to know about What is IPO GMP then cliclk Here.
Subscription Ratio: Often mentioned after an IPO closes. It is the ratio of total bids to available shares. E.g. “IPO subscribed 10.7×”. If a 200 cr issue gets 2,000 cr in bids, it’s subscribed 10×. A higher ratio means stronger demand (and usually fewer shares for retail). For example, Zomato’s IPO saw 10.7× oversubscription, meaning huge demand.

Understanding these terms helps you participate in IPOs knowledgeably and avoid mistakes like bidding at the wrong price or quantity. (For more on each term, see [17], [19], [22], [65] above.)

Risks of IPO Investing

While IPOs can be exciting, they carry risks that investors must recognize:

Volatility and Speculation: What is IPO… stocks often swing wildly on listing day. As one analysis notes, “IPOs shares witness wild price fluctuations… some go sky-high on account of investor mania, others fall steeply immediately after”. This volatility is often driven by hype, not fundamentals. For example, a euphoric market might push a new issue far above its fair value, risking a quick crash. The absence of historical trading data means newly listed stocks can be unpredictable.
Overpricing and Hype: IPO marketing (roadshows, anchor investor endorsements) can create unrealistic expectations. Share.market cautions that IPOs “are accompanied by extensive promotion… which may occasionally be excessive and result in overpricing and unrealistic expectations.” Investors should ignore the fanfare and objectively evaluate fundamentals and risks. A high Grey Market Premium (GMP) or hype does not guarantee a profitable listing.
Allotment Uncertainty: Many IPOs are oversubscribed, meaning not everyone gets shares. Retail investors are often allotted a fraction of their application. Share.market warns: “Non-allotment can lead to retail investors purchasing shares on the listing day at higher prices, with the potential for short-term losses”. In other words, if you don’t get enough shares, you might have to chase the stock in the open market (often above issue price) to enter the investment, which can be expensive. An oversubscription also means your application money remained blocked without return opportunity until allotment news.
Limited Company History: Some IPO companies (especially start-ups) have a short financial track record. As noted, newly public companies “may not have a record of consistent profits or long-term earnings data,” making it hard to assess true value. Lack of history amplifies uncertainty: you’re buying on future projections rather than established performance.
Lock-in Period Risks: Promoters and pre-IPO investors are typically locked in (unable to sell) for at least 1 year (six months for anchor investors, 3 years for major promoters in book-built issues). This prevents early dumping, but after the lock expires, big shareholders may sell, potentially depressing the stock price. If insider selling occurs post-lockup, share prices can fall sharply as supply floods the market.
Regulatory/Market Risks: If overall stock markets turn bearish or new regulations hit the industry, even well-received IPOs can stumble. For example, a sudden economic downturn can turn hot IPO offerings cold on listing day.

In summary, IPO investing is risky: prices can be volatile, bids might not be allotted, and sometimes fundamentals don’t justify hype. Even successful IPOs carry lock-up and “first-day seller” risks. As one expert wrote, an IPO should be approached with caution: due diligence is imperative.

Key Considerations Before Applying for an IPO

Before investing in any IPO, diligent research is essential. Here are key factors to consider:

Company Fundamentals: Read the prospectus thoroughly. Look at the company’s business model, revenue growth, profitability, and future prospects. Check its valuation – common metrics are P/E (price-to-earnings) and P/B (price-to-book) ratios after IPO price. Compare these to industry peers. If valuations seem sky-high, exercise caution.
Use of Proceeds: Understand why the company is raising money. Is it funding growth projects or merely paying off debt or rewarding insiders? A healthy IPO uses proceeds for expansion or innovation; an IPO for promoter exit is often a red flag.
Financial Health: Examine the past few years’ financial statements. Consistent revenue growth, improving margins, and positive cash flow are good signs. Beware of heavy debt, declining profits, or cash burn.
Industry Outlook: Consider the broader industry trends. Is the sector poised for growth? For example, companies in booming tech, e-commerce, or renewable energy sectors may have tailwinds. An IPO in a declining or highly competitive industry might be risky.
Promoter and Management Track Record: Research the founders and management team. Do they have a history of successful business ventures? Are they making a significant personal investment (skin in the game) by not selling all shares? Excessive share pledges by promoters (as a loan collateral) are also a warning sign.
Grey Market Premium (GMP): Although unofficial, GMP can reflect market sentiment. A very high GMP indicates strong demand, but also risk of profit-taking. A negative GMP (grey market below issue price) suggests lackluster demand. Use GMP cautiously – it is not an exact science and carries no guarantee.
Subscription Data: Watch how the IPO is being subscribed (news outlets typically release daily subscription updates). Heavy oversubscription indicates high demand but also means lower allotment chances. A lukewarm subscription may imply weak interest.
Market Conditions: Bullish stock markets can lift IPOs; in turbulent markets, even good IPOs may list below issue. Try to apply when markets are stable or trending up.
Quotes from Experts: Many broker reports or research notes will suggest whether to subscribe or not. For instance, analysts hyped IRCTC’s issue, whereas Paytm’s high valuation drew caution.
Lock-in and Listing Impact: Remember promoters’ holding will shrink after the IPO and locks end. Also, plan for the possibility of selling on listing day if you target short-term gains (though mandatory trading days may apply).

In short, treat an IPO like any equity investment: analyze risks versus rewards. Ignore the hype and endorsements, and make sure you understand why the company is going public and at what price. Only apply in an IPO if your research convinces you of its long-term value, not just fast listing gains.

Frequently Asked Questions (FAQ) about Initial Public Offerings (IPOs) in India (Beyond the Basics)

How is the IPO price determined? Is it always a fixed price?

The IPO price is primarily determined through a process called “book-building.” The company and its merchant bankers set a price band (a minimum and maximum price). Investors then bid within this range. Based on the demand at different price points, the final cut-off price is determined, which is the price at which shares are eventually allotted. While book-building is most common, some IPOs can also be at a fixed price, where the exact share price is announced upfront, and investors apply at that specific price.

What is the difference between a “fresh issue” and an “offer for sale (OFS)” in an IPO?

In a fresh issue, the company issues new shares to the public, and the money raised goes directly to the company’s balance sheet. This capital is typically used for business expansion, debt repayment, or other corporate purposes. In an Offer for Sale (OFS), existing shareholders (like promoters, private equity firms, or early investors) sell their shares to the public. The money raised from an OFS goes to these selling shareholders, not to the company. An IPO can consist of a fresh issue, an OFS, or a combination of both.

How soon after an IPO can I sell my allotted shares?

Once your allotted shares are credited to your Demat account, they typically become available for trading on the stock exchange on the official listing date. You can sell your shares on the listing day itself, once trading begins. However, there are lock-in periods for promoters, pre-IPO investors, and anchor investors, meaning they cannot sell their shares for a specified duration (e.g., 6 months to 3 years), which helps ensure stability.

What happens if an IPO is “undersubscribed”?

If an IPO is undersubscribed, it means that the total number of bids received is less than the number of shares offered. In such a scenario, all applicants usually receive the full quantity of shares they applied for. The company may also choose to reduce the issue size or, in rare cases, withdraw the IPO if it doesn’t meet the minimum subscription requirements set by SEBI.

Can I apply for multiple lots in a single IPO?

Yes, for retail investors, you can apply for multiple lots within the retail individual investor (RII) category, as long as your total application value does not exceed ₹2 lakh (though UPI mandate limits can be higher, the retail category itself generally caps at ₹2 lakh application value). You can also typically place up to three separate bids at different prices within the price band using online platforms like Zerodha. For High Net Worth Individuals (HNIs)/Non-Institutional Investors (NIIs), there are no upper limits on application value.

What role does a Registrar play in an IPO?

The Registrar to an Issue is a crucial intermediary in the IPO process. Their primary responsibilities include:

Managing the application process.
Processing bids and ensuring compliance with regulations.
Determining the basis of allotment (especially in oversubscribed issues).
Finalizing the allotment of shares.
Processing refunds for unsuccessful applicants.
Crediting shares to the Demat accounts of successful applicants.
Maintaining records of shareholders. Companies like KFintech, Link Intime, and Bigshare are common registrars for IPOs in India.

What is “Basis of Allotment” and where can I check it?

The “Basis of Allotment” is the detailed document explaining how shares were distributed among applicants, especially in oversubscribed IPOs. It outlines the criteria and number of shares allotted to different investor categories. You can usually check your allotment status and the basis of allotment on the website of the Registrar to the IPO (e.g., KFintech, Link Intime) or on the websites of the stock exchanges (NSE/BSE) a few days after the IPO bidding closes.

How does SEBI regulate IPOs in India?

SEBI (Securities and Exchange Board of India) is the primary regulator for IPOs in India. It ensures investor protection and market transparency through various regulations, notably the SEBI (Issue of Capital and Disclosure Requirements) Regulations (ICDR Regulations). SEBI sets eligibility criteria for companies going public, mandates comprehensive disclosures in the prospectus, governs the book-building process, sets rules for lock-in periods, and oversees the overall fairness and integrity of the IPO market.

What is “Anchor Investor” participation in an IPO?

Anchor investors are large institutional investors (like mutual funds, foreign portfolio investors, or insurance companies) who are allocated a portion of the shares one day before the IPO opens for public subscription. This happens at the final issue price. Their participation signals confidence in the IPO and helps build momentum and credibility for the public offering. Up to 60% of the Qualified Institutional Buyer (QIB) portion can be allotted to anchor investors.

What happens to my money if I don’t get an IPO allotment?

If you apply for an IPO via ASBA (UPI or Netbanking) and do not receive any allotment of shares (or receive a partial allotment), the blocked amount corresponding to the unallotted shares will be unblocked and released back into your bank account. This typically happens within 2-3 working days after the allotment finalization. The funds are never debited from your account unless shares are allotted.

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