Learn About IPO Investing
Everything you need to know about IPOs, from basics to advanced strategies. Start your investing journey with confidence.
What is an IPO?
Initial Public Offering basics
An Initial Public Offering (IPO) is when a private company offers its shares to the public for the first time. This allows the company to raise capital from public investors, and in return, investors get ownership stakes in the company.
Company Goes Public
Private company sells shares to the public for the first time
Raise Capital
Company raises money for expansion, debt repayment, or other purposes
Public Ownership
Investors become part-owners of the company by buying shares
Types of IPO
Mainboard IPO
For large, established companies. Listed on NSE/BSE main board. Higher minimum investment. Strict SEBI regulations.
SME IPO
For small and medium enterprises. Listed on NSE SME or BSE SME. Higher risk but potential for bigger returns.
Investor Categories
Who can apply in an IPO
Retail Individual Investor (RII)
Individual investors who apply for shares worth up to ₹2 lakhs.
- Investment limit: Up to ₹2 lakhs
- 35% quota reserved
- Lottery-based allotment
Non-Institutional Investor (NII/HNI)
High net worth individuals investing more than ₹2 lakhs.
- Investment: Above ₹2 lakhs
- 15% quota reserved
- Pro-rata allotment
Qualified Institutional Buyer (QIB)
Banks, mutual funds, insurance companies, and other institutions.
- Large institutional investors
- 50% quota reserved
- Pro-rata allotment
How to Apply for an IPO
Step-by-step guide
Open a Demat & Trading Account
You need a Demat account with any broker like Zerodha, Groww, Upstox, or Angel One. Also ensure your bank account is linked.
Complete UPI Mandate Setup
Link your UPI ID (like yourname@upi) to your trading account. Most IPO applications now use ASBA (Application Supported by Blocked Amount) via UPI.
Find Open IPOs
Check IPO Guruji for currently open IPOs. Review the price band, lot size, and issue details before applying.
Apply via Broker App
Go to IPO section in your broker app, select the IPO, choose number of lots, enter your UPI ID, and submit the application.
Approve UPI Mandate
Open your UPI app (Google Pay, PhonePe, BHIM) and approve the mandate request. The amount will be blocked (not debited) in your account.
Wait for Allotment
Allotment happens 2-3 days after IPO closes. If allotted, shares are credited to Demat. If not, the blocked amount is released.
GMP (Grey Market Premium)
Understanding the unofficial market
Grey Market Premium (GMP) is the unofficial price at which IPO shares trade before they are officially listed on the stock exchange. It indicates market demand and expected listing gains.
Positive GMP
Indicates expected listing at premium. High demand for the IPO.
Negative GMP
Indicates expected listing at discount. Low demand or negative sentiment.
Important Disclaimer
GMP is an unofficial indicator from grey markets. It may not reflect actual listing prices. Trading in grey markets is not regulated by SEBI. Use GMP only as a reference, not as investment advice.
IPO Timeline
Key dates to remember
IPO Open Period
Investors can apply for IPO shares during this window
IPO Closes
Last day to submit applications
Basis of Allotment
Registrar finalizes allotment based on demand
Refund/Unblock
For non-allotted applications, amount is unblocked
Credit to Demat
Allotted shares credited to your Demat account
Listing Day
Shares start trading on stock exchange
Tips for IPO Investing
Maximize your chances
Apply with Multiple Demat Accounts
Family members can apply separately. Each application has equal chance in lottery.
Apply at Cut-off Price
For retail investors, always apply at cut-off price to ensure your application is valid.
Research Before Applying
Read the RHP (Red Herring Prospectus), check company financials, and understand the business.
Apply on Last Day
Apply on the last day after checking subscription status. But don't wait until last minute!
Don't Chase Oversubscribed IPOs
High subscription doesn't guarantee profits. Focus on fundamentals, not hype.
Set Realistic Expectations
Not all IPOs give listing gains. Some may list at discount. Invest for long term if you believe in the company.
What is an NFO?
New Fund Offering basics
A New Fund Offering (NFO) is when an Asset Management Company (AMC) launches a new mutual fund scheme and offers units to investors for the first time at face value (usually ₹10).
Benefits of NFO
- Entry at face value (₹10)
- Access to new investment themes
- Low minimum investment
Considerations
- No track record to evaluate
- Exit load may apply
- Compare with existing similar funds
Frequently Asked Questions
Common questions about IPO investing
What is an IPO?
An Initial Public Offering (IPO) is when a private company offers its shares to the public for the first time. This allows the company to raise capital from public investors, and in return, investors get ownership stakes in the company. IPOs are listed on stock exchanges like NSE and BSE.
How do I apply for an IPO online?
To apply for an IPO: 1) Open a Demat and trading account with any broker (Zerodha, Groww, Upstox, Angel One). 2) Link your UPI ID for ASBA payments. 3) Find open IPOs in your broker app. 4) Select the IPO, choose number of lots, and submit application. 5) Approve the UPI mandate request in your UPI app. The amount will be blocked until allotment.
What is GMP in IPO?
Grey Market Premium (GMP) is the unofficial price at which IPO shares trade before they are officially listed on the stock exchange. It indicates expected listing gains. For example, if issue price is ₹100 and GMP is ₹50, the expected listing price is ₹150. However, GMP is unofficial and not regulated by SEBI.
What is the minimum investment in an IPO?
The minimum investment depends on the lot size and price band. For retail investors (RII category), you can apply for up to ₹2 lakhs. The minimum investment is calculated as: Lot Size × Issue Price. For example, if lot size is 15 shares and price is ₹300, minimum investment is ₹4,500.
How is IPO allotment done?
For Retail Individual Investors (RII), allotment is done through lottery if the IPO is oversubscribed. Each application gets equal chances regardless of number of lots applied. For NII and QIB categories, proportional (pro-rata) allotment is done based on demand.
What is the difference between Mainboard IPO and SME IPO?
Mainboard IPO is for large, established companies with minimum issue size of ₹10 crore, listed on NSE/BSE main board with strict regulations. SME IPO is for small and medium enterprises, listed on NSE SME or BSE SME platform with relaxed criteria. SME IPOs carry higher risk but may offer bigger returns.
When do I get allotted shares?
IPO allotment typically happens 6-7 working days after the IPO closes. The timeline is: Day 1-3: IPO open period, Day 4: IPO closes, Day 5-6: Basis of allotment finalized, Day 7: Refund processed for non-allotted applications and shares credited to Demat for allotted applications, Day 8: Listing day on stock exchange.
What is NFO?
New Fund Offering (NFO) is when an Asset Management Company (AMC) launches a new mutual fund scheme and offers units to investors for the first time at face value, usually ₹10 per unit. Unlike IPOs which are for company shares, NFOs are for mutual fund units. Investing in NFO gives you entry at a fixed low price.
Can I apply for IPO from multiple Demat accounts?
Yes, but each application must be from a unique PAN card. You cannot apply multiple times using the same PAN. However, family members (spouse, parents, children) can each apply separately using their own PAN and Demat accounts, giving your family multiple chances in the lottery.
Is IPO investment safe?
IPO investment carries market risk like all equity investments. Not all IPOs give listing gains, and some may list at a discount to issue price. Research the company thoroughly by reading the Red Herring Prospectus (RHP), checking financials, understanding the business, and consulting a financial advisor. Only invest what you can afford to lose.
Ready to Start Investing?
Check out the latest open IPOs and start your investment journey today.