Products · IPO
Initial Public Offerings: your gateway to public markets
An IPO is the pivotal moment a private company offers its shares to the public for the first time — raising capital as it becomes publicly traded. For investors, it’s a chance to buy in at the company’s initial offering.
The basics
What is an IPO?
An Initial Public Offering is the process by which a private corporation issues new shares to the public for the first time. This move from private to public ownership lets the company raise capital from a wide range of investors. Once complete, its shares list on a stock exchange, where the general public can buy and sell them.
The motivation
Why do companies go public?
Capital raising
The primary reason — raising significant capital to fund growth, expansion, R&D, debt repayment or acquisitions.
Liquidity for early investors
An exit for venture capitalists, angels and founders, letting them cash out their investments.
Public image & brand
Being publicly traded boosts visibility, credibility and brand recognition.
Employee motivation
Public shares power employee stock-option plans, helping attract and retain talent.
Future fundraising
Once public, a company can more easily raise further capital through secondary offerings.
Acquisitions
Publicly traded stock can be used as currency for future mergers and acquisitions.
Step by step
The IPO process
Select underwriters
The company chooses one or more investment banks (underwriters) to manage the IPO — advising on pricing, timing and market conditions.
Due diligence & filings
Underwriters run extensive due diligence; the company files a detailed prospectus — in India a Draft Red Herring Prospectus (DRHP) — with SEBI, covering its business, financials and risks.
Price the shares
The company and underwriters set the offer price — fixed or via a book-building process — based on demand, valuation and comparable companies.
Roadshow
Management and underwriters meet potential institutional investors to generate interest and gauge demand.
Allocation & listing
Shares are allocated to institutional, HNI and retail investors, then begin trading on an exchange (NSE, BSE) on the listing date.
For investors
Benefits for investors
Access to growth
Invest in companies often in a high-growth phase and potentially poised for significant appreciation.
Early entry
Get in on the ground floor of a company’s public journey.
Diversification
Add new companies and sectors to your investment portfolio.
Potential listing gains
In some cases shares list at a premium to the offer price, providing immediate gains.
Know the risks
Risks associated with IPO investing
Volatility
IPO stocks can be highly volatile in the first days or weeks, driven by speculation and limited trading history.
Lack of history
New public companies offer less historical financial and performance data to analyse.
Overvaluation
An IPO may be overpriced, leading to a decline in share price after listing.
Lock-up periods
When insiders’ lock-ups end, added supply can put downward pressure on the price.
Market sentiment
An IPO’s success can hinge heavily on overall market mood.
Limited allocation
Retail investors may receive a small allocation — or none — in heavily sought-after IPOs.
Your roadmap
How to participate in an IPO in India
Open a Demat & Trading account
You need an active Demat account (to hold shares) and a trading account (to place orders) with a SEBI-registered broker.
Research the IPO
Read the DRHP and Red Herring Prospectus (RHP) to understand the business, financials, risks and the purpose of the IPO.
Apply for the IPO
- ASBA — apply via your bank’s net banking; funds are blocked (not debited) until allotment.
- UPI — retail investors can apply via UPI through supported brokers and banks.
Check allotment status
Once bidding ends, check status on the registrar’s site or through your broker.
Listing & trading
Allotted shares appear in your Demat account on listing day, after which they can be traded on the exchange.
Is IPO investing right for you?
Invest in tomorrow’s public companies
IPOs can be an exciting opportunity — but they reward careful research, an understanding of the risks and a disciplined approach. Assess your risk tolerance and goals, then apply seamlessly via UPI with your Absolute Broking account.