What is an IPO? How to Apply in 2025
What is an IPO? It’s the first time a company offers its shares to the public, allowing investors to buy ownership. In India, IPOs are governed by SEBI and listed on NSE/BSE. This guide explains IPO meaning, process, and how beginners can apply step by step in 2025.
The IPO Craze: Why Everyone Talks About It
Remember the LIC IPO buzz in 2022, or Zomato and Nykaa’s massive listings? Lakhs of investors applied within days. That’s the power of an IPO (Initial Public Offering) — it gives everyday investors a chance to buy into companies before they officially list on stock exchanges.
But the real question is: What is an IPO, and how can you apply smartly? Let’s break it down.
What is an IPO?
An IPO (Initial Public Offering) is when a private company offers its shares to the public for the first time. Once the IPO is approved by SEBI and listed on NSE or BSE, the company becomes publicly traded.
👉 Example: When a startup like Zomato decides to raise funds, it files a Draft Red Herring Prospectus (DRHP) with SEBI, sets a price band, and invites retail, HNI, and institutional investors to subscribe.
So, IPO = first step of a company entering the stock market.
Why Do Companies Launch IPOs?
Companies don’t just launch IPOs for fame. They do it for reasons like:
Raising capital for expansion or new projects.
Paying off debt to clean up balance sheets.
Building brand trust — listed companies have higher credibility.
Giving early investors an exit — venture capital and PE funds often sell part of their stake in IPOs.
IPO Process in India (Step by Step)
Applying for an IPO looks simple, but the process behind it involves several stages:
Filing DRHP → Company files draft with SEBI for review.
Approval & Exchanges → After approval, NSE/BSE confirm listing.
Price Band Setting → Company + bankers decide range (e.g., ₹100–₹120).
Application Period → Usually 3–5 days for retail and institutional investors.
Allotment Process → If oversubscribed, allotment is random within quota.
Listing Day → Shares start trading on NSE/BSE — often with premium or discount.
How to Apply for an IPO in India (2025 Edition)
Method 1: Through Your Bank (ASBA)
Log in to net banking → IPO section.
Select IPO → enter quantity and price.
Amount blocked in account until allotment.
Method 2: Through Brokers (UPI)
Zerodha, Groww, Upstox allow IPO applications via UPI.
Accept UPI mandate → wait for allotment.
Method 3: NSE/BSE Platforms
Apply directly via NSE IPO portal or BSE site.
Requires Demat + PAN.
👉 Tip: Always use your Demat account linked with UPI or bank ASBA to ensure smooth processing.
IPO Allotment Process Explained
Retail quota = 35% of total shares reserved.
If IPO is oversubscribed, allotment is done by lottery.
If not oversubscribed, all applicants get allotment.
Refunds (unblocked funds) happen automatically if shares aren’t allotted.
Shares credited directly to Demat account before listing.
Pro Tips for Beginners in IPOs
Check Grey Market Premium (GMP) for early sentiment (but don’t rely fully).
Apply in retail quota (max ₹2L) for higher chance of allotment.
Diversify — don’t invest all money in one IPO.
Read DRHP carefully to understand company fundamentals.
Don’t chase hype — many IPOs list below issue price.
Case Example: Nykaa IPO
Nykaa launched its IPO in November 2021. Price band was ₹1,085–₹1,125. Investors who applied through UPI/ASBA and got allotment saw listing gains of nearly 80% on day one.
This shows IPOs can create huge opportunities, but only if you understand the process and risks.
Key Takeaways
IPO = Initial Public Offering, when companies go public.
Governed by SEBI, listed on NSE/BSE.
Apply via ASBA (bank) or UPI (brokers).
Allotment based on quotas & subscription.
IPOs can give great gains but need careful study.
FAQs
Q1: What is an IPO in stock markets?
A: It’s the first public sale of shares by a private company to investors.
Q2: How can beginners apply for IPO in India?
A: Through ASBA in banks, UPI via brokers, or NSE/BSE IPO portals.
Q3: Do I need a Demat account for IPOs?
A: Yes, all IPO applications in India require a Demat account.
Q4: What is SEBI’s role in IPOs?
A: SEBI approves DRHP and regulates IPO compliance.
Q5: How is IPO allotment decided?
A: Allotment depends on oversubscription and retail quota, often via lottery.
Why Trading Shastra is the Best Place to Learn IPO Basics
At Trading Shastra Academy, founded by Himanshu Gurha, we go beyond theory:
Learn IPO application process with live examples.
Understand DRHP, allotment, and SEBI rules.
Offline + online training in Noida / Delhi NCR.
Get exposure to real trading capital, NISM certification, and internship stipends.
This makes Trading Shastra the go-to choice for professionals and beginners alike.
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Disclaimer
This blog is for educational purposes only. Stock market investments are subject to risks. Please do thorough research before investing.