Initial Public Offer subscription is the process of applying for shares in an entity whenever it raises funds through the public. The IPO Subscription process allows investors to take an ownership stake in a company when it goes public. There is a specific period (also known as the subscription window) during which investors can apply for subscription in an IPO and can place their bids and orders in that period.
Subscribing to an IPO refers to the process of applying for shares at the price of the IPO. The issue price or the price band of the shares is decided by the Merchant Bankers and the Promoters.
There are two types of IPO pricing: fixed-price method and Book-Building method. The investor is not allowed to place orders at a price that is lower or higher than the set price band. Let’s dive into the IPO subscription process deeply.
IPO timing refers to the specific schedule during which investors can apply for shares in a public offering. The IPO application window typically remains open for 3 to 5 working days, as specified in the Red Herring Prospectus (RHP). Investors can place bids during this period, usually between 10:00 AM and 5:00 PM on trading (working) days.
So, to better understand it, let's take an example:
Indogulf Sciences offered its IPO to the public, so investors were allowed to apply for it from 26th June 2025 to 30th June 2025, the first date is the opening date, and the latter is the closing date. The duration from 26th June to 30th June 2025 is known as the subscription window. The expected date on which investors are allotted their shares is 1st July, and a refund to the investors who were not allotted shares is made on 2nd July. This whole process is the IPO subscription process period, and after this time period, the shares are listed on the stock exchange and are traded thereon.
From the investor's point of view, there are no charges levied on them in the process of IPO subscription; the investor is only liable to pay the amount of the order that is placed and nothing else.
In the process of an IPO, the Issuer handles the bank and stockbroker charges for handling the IPO subscription process.
The 4 types of investors who can apply for IPO subscription are -
At the time of applying for the IPO subscription, the investors have to pay the application amount. After the completion of the IPO process, if the investor is not allotted the shares, the company is liable to refund the amount within 4 working days.
In case of delay, investors can reach out to the registrar appointed by the company or can raise a complaint with the SEBI against the company.
Explore Upcoming Mainboard IPOs
Invest in growing companies- The IPO subscription process plays a crucial role in helping investors participate in the early stages of a company's public journey. By subscribing to an IPO, investors get an opportunity to become shareholders in a company at its initial offer price, often before it lists on the stock exchange, and provides potential for early gains.
Long term growth- For long-term investors, IPOs offer access to companies with strong growth potential. Participating in an IPO allows investors to diversify their portfolios with new-age businesses or industry leaders that were previously privately held. Moreover, IPOs are regulated by SEBI, ensuring a transparent and secure process for retail and institutional investors alike.
In short, IPO subscription provides a strategic entry point, potential for early gains, and a chance to support growing businesses, making it a valuable option for both retail and institutional investors.
Have a look at the key benefits of SME IPO for growing businesses and investors.
Sometimes, an IPO gets more attention than expected. When more investors apply for shares than what’s available, it’s called oversubscription. This often signals strong demand and positive market sentiment.
In such cases, shares are allotted either proportionally or through a lottery, especially for retail investors. While oversubscribed IPOs often lead to good listing gains, it's still wise to evaluate the company's fundamentals — not just follow the hype.
Undersubscription is the opposite — it happens when not enough investors apply for the IPO. This usually reflects weak demand, possibly due to market uncertainty or concerns about the company’s financials.
If key categories like institutional buyers don't subscribe fully, the IPO may be extended, restructured, or even canceled. For investors, undersubscription is often a red flag, so always research the business before applying.
Detailed Difference between Oversubscription and Undersubscription
Investors can apply for an IPO through two ways
ASBA (Applications Supported by Blocked Amount): Use your net banking or mobile banking app to apply. Your funds stay in your account and are only blocked — not withdrawn — until allotment.
UPI: Use platforms like Zerodha, Groww, or Angel One to apply with your UPI ID. It’s quick, mobile-friendly, and SEBI-approved.
Check IPO Eligibility on SME Platform
How to increase chances of IPO allotment?
IPO Subscription Quick Checklist
✅ IPO Subscription Quick Checklist (India)
The price band is the range within which investors can bid for shares during the book-building process. The price band must be announced at least two working days before the IPO opens, or earlier in pre-issue advertisements.
The IPO price is set based on demand, market conditions, and financial metrics like EPS and P/E ratio, in consultation with the merchant banker.
In a fixed price issue, the price is pre-decided, while in a book-built issue, the final price is determined through investor bidding.
Differential pricing allows different prices for different investor categories, such as discounts for retail investors and employees.
IPO pricing is a key IPO process that involves detailed analysis by the company and merchant bankers in India. It is based on various factors such as the company’s financial performance, future growth prospects, industry comparisons and current market trends. There are typically two methods used for IPO pricing in IPO: Fixed Price and Book Building. In a Fixed price Issue, the price is decided and disclosed in advance. In book building, a price band is provided, and investors bid within that range. The final price is determined after evaluating investor demand. Valuation techniques, like comparing with peer companies or calculating based on earnings, also influence the pricing. This ensures a fair price that balances company value and investor interest. List of Upcoming Mainboard IPO
SME IPOs offer the potential for high returns but also carry significant risks like low liquidity, business concentration, limited track record, and market volatility. Post-listing, price discovery can be sharp, and exit options may be limited. Investors should thoroughly analyze the DRHP, management, competitive positioning, and financials. SME IPOs are suitable for investors with higher risk tolerance and long-term investment horizon. List of Upcoming SME IPO
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