Companies planning an Initial Public Offering (IPO) in India undergo a structured, multi-stage procedure. The IPO process generally spans 6–8 months, though it may vary for SME IPO and Mainboard IPO. It begins with IPO Readiness, evaluating the listing criteria, resolving any legal or financial issues, and securing necessary in-principle approvals for listing on the stock exchanges of India. Investors need to understand the process of IPO in India. Here is a brief and concise explanation of IPO process.
Companies often engage IPO advisory services at this stage; experienced IPO advisors and consultants can help audit the business, align governance and financial reporting with public-company standards, and verify all listing requirements are satisfied. A company becomes eligible by fulfilling the IPO Eligibility Criteria and Listing Norms as specified by SEBI in ICDR Regulations.
A SEBI-registered Merchant Banker (lead manager) is hired to lead the process. The lead manager coordinates due diligence, structures the offering and liaises with SEBI and the exchanges. Other key IPO intermediaries include underwriters (if any), a registrar (RTA) to the issue (who will handle applications and allotments), collecting bankers (for funds management), legal counsel, auditors and company secretaries.
BRLM conducts the due diligence, IPO valuation in coordination with financial intermediaries, while the registrar processes subscription forms, allots shares and manages IPO refunds. Engaging a full IPO advisory team – sometimes called “IPO Consultants” – ensures that every compliance task (from accounting to disclosures) is covered.
The lead managers (with financial consultants) draft the Draft Red Herring Prospectus (DRHP) to be filed with SEBI. This draft includes the company’s business description, management details, restated financial statements, risk factors, and proposed use of IPO proceeds. Collating this information in the DRHP often takes several months. During this phase. the IPO advisors ensure that all material facts are disclosed and that the draft prospectus meets SEBI’s format and content rules.
When the draft prospectus (DRHP) is ready, copies are filed with the respective Stock Exchange and the Registrar of Companies. Within two working days of filing, the company issues a public announcement of the proposed IPO. The DRHP is available on the websites of respective stock exchange for the mandatory 21-day public comment period. The company and its advisors have to address the queries of the Exchanges and revise the document accordingly. After all the observations are addressed, SEBI gives DRHP approval.
After the DRHP approval, a company has to file RHP (Red Herring Prospectus) with SEBI or the respective stock exchanges in case of SME IPO. The company, in consultation with its lead managers, decides on the IPO price. Marketing activities of the IPO also start and roadshows and marketing campaigns are conducted to generate investor interest. Management meets with analysts, institutional funds and media to highlight the business’s growth story.
The IPO is then opened to the public for Subscription (usually 3–5 working days). Investors apply for shares using the ASBA process through banks. Once the issue closes, the registrar computes the basis of allotment according to SEBI rules. On listing day, the company’s equity becomes publicly traded on the exchange (NSE, BSE or the SME platforms). A final prospectus which includes the IPO price is also filed.
The successful completion of these steps – from eligibility checks to IPO allotment – marks the end of the IPO procedure. Post-listing, the company continues with ongoing disclosure and compliance requirements under SEBI’s listing regulations (LODR).
Both are good SME platforms. However as per the past records it is seen that higher size IPOs are listed on NSE.
All IPO funds are credited to the company. An IPO can have two components i.e. Fresh Issue and an Offer for Sale. Fresh Issue proceeds are received by the company and offer for sale proceeds goes to investors who are making an exit from the company.
IPO costs include regulatory fees, underwriting fees, legal & compliance expenses, marketing costs, and merchant banker charges. Typically, IPO expenses range from 5% to 10% of the total issue size.
Entities or individuals debarred from accessing the capital market, wilful defaulters, fraudulent borrowers, or fugitive economic offenders are not eligible.
Experts like auditors, legal advisors, Merchant Bankers, and IPO advisors work together to navigate the process.
Mainboard IPOs are launched by larger companies and listed on the primary stock exchanges like NSE and BSE. They must meet stricter eligibility norms, such as a minimum post-issue capital of Rs. 10 crores and profitability track record. In contrast, SME IPOs cater to smaller businesses with less compliances. SME IPOs are listed on dedicated platforms like NSE Emerge or BSE SME. Investors should consider liquidity, company fundamentals, and compliance standards when investing. Mainboard IPOs offer more liquidity and are suitable for a wider range of investors, including large institutions.
Anyone with a valid PAN card and Demat account can apply for IPO. This includes, Individual investors, HNIs, NIIs, existing shareholders of the issuer company, Employees of the company. Check Detailed Mainboard IPO Eligibility
Yes, you can apply for an IPO after market hours through ASBA (Applications Supported by Blocked Amount) using net banking, UPI, or broker platforms. IPO applications are allowed between 10:00 AM to 5:00 PM on trading days, as per exchange guidelines. Even if an application is made after 5:00 PM, then that application will be considered for the next working day. The regular stock market trading hours are 9:15 AM to 3:30 PM for both NSE and BSE. Hence, there is no restriction for IPO applications to live market trading hours and they can be done beyond them. Explore SME IPO in India
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