An IPO represents a private company’s first offering of shares to the general public. This transition converts a privately-held business into a publicly-traded corporation, allowing the company to raise significant capital while offering early investors an exit opportunity.
Why Companies Launch IPOs
Private companies operate with limited shareholders—founders, family members, venture capitalists. As expansion accelerates, capital requirements surge beyond what private investment provides. IPOs solve this through public market fundraising, simultaneously enabling early investors to realize returns on their investments.
IPO process private to public company conversion
The company raises funds through the “primary market” during the IPO. Post-listing, shares trade in the “secondary market” (NSE/BSE) where everyday investors buy and sell.
Two IPO Types
Fixed-Price Offering: Company sets exact share price. Transparent, predictable for investors.
Book-Building Offering: Company establishes price band (floor to cap price). Investors bid within this range, finalizing price based on demand.
Requirements to Apply
Essential prerequisites before IPO investment:
- Valid PAN Card (mandatory)
- Active Demat Account (holds shares electronically)
- Active Trading Account (executes transactions)
- Internet Banking Access
- Bank Account linked to Demat Account
How to Apply (Two Methods)
How to apply for IPO step-by-step guide
Method 1: ASBA (Application Supported by Blocked Amount)
- Log into Net Banking
- Navigate to IPO Application section
- Select desired IPO
- Enter bid details (lot size, price)
- Submit application
- Bank blocks application amount temporarily
- Shares allot within 1-3 days post-closure
Method 2: UPI
- Log into Demat Account
- Go to IPO Application page
- Select IPO
- Enter bid details
- Enter UPI ID
- Approve UPI mandate from registered mobile
- Shares allot within 1-3 days post-closure
Important Timelines
- IPO subscription open typically 3-6 days
- Share allotment within 1 day of closure
- Listing on stock exchange within 3 days of allotment
- Money refunds to unsuccessful applicants automatically
Critical Points
Lottery System: When IPOs are oversubscribed (demand exceeds supply), allotment happens through random lottery, not first-come-first-serve.
No Strict Quota: Retail investors have no upper investment limit through ASBA; UPI transactions capped at ₹5 lakh per application.
Research Mandatory: Analyze company prospectus, management quality, business fundamentals before applying. IPO enthusiasm creates hype—careful research prevents poor decisions.
Listing Day Volatility: IPO shares often spike on listing day due to market enthusiasm, then correct within weeks. Early investors frequently face losses.
Investment Strategy
Strong, fundamentally sound companies with proven profitability offer better long-term returns than chasing hype. Avoid applying merely because market excitement surrounds the IPO.
Stock market courses in Delhi teach IPO analysis, fundamental assessment, and post-listing investment strategies—enabling informed decisions beyond market hype.
