IPO full form: Initial Public Offering. An IPO is the first time a private company sells its shares to the public and lists them on a stock exchange like NSE or BSE — raising capital from investors who, in return, receive tradeable shares in the company.
IPO stands for Initial Public Offering. It is the first time a privately held company offers its shares to the public and lists them on a stock exchange such as NSE or BSE. Through an IPO, a company raises capital from public investors and, in return, those investors receive shares they can trade once the company is listed. After the IPO, the business becomes a publicly listed company with its ownership spread across many shareholders.
Companies go public mainly to raise growth capital by issuing new shares (a 'fresh issue'), and to let early investors or promoters sell part of their stake (an 'offer for sale', or OFS). A listing also gives a company a market valuation, greater visibility and credibility, and tradeable shares it can use for fundraising or acquisitions. For everyday investors, an IPO is an opportunity to invest in a company at the point it enters the public market.
The company files a draft prospectus (DRHP) with SEBI, which reviews it. After approval it files the RHP with the final price band and dates. The issue then opens for a 3-day bidding window in which investors apply through ASBA/UPI at or above the cut-off price, in fixed lots. Demand is collected across QIB, NII and Retail categories (book building). After the issue closes, the registrar finalises allotment — by lottery if oversubscribed — and under SEBI's T+3 timeline the shares list and begin trading within three working days.
Most Indian IPOs are book-built: rather than a single fixed price, the company sets a price band (e.g. ₹144–₹152) and investors bid within it. Shares are applied for in lots — a fixed minimum quantity — so the minimum investment is the lot size multiplied by the upper price. Once bidding closes, the final issue price (the cut-off) is discovered from the demand collected across all categories.
The DRHP (Draft Red Herring Prospectus) is the preliminary document filed with SEBI for review, containing the company's business model, financials, risk factors and use of proceeds — but not the final price. The RHP (Red Herring Prospectus) is the updated, near-final version filed just before the issue opens, with the price band and dates. Reading these documents is the most reliable way to understand what you are investing in.
Mainboard IPOs are larger companies listing on the main NSE/BSE platforms with stricter eligibility and a retail minimum of roughly ₹14,000–15,000. SME IPOs come from smaller companies listing on NSE Emerge or BSE SME, with a higher minimum (typically ₹1–1.5 lakh per lot), lower liquidity, and higher risk and reward. Both are tracked on OptionX, with SME issues clearly tagged.
An IPO is a company's first public sale of shares. An FPO (Follow-on Public Offering) is when an already-listed company issues further shares to raise additional capital. The mechanics — price band, bidding, allotment — are similar, but an IPO marks the market debut, whereas an FPO comes from a company that is already trading on the exchange.
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