IPO -From Application to Listing A Beginner’s Guide

Here’s a clear, step-by-step guide on how an IPO works in India, from the moment it’s announced to the day it lists on the stock exchange.

 1. It All Starts with the DRHP

Every IPO journey begins when a company files its Draft Red Herring Prospectus (DRHP) with SEBI.

This document outlines:

• Company background and promoters

• Business model and revenue sources

• Financial health and key risks

• How the IPO funds will be used

Once approved by SEBI, the company releases the Red Herring Prospectus (RHP)

—the final document containing IPO dates, price band, lot size, and all relevant offer details.

 2. IPO Opens for Subscription

When the IPO opens (usually for 3 working days), investors can place bids through:

• UPI-based apps (like stockbroking platforms)

• Net banking via ASBA (Application Supported by Blocked Amount)

Retail investors (up to ₹2 lakhs) can either:

• Select a specific price within the band

• Or opt for the Cut-off Price, which maximizes allotment chances.

3. Funds Get Blocked, Not Debited

Once the application is submitted:

• The corresponding amount is blocked in your bank account

• UPI users receive a payment mandate request—it must be approved for the bid to be valid

• No money is deducted until allotment happens

4. Subscription Period Ends

After 3 days, the IPO closes. The final subscription figures across Retail, HNI, and QIB categories

are disclosed publicly. Popular IPOs often get oversubscribed multiple times.

5. Allotment Process Begins

A few days after the IPO closes, the registrar of the issue finalizes the Basis of Allotment:

• If oversubscribed, retail allotment is done via a lottery system

• If undersubscribed, you may receive full or partial allotment

Investors can check the allotment status using their PAN, application number, or Demat ID

on the registrar's website.

6. Funds Debited, Shares Credited

• If you receive allotment:

  • Funds are debited from your bank account

  • Shares are credited to your Demat account, typically 1–2 days before listing

• If not allotted:

  • Blocked funds are released back to your account automatically

7. Listing Day — Shares Go Live

On the scheduled listing date (generally 6–8 days after IPO close):

• Shares begin trading on NSE and BSE

• You can choose to hold or sell based on your investment view

• A strong opening price results in listing gains