IPO

An IPO (Initial Public Offering) is the moment a private company sells shares to the public for the first time and gets listed on a stock exchange. The company raises capital (a 'fresh issue') and/or existing shareholders sell part of their stake (an 'offer for sale').

How it works in India

Every IPO must file documents with SEBI and publish a Red Herring Prospectus laying out the price band, risks and financials. Retail investors apply during a short bidding window using ASBA (Application Supported by Blocked Amount), where the application money is simply blocked in your bank account via a UPI mandate rather than debited upfront. If you don't get an allotment, the block is released.

SEBI has shortened the timeline so shares list on the exchange within three working days (T+3) of the issue closing. Allotment for oversubscribed retail portions is decided by a computerised lottery, so applying for more lots does not guarantee shares.

Mainboard vs SME

Large companies launch mainboard IPOs with strict SEBI vetting. Smaller firms can list on dedicated BSE SME or NSE Emerge platforms with lighter requirements. SME IPOs carry higher risk and now require a larger minimum application, so they suit informed investors, not first-timers.

Why it matters

India has seen a wave of IPOs, from profitable manufacturers to new-age tech startups that SEBI rules now allow to list even without three years of profit. 'Listing gains' (the pop on debut day) attract many retail applicants, but they are not guaranteed; SEBI has even introduced price bands to curb wild opening swings.

A practical POV: an IPO is a company selling at a price *it* chose, often when sentiment is hot. Read the prospectus for how the money will be used, check valuations against listed peers, and treat listing-day gains as a bonus, not a strategy. Many strong businesses are also available cheaper in the secondary market after the hype fades.