IPOs
What is IPO (Initial public offering)?
Also called: Initial public offering, Public issue
Hinglish mein padhein: IPO kya hota hai?
An IPO is when a private company sells shares to the public for the first time and lists them on a stock exchange.
Companies raise money through a fresh issue of shares, existing shareholders sell through an offer for sale (OFS), or both. The prospectus (DRHP/RHP) explains the business, risks and use of funds.
Most mainboard IPOs are book-built within a price band, stay open for three working days and list on T+3 — three working days after the issue closes.
Related terms
- Price bandThe price band is the range within which investors bid for shares in a book-built IPO, for example ₹300–₹315.
- Lot size (IPO)The lot size is the minimum number of shares you must apply for in an IPO; you can apply in multiples of it.
- GMP (Grey market premium)GMP is the unofficial premium at which IPO shares trade informally before listing. It is not regulated and often wrong.
- IPO allotmentAllotment decides who gets shares in an IPO. When retail demand exceeds supply, lots are allotted by computerised lottery.
- Listing gainsListing gains are the profit made if an IPO share opens above its issue price on the first day of trading.
- DRHP and RHPThe DRHP is the draft prospectus a company files with SEBI before an IPO; the RHP is the final version with dates and price band.