What is an IPO? How to Apply in 2025
What is an IPO? It’s when a private company sells its shares to the public for the first time, listing on NSE/BSE. In 2025, IPOs remain a top way for Indian investors to enter growing companies. This guide explains IPO meaning, process, and how to apply step by step.
IPOs: The Doorway to Market Opportunities
When Reliance Power launched its IPO back in 2008, more than 50 lakh applications flooded in. In recent years, Zomato, Paytm, and Nykaa have drawn similar excitement. IPOs are not just financial events — they’re opportunities for retail investors to become early shareholders in companies they believe in.
But before you jump in, let’s answer the big question: What exactly is an IPO and how do you apply for one?
IPO Meaning Explained
An IPO (Initial Public Offering) is the first time a private company offers shares to the public. After SEBI’s approval, shares get listed on NSE and BSE, making the company “publicly traded.”
👉 Example: In 2021, Nykaa went public through its IPO, raising funds and giving investors the chance to buy shares before it traded on exchanges.
So, IPOs = fundraising for companies + ownership opportunity for investors.
Why Companies Choose IPOs
Companies launch IPOs for multiple reasons, including:
Raising funds for expansion or new projects.
Reducing existing debts.
Increasing brand trust and visibility.
Providing an exit route to early investors and venture capitalists.
For investors, IPOs are attractive because they can enter a company at its listing price — often before institutional funds build large positions.
The IPO Journey (Process in India)
Filing the Draft Red Herring Prospectus (DRHP) with SEBI.
Approval by SEBI and acceptance by NSE/BSE for listing.
Setting the Price Band (e.g., ₹90–₹100).
Application Window Opens (generally 3–5 working days).
Allotment Decision — shares allotted randomly in case of oversubscription.
Listing Day — shares debut on NSE and BSE, often at a premium or discount.
How to Apply for an IPO in India
1. Bank ASBA Method
Log into net banking → IPO section.
Select IPO, enter quantity, confirm.
Money remains blocked until allotment.
2. UPI via Brokers
Use apps like Zerodha, Groww, or Upstox.
Enter IPO details, approve UPI mandate.
3. Directly on NSE/BSE Portals
Register with PAN + Demat.
Apply directly through exchange websites.
💡 Tip: Always ensure your Demat account is active and linked to your bank/UPI before applying.
IPO Allotment for Beginners
Retail quota = 35% reserved for small investors.
If IPO oversubscribed → allotment by lottery.
Shares credited directly to Demat account.
Refunds (if not allotted) happen automatically.
Pro Tips Before Applying for an IPO
Always read the company’s DRHP for financial health.
Check grey market premium (GMP) for market sentiment.
Apply in multiple family accounts (different PANs) to increase allotment chances.
Never invest based only on hype — focus on fundamentals.
Case Example: LIC IPO
The LIC IPO in 2022 became India’s biggest ever. Millions applied, but only some got allotments due to heavy oversubscription. Those who got shares saw mixed listing performance, proving that IPO investments carry both opportunities and risks.
TL;DR Key Points
IPO = Initial Public Offering → first time shares go public.
Regulated by SEBI, listed on NSE/BSE.
Apply via ASBA, UPI, or stock exchanges.
Allotment may be random if oversubscribed.
Smart research matters more than hype.
FAQs
Q1: What is an IPO in India?
A: IPO stands for Initial Public Offering, when companies sell shares publicly for the first time.
Q2: How can I apply for IPO as a beginner?
A: You can apply using your bank’s ASBA service, UPI through brokers, or NSE/BSE portals.
Q3: Do I need a Demat account to apply for IPO?
A: Yes, a Demat account is mandatory for IPO applications.
Q4: What documents are needed for IPO application?
A: PAN, Demat account, and linked bank/UPI details.
Q5: Are IPOs safe for beginners?
A: IPOs can be profitable but also risky; always research before investing.
Why The Finxperts Academy is Ideal for Learning IPO Basics
At The Finxperts Academy, we train students and professionals in practical stock market skills like IPO application, options, and risk management. With live examples, expert mentors, and certificate-backed programs in Noida, we ensure you understand IPOs beyond theory.
Our motto: Learn. Trade. Excel.
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Disclaimer
This blog is for educational purposes only. Stock market investments are subject to risks. Please do thorough research before investing.