IPO process in India: Complete steps involved

ipo process in India

Initial public offering (IPO) is one of the effective ways of raising money by floating financial securities in the market. In simple words, IPO allows a company to obtain financial support by offering its shares to the public. But, introducing the public offering is not an easy process as it involves following a systematic procedure hold by the regulatory body.

So with the help of this article, you will get familiar with the complete IPO process in India along with the advantages and disadvantages of IPO.

About- Initial public offering(IPO)

In the process of IPO, a private company can register itself in the stock market with an aim of getting public support and contribution to expand its business and pay off its debts. The interested investors or traders can participate in the procurement of the shares that are issued in form of a lot with a particular price value.

IPO provides an opportunity to both companies and buyers to achieve their goals as companies got buyer's financial support for expanding business while buyers can earn profits against their investments.

IPO process in India

The IPO process in India is controlled by the Securities and exchange board of India (SEBI), which laid various guidelines for protecting the interest of investors investing in stock markets.

So, all the process has to be done systematically as per the regulations imposed by the exchange board of India. These are the following steps that are to be followed before launching an IPO in India:

1. Hire an investment banker

An investment banker will work as a financial advisor to the company and will guide with the criteria involved in the process. He will study the company's financial statements and build an underwriting agreement comprising of funds to be raised by issuing the securities publicly. The investment banker will be working as an intermediator between the company and investors.

2. Get registered with SEBI

This is one of the crucial steps for the IPO process in India as it involves drafting the company's prospectus and submitting the documents to the regulatory body i.e SEBI. The prospectus that is to be submitted is called a red herring prospectus, it is called red because the initial page of the document will disclose the disclaimer written in the red color.

Apart from the disclaimer, the document will depict significant details about the company including financial assets, future prospects, management details, and the objective behind initiating the IPO process. Now, SEBI will review the documentation and approve the process if it finds the documents submitted by the company is valid.

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3. Indexing the company in the stock exchange

This step involves the company to get indexed in the Indian stock exchanges. There are 21 regional and 2 national stock exchanges in India. One can get its company registered in the stock exchange by following the criteria set by the exchanges.

4. Marketing of the IPO that is to be introduced

This process is similar to promoting our goods or services for attracting customers that are used for boosting sales by business organizations. And in the case of IPO, the company seeks potential investors who are ready to invest in their primary offering. This process of promoting is called as roadshow.

5. Issue pricing

Before going to the public, the IPO is listed with a price tag that may be fixed or based on the book-building process. A fixed offering will be depicting the number of shares to be issued in a lot size with a fixed price tag.

Example: A company issues the lot size that consists of 250 shares with a price range of Rs. 60.

The book-building process consists of the price band offered by the company in a particular price range, in which the investor can bid at a certain amount within the price range given by the company.

Example: A company issues a specific lot with a price range of Rs. 59-60, where the investors can bid at a particular price for achieving subscription.

6. Available on the stock exchange

After completion of all the procedures and steps, now the IPO is available on the stock exchanges and the investors can subscribe as per the price category introduced by the company.

It keeps on listed for the subscribers up to 3-4 days. The investors will be allotted the lots and after some days it gets available to all the investors for trading in the stock exchange. This was the step of the IPO process in India.

Advantages and disadvantages of IPO

Knowing the advantages and disadvantages of IPO is a very significant step before initiating the procedure.


  • Raising sufficient funds for expanding business & business operations.

  • A company listing in the stock exchanges comes in the limelight of the general public and investors that would ultimately increase the credibility of the company.

  • The companies will activate more business opportunities that were not available to them earlier.

  • It is also beneficial for shareholders to invest and earn high profits.


  • The company has to invest a large time and cost before introducing its IPO.

  • The companies have to disclose their financial statement with the security exchange board for maintaining the interest of investors.

  • After listing in the stock market the company is held liable to answer its shareholder's questions and queries.


With the help of this article, we got crucial knowledge about IPO, the IPO process in India, and the advantages and disadvantages of IPO. Also, the reading gives a quick guide to the business players and investors about how the initial public offering works with complete steps involved.

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