IPOBeginner
IPO
Initial Public Offering
The first time a private company sells its shares to the public and lists on an exchange.
Detailed explanation
The company files a prospectus (DRHP), sets a price band, and takes bids over a three-day window. A fresh issue raises new money for the company; an offer for sale simply transfers existing shares to new owners. Allotment in oversubscribed retail categories is by lottery.
Example
A price band of ₹280–₹295 with a lot of 50 shares needs ₹14,750 blocked at the upper end for one retail lot.
Why it matters
IPO pricing is set by the seller with full information, so the burden of valuation work sits entirely with the buyer.
Key points
- Money is blocked via ASBA/UPI, not debited, until allotment.
- Read the DRHP's risk factors and the use of proceeds.
- Listing gains are not guaranteed and are taxed as short-term gains.
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Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.