IPO Process in India explained: this guide covers what IPO Process in India means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
An Initial Public Offering (IPO) is the first sale of shares to the public by a company. Governed by SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 (SEBI ICDR), the IPO process in India is well-structured with specific timelines, disclosure requirements, and investor protections. This guide covers the complete process from decision to list.
Eligibility for IPO (SEBI ICDR Regulation 6)
- Net tangible assets > Rs. 3 crore in each of 3 preceding years
- Average consolidated pre-tax operating profits > Rs. 15 crore (3 out of 5 years), OR
- Net worth > Rs. 1 crore in each of 3 preceding years, OR
- Changed business: At least 75% proceeds used for specified purpose
- Alternative: QIB route (Regulation 6(2)) — no profit track record required if at least 75% of issue goes to QIBs
Key Participants
- Merchant Banker (BRLM): Lead Manager — coordinates entire IPO process, prepares DRHP, manages roadshow
- Registrar to Issue (RTI): Manages applications, allotment, refunds
- Underwriters: Guarantee subscription (if required)
- Auditors: Certify financial statements in DRHP
- SEBI: Regulates; issues observations on DRHP
- Stock Exchange: NSE/BSE — approves listing
IPO Process Steps
- Appoint BRLM and advisors: Select investment bank as lead manager
- Due diligence: BRLM conducts business, legal, financial, tax due diligence
- DRHP preparation: Draft Red Herring Prospectus — comprehensive disclosure document filed with SEBI
- SEBI filing and observations: SEBI issues comments within 30 days; company responds
- SEBI approval (observations letter): Valid for 12 months
- Exchange filing and approval
- Roadshow / Investor marketing: Pre-IPO presentations to institutions
- Price band announcement: Price band (floor and cap — max 20% range) announced
- Subscription: IPO open for 3 days; bids via ASBA/UPI
- Allotment and refund: Within 6 days of IPO close (T+6)
- Listing: Shares listed on exchange on T+6 (changed from T+10 in 2024)
Investor Categories and Reservation
| Category | Reservation |
|---|---|
| QIB (Qualified Institutional Buyers) | 50% (75% in QIB route) |
| Non-Institutional Investors (NII/HNI) | 15% |
| Retail Individual Investors (RII) | 35% |
Post-Listing Compliance
- SEBI LODR quarterly/annual disclosure obligations
- Minimum promoter lock-in: 18 months (50% of post-issue promoter holding); balance 6 months
- Anchor investor lock-in: 30 days
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