IPO 2025 - Initial Public Offerings

What is the meaning of IPO (Initial Public Offer)?

An Initial Public Offering (IPO) is the process through which a privately-held company offers its shares to the public for the first time, enabling investors to purchase equity in the company. This allows the company to raise capital by selling shares to public investors, marking its transition from private to public ownership. In India, IPOs are classified into two categories: Mainboard IPOs and SME IPOs. Mainboard IPOs are listed on major stock exchanges like the NSE and BSE, while SME IPOs are listed on specialized SME platforms such as the NSE SME. The minimum investment requirement for a Mainboard IPO is typically up to ₹1.5 lakh, whereas SME IPOs generally require a minimum investment of ₹2 lakh. Recent notable Mainboard IPOs include companies such as Tata Technologies Ltd., Bajaj Housing Finance Ltd., and Life Insurance Corporation of India (LIC).

What do you mean by IPO funding?

IPO funding allows you to use a loan to invest in more shares during an Initial Public Offering (IPO), giving you a better chance of getting a larger allotment. It helps bridge the gap between how much money you need and what you currently have. You only need to pay a small portion, called the margin, and the lender will cover the rest. With IPO financing, you can apply for more shares than you would with your own funds, increasing your potential returns if the IPO does well. After the shares are allocated, they are added to your demat account. You can then choose to sell them for a profit once they are listed on the stock exchange. If the IPO is oversubscribed and you don’t get any shares, your money will be returned to you within 10 days. This funding option gives you flexibility, but it’s important to act quickly before the shares are oversubscribed.

What is the book building in IPO?

A Book Building IPO allows companies to set a price band, with a lower and upper limit, for their shares (e.g., ₹100-₹120 per share), and investors can place bids within this range. Through the bidding process, investors indicate how many shares they wish to purchase and at what price within the specified range. The final price, or Cut-off Price, is determined based on the demand and bids collected over a defined period. Investors who have bid at or above this price are then allotted shares. The book-building process is more transparent than traditional fixed-price IPOs, as it provides the issuing company with real-time demand data, enabling adjustments to pricing. Both institutional and retail investors can participate, with retail investors having the option to bid at the cut-off price to receive shares at the final price set through the book-building process. This method offers benefits such as market-driven pricing, which ensures better price discovery, and reduces the risk of underpricing or overpricing shares. As a result, book building is the most common approach for IPOs in India, offering a more efficient and responsive way to price shares.

Can I reverse or cancel my IPO application?

Yes, you can revise or cancel your IPO subscription application untill the IPO closing date. To modify your IPO application on the Motilal Oswal Mobile trading application, go to the IPO section, select your application, select the option to modify your bids, and submit the application. Post this submission, you will have to approve the mandate with your choosen UPI app and your application will be sent to the exchanges with revised changes. To cancel your application, you will simply opt to cancel your subscription.

Who can invest in an IPO?

IPO investments are open for all individuals, institutions, corporate bodies and other firms. However, it is mandatory that all firms and individuals who wish to apply for the IPO must have an operational demat account.

What is pre-apply in IPO?

As the name suggests, pre-apply IPO applications are the ones that allow an investor to apply for a specific IPO before the bidding period starts. Usually, pre-applications start 3-4 days before the actual bidding period. With Motilal Oswal, you can now pre-apply for any IPO, to make sure you don’t miss the bid.

What is the minimum and maximum Investment in an IPO for retail investors?

The minimum investment required for an IPO is decided by the company, which ranges from Rs 12,000 to Rs 15,000. However, a retail investor can invest a maximum of Rs 2 Lakh in an IPO.

Do I need a Demat account for investing in an IPO?

It is not mandatory for an investor to have a DEMAT account to invest in an IPO. But, to trade the shares allocated in the IPO, an investor will have to open a DEMAT Account. bt with Motilal Oswal now!

How do I sell an IPO on a listing day?

To sell IPO shares on the listing day, an investor can make use of the pre-market session to place the sell orders. This can be done by selecting the option of 'selling'. Post this, you can set certain parameters such as the trigger price (price at which you wish to sell the share), number of shares to be sold, etc. once the shares get listed.

What is the average first day return on IPOs?

Listing day returns of an IPO depend on variety of factors such as the fundamentals of the company, valuations, percentage of institutional buyers, High-net-worth individuals (HNI), etc. Although it is not possible to correctly specify the first day returns, an investor can expect good-priced IPOs to at least bounce up by 10%.

What is the difference between the issue price and listing price?

The issue price of an IPO is the price at which a company sells its shares. The IPO is then listed at exchanges. The listing price is the opening price of the share on the listing day.

What is the difference between DRHP and RHP?

DRHP means Draft Red Herring Prospectus. This means, DRHP is a draft that does not have complete particulars on the price of the securities offered and quantum of securities offered. On the other hand, RHP is the final prospectus that is approved by the SEBI. RHP, thus contains all information and data with respect to the price of the shares offered for sale, and the number of shares an investor will be allocated.

What is Price Band in IPO?

Price band of a share in an IPO is a price range set by the company to sell its shares to the public. Price band allows the company to know if an investor is eager to buy the share at an upper range or at the lower range. For example, if the price band of a particular IPO is priced at rupees 200 to 250 per share, an investor cannot bid below rupees 200 or beyond rupees 250 per share. Price band varies depending on the type of investor.

How to apply for upcoming IPOs online at Motilal Oswal?

To apply for an online Initial Public Offering (IPO) through Motilal Oswal, you first need to open a trading and demat account with us. Once you’ve opened it, log into the Motilal Oswal trading portal using the credentials given to you and select the IPO that you wish to invest in. Upon selecting the same, proceed to enter all the relevant details and place the order. And that’s it. With Motilal Oswal, investing in IPOs online is extremely easy and quick.