Quick Summary: An IPO (Initial Public Offering) is when a company lists on the stock exchange for the first time. Applying takes 3 minutes through your broker app. This guide explains the entire process — from understanding allotment to avoiding common IPO traps.
What Is an IPO and Why Do Companies List?
When a private company wants to raise money from the public, it lists its shares on a stock exchange. This process is called an IPO — Initial Public Offering. The company offers a portion of its shares to ordinary investors at a fixed price (or a price band in book-built IPOs). After listing, these shares trade freely on the exchange every day.
Companies list for various reasons: raising growth capital, allowing early investors (promoters, PE funds) to partially exit, improving brand visibility, and gaining a \”currency\” (listed shares) to use for acquisitions.
India\’s IPO market was exceptionally active in 2024–25. Over 90 mainboard IPOs raised more than ₹1.6 lakh crore in 2024 alone — the highest ever. Companies like Hyundai India, Swiggy, NTPC Green Energy, and Bajaj Housing Finance had massive IPOs with significant retail investor participation.
Key Terms You Must Know Before Applying
📖 IPO Glossary for Beginners
| Price Band | The minimum and maximum price at which you can bid. E.g., ₹400–₹425. Most investors bid at the upper price band to maximise allotment chances. |
| Lot Size | Minimum number of shares you must apply for. If lot size is 30 and price band is ₹400–₹425, minimum application = 30 × ₹425 = ₹12,750. |
| Subscription | How many times the IPO was applied for vs. shares available. 50x subscription = 50 times more applications than shares. Higher subscription = lower allotment chance. |
| GMP | Grey Market Premium — unofficial price at which IPO shares trade before listing. Not regulated, can be misleading, but traders track it as a sentiment indicator. |
| Allotment | Whether you received shares. In oversubscribed IPOs, allotment is by lottery among retail applicants. Applying from multiple demat accounts (family members) increases your chances. |
| ASBA | Application Supported by Blocked Amount. Your money is blocked (not debited) in your bank account until allotment. If not allotted, money is automatically released. No loss of interest during the IPO period. |
| Listing Day | The day the stock starts trading on the exchange — typically T+6 days after the IPO closes. Listing price can be above (listing gain) or below (listing loss) the IPO price. |
Step-by-Step: How to Apply for an IPO Using UPI (2026)
The easiest method for retail investors today is the UPI-based application through your broker\’s app. Here is the exact process:
📱 How to Apply for IPO via Zerodha / Groww (UPI Method)
On Zerodha Kite, go to Menu → IPO. On Groww, tap Stocks → IPO. You will see all currently open IPOs with subscription dates and price bands.
Always bid at the upper price band for maximum allotment chance. For retail, apply for 1–2 lots unless you have strong conviction. Your maximum application limit as a retail investor is ₹2 lakh.
Your UPI ID is your GPay/PhonePe/Paytm UPI handle (e.g., yourname@okhdfcbank). Enter it accurately — this links to your bank account from which the amount will be blocked.
Open your UPI app. You will receive a payment request to \”block\” (not debit) the application amount. Approve it within the deadline. If you miss this, your application is automatically rejected.
Check on the registrar\’s website (KFin Technologies or Link Intime) using your PAN card. If allotted, shares appear in your demat account on T+6. If not allotted, blocked funds are released immediately.
How to Evaluate Whether an IPO Is Worth Applying For
Not all IPOs are worth applying for. This is the most important lesson about IPO investing. The Indian market has seen many IPOs that listed at massive premiums on Day 1 and then fell 40–60% over the following months. The investors who applied for the \”listing pop\” and held on often ended up with significant losses.
Here is my evaluation framework built over 25 years of watching IPOs:
✅ IPO Evaluation Checklist
The Most Honest Advice on IPO Investing
IPOs are exciting. They feel like lottery tickets. And occasionally, they deliver extraordinary returns — the ₹10,000 invested in Ircon International\’s IPO in 2018 was worth over ₹1.2 lakh by 2024. But for every Ircon, there are dozens of IPOs that listed with a bang and then destroyed retail investor wealth over the following years.
My advice: apply for IPOs sparingly, only in companies you genuinely understand, at valuations that make sense. The best long-term wealth in Indian equities has been made by patiently holding quality listed companies — not by chasing every IPO that crosses your WhatsApp feed.
If you must participate in IPOs, limit it to 10–15% of your total equity portfolio. Keep the remaining 85%+ in seasoned, proven businesses that have already demonstrated their ability to create shareholder wealth over multiple business cycles.
DisclaimerThis article is for educational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the DRHP carefully before applying.
