IPO process in India Steps

Many a time, we see in business news or advertisements that a company is launching its IPO (Initial Public Offering). In this post, we will discuss the basics of IPO (IPO Process in India), the very first-time shares of the company,  and its steps which will be helpful to the persons who are very new to the stock market.

ipo process in india steps

Definition or Meaning of IPO:

IPO or Initial Public Offering is the process by which a company becomes a public company from the private company what it was initially. The company becomes public to raise its capital from the general public by selling its share (first time) to them. When the company becomes public, it is listed on the BSE/NSE exchange where its shares can be traded.

(Read: List of Upcoming IPO in India)

IPO process in India steps

Initially, when the company remains a private limited company, there are very few shareholders in it who take decisions about the company. They do not have to disclose their profit and loss in the company. But when this company becomes public through IPO, it has to report its quarterly result in the public media. There may thousands of shareholders in the public company they need to form a board of directors which can decisions about the company.

How is IPO offered?

A company which is to offer its IPO hires an investment bank before launching of IPO. Thpreparetogether prepares the information (file work) about this IPO in which they decide the financial details. This is called the underwriting agreement. After that, the registration is filed at SEBI along with this underwriting agreement. After a scrutiny process, if everything is right, SEBI gives a date to launch the IPO by the company.

How to Invest in IPO?

To invest in IPO being launched by a company, the investors need to have a demat account. When IPO starts, investors place bids in the price range given by the company. In IPO, equity shares are offered in lots and every lot has fix quantity of shares. While placing the bid, details of demat account are given by the investor and the total price amount according to the lot is deducted from the investor’s account. When IPO bidding ends, after about a week, the company starts allotting the shares to the investors according to their bid. It is not necessary that every investor gets the share. Those who are allotted, their demat account gets credited with equity shares.

Trading after allotted in IPO

After allotment of shares to investors, the company gets listed on the exchange (BSE/NSE). Many investors sell their shares on listing to get the listing benefits. But many investors hold these shares for a long time and wait for a good price.

IPO process in India steps

Disclaimer: This post is meant for educational purpose only. This does not provide stock buying/selling recommendation to investors and it never leads the investors to make any investment decision.

IPO process in India steps

Read Also:

How to open a demat account

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IPO process in India steps

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