What Is an IPO?
An IPO (Initial Public Offering) is when a private company sells shares to the public for the first time. After the IPO, anyone with a demat account can buy a piece of the company.
Types of Public Offerings
| Feature | Mainboard IPO | SME IPO |
|---|---|---|
| Min lot investment | ~₹13-16K | ~₹1-2 lakh |
| SEBI scrutiny | Very high | Lower |
| Risk level | Moderate | High to very high |
Tip: Beginners should stick to mainboard IPOs.
What You Need
- Demat account (Zerodha, Groww, Angel One)
- Bank account linked to demat
- UPI ID linked to same bank
Step-by-Step Application (UPI ASBA)
- Find open IPO on broker app
- Check price band, lot size, dates
- Select lots, choose cut-off price
- Enter UPI ID, submit
- Approve UPI mandate within 30 min — #1 reason applications fail
- Wait 6-7 days for allotment
Check Allotment Status
- Link Intime: linkintime.co.in
- KFin Technologies: kosmic.kfintech.com
- BSE website or broker app
Understanding GMP
Grey Market Premium is the unofficial price IPO shares trade at before listing. If IPO price = ₹100 and GMP = ₹40, expected listing = ₹140. But GMP is unregulated and can be wrong — LIC listed at discount despite decent GMP.
How to Evaluate an IPO
| Metric | What to Look For | Red Flag |
|---|---|---|
| Revenue growth | 15-25%+ YoY | Flat or declining |
| Net profit | Profitable 2 of 3 years | Continuous losses |
| Promoter holding | Above 50% | Below 30% |
| PE vs peers | At or below peers | 2x peers with no justification |
Recent Case Studies
- Tata Tech (2023): ₹500 → ₹1,200 listing (140% gain!) — strong brand + reasonable valuation
- LIC (2022): ₹949 → ₹872 listing (8% loss) — overpriced
- Paytm (2021): ₹2,150 → ₹500 within a year (75% loss) — hype over fundamentals
Tax on IPO Gains
- Sell within 12 months:
STCG at 20% (+cess)
- Hold 12+ months: LTCG — gains up to ₹1.25L tax-free, above that 12.5%
10 Common Mistakes
- Not approving UPI mandate
- Bidding below cut-off price
- Applying multiple times with same PAN (all rejected)
- Insufficient bank balance
- Applying for every IPO blindly
- Relying only on GMP
- Too many lots (lottery = same odds for 1 or 13 lots)
- No sell plan
- Ignoring objects of issue
- Following social media hype
Pro Tips
- Use multiple family accounts (different PANs = more lottery chances)
- Check live subscription data on BSE/NSE
- Mainboard over SME for beginners
- Do not invest money you need in 7-10 days