IPO FAQs

IPO FAQs

The questions Indian retail investors actually ask, answered plainly.

What is an IPO in simple words?

An Initial Public Offering is the first time a private company sells its shares to the public and lists them on a stock exchange. You apply during a short window; if shares are allotted to you, they appear in your demat account and start trading on the listing day.

Is GMP reliable? Should I trust it to decide whether to apply?

No. Grey Market Premium is an unofficial, unregulated and thinly-traded number set by grey-market dealers. It reflects short-term sentiment and can collapse before listing. Treat it as one weak signal, never as the reason to apply. Our GMP Accuracy Tracker shows how often it has been right.

Does a high GMP mean strong listing gains?

Not dependably. High GMP often coincides with high applications and high subscription, which then get cited as proof of a "good IPO" — a partly self-fulfilling loop. In weak markets, high-GMP IPOs have still listed flat or below issue price.

Does applying for more lots increase my allotment chances?

Not in the retail category. When retail is oversubscribed, allotment is a lottery with one entry per PAN. Applying for 1 lot or the maximum retail amount both give you exactly one entry — the larger application just blocks more of your money. See the 1-PAN rule.

Can I apply for the same IPO from multiple demat accounts on one PAN?

No. The registrar detects duplicate PAN entries and rejects all of them. To increase household odds legally, use separate PANs — one application per family member from their own account.

Why does my UPI mandate keep getting revoked or failing?

Usually because your bank's UPI systems or the registrar's system are overloaded, not because the broker app is broken. Applying in the last hour before close makes failure more likely. See How to Apply.

Why is my money blocked after applying, and when is it released?

Under ASBA the money is not debited — your bank places a hold on it and you keep earning interest. If you are not allotted shares, the hold is removed after allotment is finalised; your bank may take a day or two more to reflect it.

What does "oversubscribed 40x" mean, and is that good?

It means investors bid for 40 times the shares on offer. It signals demand, but it is not a quality verdict — and higher retail oversubscription mathematically lowers your odds of getting a lot.

Should I wait for the last day to see QIB numbers before applying?

Many experienced investors watch the QIB category and apply late. Just leave a buffer — bank and registrar systems are congested near the deadline and mandates fail more often then.

What is OFS, and should I avoid IPOs that are all OFS?

OFS (Offer For Sale) means existing shareholders are selling; that money goes to them, not the company. It is not automatically bad — a private-equity fund exiting on schedule is different from founders offloading a large stake into a hyped market. Look at who is selling and how much of their holding.

How do I read a DRHP without reading 500 pages?

Focus on Risk Factors, Objects of the Issue (is it fresh capital or an exit?), promoter holding and pledge, related-party transactions, and the three-year financial trend. Our DRHP summaries do this extraction for each IPO we cover.

What should I do on listing day — sell or hold?

Decide before you apply. If you applied only for listing gains, exit on listing day regardless of whether it opens up or down — don't anchor to the issue price. If you applied as a long-term investor because you understand the business and valuation, the listing price doesn't change your thesis. See the Decision Tree.

My IPO listed below the issue price. Now what?

The issue price is an anchor chosen by the company's bankers, not a fair-value floor. Re-check whether your original reason to hold still stands. Don't average down on listing day just because it looks "cheap" — wait for evidence in the first post-listing results.

When does the anchor and promoter lock-in expire, and will the stock fall?

Anchor lock-ins are typically 30 and 90 days; promoter lock-ins are longer. Lock-in expiry releases new supply and can pressure the price around that date. It is a predictable event worth marking on a calendar.

How are IPO gains taxed?

Selling within 12 months of listing is short-term capital gains; after 12 months it is long-term. Rates and thresholds change with the Union Budget, so confirm the current figures before you file.

Is a government or big-brand IPO automatically safe?

No. Brand and government backing say nothing about valuation. Large, well-known IPOs have listed below their issue price and stayed there. Price and quality are separate questions.