How to Invest in IPO in India — Step by Step Guide

IPO investing has become extremely popular in India. In 2025 alone, over 70 companies went public on NSE and BSE, and many of them gave significant listing day gains. But if you are new to this, the process can seem confusing. This guide will walk you through every step of applying for an IPO in India, from opening a demat account to getting your shares on listing day.

What is an IPO?

IPO stands for Initial Public Offering. It is the process through which a private company offers its shares to the public for the first time. Before an IPO, only the founders, early investors, and employees own shares. After the IPO, anyone with a demat account can buy and hold shares of that company.

Companies go public for various reasons — to raise capital for expansion, to allow early investors to exit, to increase brand visibility, or to use shares as currency for acquisitions. For retail investors like us, IPOs represent an opportunity to invest in companies at their initial offering price, which can sometimes be lower than what the market is willing to pay on listing day.

Prerequisites — What You Need Before Applying

To apply for any IPO in India, you need three things. First, a demat account — this is where your shares will be stored electronically. You can open one with any broker like Zerodha, Groww, Upstox, or Angel One. Second, you need a bank account linked to your demat account. Third, you need a UPI ID (like your Google Pay or PhonePe VPA). Since 2019, all retail IPO applications under Rs 5 lakh go through the UPI-based ASBA (Application Supported by Blocked Amount) process.

Step-by-Step IPO Application Process

Step 1: Find an upcoming IPO. Check our Upcoming IPO Calendar to see which IPOs are opening soon. Look at the price band, issue size, and dates.

Step 2: Research the company. Read the Red Herring Prospectus (RHP) which is the official document filed with SEBI. Look at the company's revenue, profit, debt, and growth prospects. Check what analysts are saying — our Stock Picks section often covers IPO recommendations.

Step 3: Apply through your broker. During the IPO open period (usually 3 days), log into your broker app. Go to the IPO section, select the IPO you want, choose the number of lots, and enter your UPI ID.

Step 4: Approve the UPI mandate. Within a few minutes, you will receive a notification on your UPI app (Google Pay, PhonePe, or bank app). Open it and approve the mandate. This blocks the required amount in your bank account — the money is not deducted, just blocked until allotment.

Step 5: Wait for allotment. After the IPO closes, allotment usually happens within 6 business days. If you get allotted, the blocked money gets deducted and shares appear in your demat account. If not allotted, the money gets unblocked.

Step 6: Listing day. The shares get listed on the stock exchange, usually 6 days after allotment. You can choose to hold them for long-term investment or sell them on listing day if you want to book a quick profit.

How IPO Allotment Works

IPO allotment in the retail category (up to Rs 2 lakh application) works on a lottery system. If 10 lakh people apply and only 1 lakh lots are available, each person has a roughly 10% chance of getting allotted. Applying for more lots does not increase your probability in the retail category — each PAN card gets equal treatment.

A smart strategy many investors use is applying from multiple demat accounts (family members) to increase the overall probability of getting at least one allotment. For example, if you, your spouse, and your parents each apply, you have four chances instead of one.

Grey Market Premium (GMP)

You might have heard of "IPO GMP" — this stands for Grey Market Premium. It is an unofficial, off-market indicator of how much demand an IPO has. For example, if an IPO price band is Rs 200 and the GMP is Rs 50, it suggests the market expects the stock to list around Rs 250. However, GMP is not reliable and should not be the only factor in your decision.

Common Mistakes to Avoid

Do not apply for every IPO blindly. Some IPOs are overpriced and give negative listing returns. Do not rely solely on GMP — it can be manipulated. Do not borrow money to apply for IPOs — only invest what you can afford. And do not forget to approve the UPI mandate — many applications get rejected because investors forgot this step.

Track Upcoming IPOs

Stay updated with the latest IPOs on our IPO Calendar. We show company name, price band, open and close dates, and issue size for all upcoming IPOs on NSE and BSE.

Disclaimer: This article is for educational purposes only. It is not financial advice. IPO investing carries risk. Please consult a SEBI-registered advisor before making investment decisions.