How Does the IPO Process Work in India? From DRHP to Listing
If you have ever wondered how the IPO process works in India, the short answer is that a company travels a long, regulated road before its shares ever reach your demat account. An IPO, or initial public offering, is the first time a private company sells shares to the public. Between the day a company decides to list and the day you can buy or sell it on the NSE or BSE, the offer passes through SEBI review, a pricing exercise, a public subscription window, an allotment lottery, and finally listing. This guide walks through each stage so you can follow any Indian IPO from the DRHP filing all the way to listing day.
Stage 1: The company decides to go public
A company lists to raise money: to fund expansion, repay debt, or let early investors and promoters sell part of their holding. It appoints merchant bankers (also called book-running lead managers) who handle the paperwork, valuation, and marketing. This is also where the issue takes shape: how much is a fresh issue of new shares versus an offer for sale (OFS) of existing shares. Fresh issue money goes to the company; OFS money goes to the selling shareholders, not the business.
Stage 2: The DRHP is filed with SEBI
The company files a Draft Red Herring Prospectus (DRHP) with SEBI. This is the single most important document for anyone doing homework on an IPO. It lays out the business, financials, risk factors, promoter details, litigation, and what the company plans to do with the money. It does not yet carry the price band or the final issue dates.
Reading the DRHP is where real due diligence begins. If you want a structured way to work through one, see our guide on what a DRHP is and how to read it. New to the basics first? Start with what an IPO is in the Indian stock market.
Stage 3: SEBI reviews and issues observations
SEBI does not approve or reject an IPO on merit. It checks that the disclosures are complete and fair. It reviews the DRHP and comes back with observations, which are essentially questions and required changes. The company addresses them and updates the document. Only after SEBI's observations are in can the issue move ahead. This step is why some filed IPOs take months to actually open, and why a DRHP filing is a signal of intent, not a confirmed date.
Stage 4: The RHP, price band, and anchor investors
Once cleared, the company files a Red Herring Prospectus (RHP) with the Registrar of Companies and the exchanges. The RHP is the near-final version of the DRHP, now with the price band and the issue dates added.
Most Indian IPOs use book building, where the company sets a price band with a floor price and a cap price (for example, ₹95 to ₹100), and investors bid within it. The final price is discovered from the demand across that band.
One working day before the issue opens to the public, large institutions can apply as anchor investors. Their participation is disclosed and often read as an early signal of institutional confidence, though it is not a guarantee of listing gains.
Stage 5: The issue opens and how you apply
The public subscription window is usually open for three working days. You apply through your broker or bank using ASBA (Application Supported by Blocked Amount). With ASBA, the application money is not debited. It stays blocked in your bank account and keeps earning interest until allotment. If you get shares, only that amount is debited; if you do not, the block is released automatically.
For retail applications, UPI is the standard route. SEBI allows IPO applications through UPI up to ₹5 lakh per transaction, which covers retail investors and smaller high-net-worth applications. If you are weighing the options, our comparison of UPI, ASBA, and broker platforms breaks down which suits you.
You apply in lots, not single shares. The RHP sets the lot size (the minimum number of shares per application), and you bid in multiples of it.
Stage 6: Investor categories and subscription
The shares are split across three investor groups, and each has its own reserved portion in a book-built issue:
| Category | Who | Typical reservation | Application size |
|---|---|---|---|
| QIB | Institutions (mutual funds, banks, FPIs) | 50% | Large |
| NII / HNI | Individuals and bodies applying above ₹2 lakh | 15% | Above ₹2 lakh |
| Retail | Individual investors | 35% | Up to ₹2 lakh |
As applications come in, the issue shows a subscription figure, meaning how many times each category has been bid for. You can follow this live on our subscription tracker. A heavily subscribed retail portion means allotment gets tighter.
Alongside subscription, many investors watch the grey market premium, an unofficial indicator of listing sentiment. It is useful as a mood reading, not a promise. Our explainer on why GMP is not a guarantee covers the limits.
Stage 7: The issue closes and allotment happens
After the window shuts, the registrar finalises allotment. If the retail portion of a mainboard IPO is oversubscribed (more applicants than shares), SEBI mandates a computerised lottery. The aim is to give one minimum lot to as many unique applicants as possible, so applying for more lots does not improve your odds once the category is oversubscribed. Applicants who do not get shares have their blocked funds released.
To understand how allotment odds actually work, read our allotment rules playbook, and check your own status on the allotment page.
Stage 8: Listing on T+3
Since December 2023, SEBI has mandated that shares list within three working days of the issue closing. This is the T+3 timeline, down from the earlier T+6. So if an issue closes on a Wednesday, listing typically happens by the following Monday.
On listing day, the shares debut on the NSE and BSE, and the difference between the issue price and the opening price is the listing gain (or loss). From that point, the stock trades on the open market like any other.
The full timeline at a glance
| Stage | What happens |
|---|---|
| DRHP filed | Company submits draft to SEBI |
| SEBI observations | Disclosures reviewed, changes made |
| RHP filed | Price band and dates added |
| Anchor day | Institutions bid, one day before open |
| Issue open | ~3 working days of public bidding |
| Issue close | Subscription window shuts |
| Allotment | Registrar finalises, lottery if oversubscribed |
| Listing (T+3) | Shares debut on NSE/BSE |
What retail investors should take from this
The process is designed so that disclosure comes before pricing and pricing comes before your money moves. Use each stage: read the DRHP for the business and risks, use the price band and subscription data to judge demand, and treat GMP as sentiment rather than fact. You can track every live IPO through these stages on the IPO calendar.
Frequently asked questions
How long does the IPO process take in India? From DRHP filing to listing can run several months, largely because SEBI's review and the company's response take time. Once an issue actually opens, the public part is quick: roughly three days of bidding, then listing within three working days (T+3).
What is the difference between a DRHP and an RHP? The DRHP is the draft filed with SEBI for review and does not carry the price band or dates. The RHP is the near-final version filed after SEBI's observations, with the price band and issue dates added.
Does SEBI approve or guarantee an IPO? No. SEBI checks that disclosures are complete and fair; it does not vouch for the company or promise returns. The investment decision, and its risk, stays with you.
How much can a retail investor apply for in an IPO? The retail category is capped at ₹2 lakh per application. IPO applications through UPI are allowed up to ₹5 lakh per transaction, which also covers smaller high-net-worth applications.
Why did I not get an allotment even though I applied? When the retail portion is oversubscribed, allotment runs on a computerised lottery, and there simply are not enough shares for everyone. Applying for extra lots does not help once the category is oversubscribed. The system favours spreading one lot across as many unique applicants as possible.
This article is for information and education only and is not investment advice. IPO investments carry market risk. Do your own research or consult a SEBI-registered adviser before investing.