By ipomarket.in Editorial Team · Last reviewed: 2026-08-25
Disclaimer: This article is for informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the offer document carefully and consult a SEBI-registered investment advisor before investing.
Many retail investors treat listing day as the finish line. You get the allotment, the stock lists, you book a gain or a loss, and you move on. But for the stocks you actually hold, the more important story usually unfolds over the next 12 to 18 months. That is when locked-in shares start hitting the market, when anchor and pre-IPO investors exit, and when the company's real earnings either justify the IPO valuation or fall short of it.
This article explains why that first year matters, using SEBI's lock-in framework as the backbone. It is educational context, not a signal to buy, sell or hold anything.
The share supply picture changes after listing
When a company lists, only a slice of its total shares is actually free to trade. Large blocks held by promoters, anchor investors and pre-IPO shareholders are locked in for defined periods under SEBI's Issue of Capital and Disclosure Requirements (ICDR) Regulations. As each lock-in expires, more shares become eligible to sell. That changing supply is one of the biggest reasons an IPO stock can behave very differently three months, six months and eighteen months after listing.
Understanding who is locked in, for how long, and when those windows open is a basic piece of due diligence. If you want the full mechanics, our explainer on the IPO lock-in period for promoters and anchor investors breaks it down in detail.
The lock-in timeline at a glance
Based on the SEBI ICDR framework (as amended in August 2021), the standard durations are:
| Shareholder category | Lock-in duration |
|---|---|
| Promoter minimum contribution (up to 20% of post-issue capital) | 18 months from allotment; 3 years if the majority of fresh proceeds fund capital expenditure |
| Promoter holdings above the 20% minimum | 50% released after one year, the balance after two years |
| Anchor investors | 50% locked for 30 days, the remaining 50% for 90 days from allotment |
| Non-promoter pre-IPO investors | 6 months from allotment |
The intent behind these rules is straightforward. Without a lock-in, promoters could sell out the moment the stock lists. The framework keeps them economically tied to the company through the early, wobbly post-listing period and gives public shareholders some assurance of continuity.
Milestone 1: The 30 to 90 day anchor unlock
The earliest supply event is the anchor unlock. Half of anchor shares free up at 30 days and the rest at 90 days. Anchor investors are large institutions who commit ahead of the public issue, so how they behave once released can hint at broader institutional conviction. This is a small unlock relative to promoter holdings, but it is often the first real test of demand beyond the listing-day rush.
Milestone 2: The 6-month pre-IPO investor window
At six months, non-promoter pre-IPO investors can begin selling. These are often early venture or private equity backers who invested before the IPO. Their exits are systematic rather than dramatic, but they add to floating supply and can weigh on price if fundamentals have not kept pace.
Milestone 3: The 18-month promoter unlock (the big one)
The most watched event is the promoter minimum-contribution unlock, typically at 18 months. This is where the largest blocks can potentially come to market.
What matters here is not just the supply, but the signal. Practitioner analysis suggests that if promoters continue to hold their shares even after the lock-in ends, it acts as a confidence booster for the market. The reverse also holds: a meaningful promoter exit right at the expiry can be read as a warning about how insiders view the company's prospects.
SEBI's tightening of lock-in rules over the years was partly aimed at exactly this problem. In the SME segment in particular, lenient exit rules historically allowed some promoters to reduce holdings quickly, which was followed by sharp price declines. If you are comparing segments, our guide on mainboard versus SME IPO differences is a useful starting point.
The other clock: earnings versus valuation
Supply is only half the story. The other half is whether the business delivers.
IPO pricing tends to front-load future growth. A company often lists at a valuation that assumes several years of strong execution. It usually takes 12 to 18 months of reported results before you can judge whether that execution is actually happening. Until then, you are trading on a promise.
When the promise and the numbers do not line up, aggressively priced IPOs tend to correct once the initial enthusiasm fades. Widely discussed examples in the Indian market include Paytm, Ola Electric and Nykaa, whose share prices came under pressure after listing as expectations were reset. These are illustrative and not predictions about any current issue; past performance of one stock tells you nothing guaranteed about another.
A sobering data point from late 2025 market commentary: recent issues showed a negative average return of around 17%, a reminder that IPOs are not a one-way ticket up. Treat that figure as a snapshot of a particular period rather than a fixed rule.
If you want a structured way to judge a business over a multi-year horizon, our framework for evaluating an IPO for a 3-5 year holding walks through the questions that matter beyond listing day.
A simple checklist for the first year
For any IPO stock you hold, it is worth tracking these through the first 12 to 18 months:
- Lock-in calendar. Note the anchor (30/90 day), pre-IPO (6 month) and promoter (12/18/24 month) expiry dates from the offer document.
- Promoter behaviour at expiry. Do promoters hold or trim? Disclosures of insider selling are public.
- Fund utilisation. Check whether IPO proceeds are being deployed for the stated purpose, especially capex, or diverted elsewhere.
- Quarterly earnings delivery. Compare actual revenue and profit against the growth story the valuation assumed.
- Valuation normalisation. Watch whether the price is drifting toward fundamentals over time.
None of this is a trading signal. It is context so you understand why a stock you own is moving, rather than reacting blindly.
FAQ
How long are promoter shares locked in after an IPO?
Under SEBI ICDR rules, the promoter minimum contribution (up to 20% of post-issue capital) is locked for 18 months from allotment, extending to 3 years if the majority of fresh proceeds fund capital expenditure. Promoter holdings above that 20% minimum are released in stages: 50% after one year and the balance after two years.
Does a lock-in expiry always cause the price to fall?
No. An expiry means shares become eligible to sell, not that they will be sold. If promoters and large holders continue to hold, it can reassure the market. A price impact usually depends on whether anyone actually sells and how the business is performing at that point.
Why do some IPOs list high and then decline over the next year?
Many IPOs price in future growth aggressively. Over 12 to 18 months, actual earnings either validate that pricing or fall short. When results lag, and as more locked-in shares enter the market, overvalued issues tend to correct. Examples like Paytm, Ola Electric and Nykaa are frequently cited, though each situation differs.
When do anchor investors get to sell?
For anchor investors, 50% of their allotment is locked for 30 days and the remaining 50% for 90 days from the date of allotment. This is typically the first supply event after listing.
Where can I find the exact lock-in dates for a specific IPO?
They are disclosed in the company's offer document (the RHP). Our guide on what a DRHP is and how to read it explains where the capital structure and lock-in details sit within that document.
Tracking an IPO stock for at least a year is not about timing the market. It is about recognising that the forces shaping the price, share supply from expiring lock-ins and the slow reveal of real earnings, mostly operate on a timeline that starts after the excitement of listing day fades.
Last reviewed: 2026-08-25 by the ipomarket.in Editorial Team.