Live GMP
Whether you're a beginner or an experienced investor, our educational resources will help you understand the nuances of the Indian IPO market.
The basics of Initial Public Offerings and why companies go public.
How the Grey Market Premium works and what it signifies.
The key differences between Mainboard and SME IPOs.
Step-by-step guide to applying for an IPO in India.
Key metrics to look at: PE Ratio, ROE, EPS, etc.
How shares are distributed among investors.
An Initial Public Offering (IPO) is the process by which a private company offers shares to the public for the first time. This transition allows the company to raise capital from public investors. In return, the company must adhere to stricter regulations and transparency requirements set by SEBI in India.
Grey Market Premium (GMP) is the extra amount buyers are willing to pay over the IPO issue price before the shares officially list on the stock exchange. It is an unofficial indicator of market demand. A positive GMP suggests strong demand, while a negative GMP (discount) indicates weak interest. However, GMP is volatile and not guaranteed.
Mainboard IPOs are for large companies with a minimum post-issue paid-up capital of Rs 10 crores. They have smaller lot sizes (usually ~Rs 15,000) and list on the main NSE/BSE. SME IPOs are for small and medium enterprises, requiring a minimum of Rs 1 lakh per lot, and they list on separate SME platforms. SMEs carry higher risk and lower liquidity.
To apply for an IPO in India, you need a Demat account, a trading account, and a bank account with UPI/ASBA facility. 1) Log in to your broker's app. 2) Go to the IPO section. 3) Select the IPO. 4) Enter the lot size and cut-off price. 5) Enter your UPI ID. 6) Approve the mandate on your UPI app. The funds will be blocked until allotment.
Before investing, check key metrics: EPS (Earnings Per Share) shows profitability. PE Ratio (Price to Earnings) indicates if the stock is overvalued or undervalued compared to peers. ROE (Return on Equity) measures how efficiently the company uses shareholders' money. Also, check debt levels and year-on-year revenue/profit growth in the RHP.
If an IPO is oversubscribed in the retail category, allotment is done via a computerised lottery system. Everyone has an equal chance of getting one lot. For HNI/NII categories, allotment used to be proportionate but is now also a draw of lots for smaller HNIs. If you do not get an allotment, your blocked funds are released (unblocked).