IPOs generate more excitement in Indian retail investing than almost anything else. Every major listing brings a flood of first-time applicants who've heard stories about listing-day gains. Some of that excitement is warranted. Most IPOs in 2024–2025 listed at premiums. But the process itself trips up many applicants — either they apply wrong and miss the allotment, or they misunderstand how the system works.
Here's a precise walkthrough of how IPO applications actually work in India.
Step 1: Check Eligibility and Lot Size
Any Indian resident with a valid PAN, demat account and bank account can apply for an IPO. NRIs can also apply through their NRE/NRO accounts via the non-resident category.
IPOs are offered in lots. One lot is the minimum number of shares you can apply for — usually worth between ₹12,000 and ₹15,000 at the IPO price. You can apply for up to 14 lots as a retail investor (the retail category is defined as applications up to ₹2 lakh in value). Above ₹2 lakh, your application falls in the High Net Worth Individual (HNI/NII) category, which has different allocation dynamics.
Step 2: Read the DRHP (at least the Risk Factors)
Before applying, spend 20 minutes reading the company's Draft Red Herring Prospectus, available on SEBI's website and the registrar's portal. You don't need to read all 400 pages. Focus on: the company's revenue and profit trend (last 3 years), the objects of the issue (what they're raising money for), the risk factors section, and the promoter background. If the company is unprofitable and raising money to pay off debt rather than grow the business, that's a red flag.
Step 3: Apply via ASBA or UPI
India's IPO application system uses ASBA (Application Supported by Blocked Amount). Your money isn't actually deducted — it's blocked in your bank account until allotment. If you don't get the allotment, the block is released immediately. This protects you from your money being tied up in transit.
Via UPI (easiest method): Log into your broker's app (Zerodha, Groww etc.) or your bank's app. Find the current IPO in the IPO section. Enter the number of lots, select cut-off price (recommended — this means you'll get the shares at whatever price is set within the price band), enter your UPI ID, and submit. You'll receive a UPI mandate request — approve it before the deadline. The amount gets blocked in your bank account.
Via net banking (ASBA): Log into your bank's net banking portal. Find the IPO application section (usually under 'Investments'). Fill in the IPO details, lot size, and price. Submit. The bank blocks the amount directly without a UPI mandate step.
Step 4: Check Allotment Status
Allotment typically happens 6 business days after the issue closes. Check status on the registrar's website (Link Intime, KFin Technologies etc.) using your PAN or application number. If allotted, shares appear in your demat account the day before listing. If not allotted, the blocked amount is released to your bank account within 2 business days.
Allotment in oversubscribed IPOs for retail investors is done by lottery — it's random within the category. Applying through multiple family member accounts (each with their own PAN) is a legitimate strategy to improve your chances.
Step 5: Decide Whether to Sell on Listing Day
This is where most people make emotional decisions. If an IPO lists at a 40% premium and you were expecting 15%, the temptation to hold for more is real — but listing-day gains are often the best you'll see for months. Conversely, a stock listing below the issue price ("negative listing") triggers panic selling at the worst possible time.
Our approach: if you applied purely for listing gains, sell 50–75% on listing day and hold the rest. If you applied because you believe in the business for 3–5 years, ignore the listing price and check back in a year.
Frequently Asked Questions
Can I apply for multiple IPOs at the same time?
Yes. There is no limit on how many different IPOs you can apply for simultaneously. However, you can only submit one application per PAN per IPO — multiple applications from the same PAN are rejected.
What happens if I apply for an IPO and forget to approve the UPI mandate?
Your application will be rejected. The UPI mandate approval is essential — without it, the exchange cannot block the funds, and SEBI rules require the block before the application is valid. Most platforms send multiple reminders before the mandate expires.
Is IPO investing profitable in India?
It depends entirely on the IPO and how long you hold. Many IPOs deliver strong listing gains but underperform the Nifty 50 over 2–3 years. Some, like Zomato and Paytm at their respective prices, disappointed investors who held long-term. Others, like Tata Technologies, delivered both strong listings and continued upside.
What is the difference between IPO, FPO and OFS?
An IPO (Initial Public Offering) is a company's first public share sale. An FPO (Follow-on Public Offering) is when an already-listed company raises additional capital. An OFS (Offer for Sale) is when existing shareholders (promoters, PE investors) sell their shares to the public — the company receives no money from an OFS, which is worth understanding before you apply.