How to launch an IPO in India

Launching an IPO in India means offering shares of your company to the public for the first time through a regulated process governed by SEBI. It involves hiring the right team, preparing detailed documents, getting regulatory approvals, and finally listing your shares on BSE or NSE.

Here is a quick snapshot of what the journey looks like:

• Hire a SEBI-registered merchant banker, lawyers, auditors, and a registrar
• Prepare the Draft Red Herring Prospectus (DRHP) — the detailed document about your company
• Submit the DRHP to SEBI and address all observations — SEBI typically responds within 30 days
• Apply for listing on BSE, NSE, or both and get exchange approval
• Open the IPO for public bidding — minimum 3 days, maximum 10 days
• Allot shares as per SEBI's proportionate allotment guidelines and list on the exchange

Not every company can walk up to SEBI and say "list me." There are eligibility criteria set by SEBI and the stock exchanges.

In general, a company looking to launch an IPO in India must have:

• A track record of profitability or meet alternative eligibility norms set by SEBI
• Net tangible assets of at least Rs. 3 crore in each of the preceding three years
• A minimum average pre-tax operating profit of Rs. 15 crore in at least three of the five preceding years — or meet the alternate route criteria for companies that do not yet have this track record

• No pending regulatory or legal issues that could affect the offering

  
  

If your company does not yet meet these criteria — do not worry. Many founders spend years building toward IPO readiness. Knowing the destination helps you plan the journey.

Think of an IPO like a company opening its doors to the public and saying — "Hey, want to own a piece of us?" Here is how it actually happens:

1. Get the right people on board — First, the company hires a team of experts — a SEBI-registered merchant banker, lawyers, auditors, and a registrar. The merchant banker is the most important person here. Think of them like the captain of the ship — they coordinate everything, make sure rules are followed, and guide the company through the entire IPO journey.

   
   

2. Write the big document — the DRHP — The team then puts together a massive document called the Draft Red Herring Prospectus. This document tells the world everything about the company — how much money it makes, what its debts look like, who runs it, what risks exist, and why people should invest. Think of it as the company's detailed resume — except this one runs into hundreds of pages.

   
   

3. Get a thumbs up from SEBI — SEBI is like the strict but fair teacher of India's stock market. The company submits the DRHP to SEBI, which reads through it carefully and may ask tough questions. The company must answer every single one honestly. SEBI typically takes around 30 days to give its observations. Only after clearing this step can the company move forward.

   
   

4. Apply to the stock exchange — Next, the company applies to get listed on BSE, NSE, or both. The stock exchange is like a big marketplace — and not everyone gets a stall here. The exchange checks whether the company meets all their eligibility criteria before giving the green signal.

   
   

5. Open the doors for everyone — Now comes the exciting part. The company announces a price band — say Rs. 100 to Rs. 110 per share — and investors like you and me can bid for shares during the IPO window. This bidding period stays open for a minimum of 3 days and a maximum of 10 days. It is like an online sale — except instead of buying shoes, you are buying a piece of a company.

   
   

6.  Allot shares and start trading — After the bidding closes, shares are allotted to applicants based on the basis of allotment determined by the registrar, following SEBI guidelines on proportionate allotment in case the IPO is oversubscribed. Applicants who do not receive shares get their money refunded within a few days. The shares then get listed on the exchange and trading begins — and just like that, the company is officially public and anyone can buy or sell its shares.

   
   

The IPO is not the finish line — it is the starting gun for a new chapter.

Once listed, your company has new responsibilities. You must publish quarterly financial results, disclose any major business developments to the exchange, maintain minimum public shareholding norms, and comply with SEBI's ongoing listing obligations.

Running a public company means being accountable — not just to yourself or your early investors, but to thousands of shareholders who have trusted you with their money. That accountability is both a weight and a privilege.

Many founders dream about an IPO but are not sure if their company is actually ready for one. Here are some honest signals that suggest your company may be on the right track:

• Your revenue has grown consistently over the last three to five years
• Your business has a clear and explainable model — investors should be able to understand what you do in one sentence
• Your financials are clean, audited, and well-documented
• Your promoter and management team has a strong track record
• Your corporate governance is in order — boards, audits, compliance, all of it
• You have a compelling story about where the business is going and how the IPO money will help get there

If most of these boxes are ticked, it may be time to have a serious conversation with a merchant banker. If some are missing — use this list as your IPO readiness checklist and start working toward it.

Once you understand IPOs, you will often hear the term FPO — Follow-on Public Offering. Here is how the two are different:

Think of an IPO as your company's debut. An FPO is when you go back to the audience and say — "We need a little more support, and here is why."

Conclusion

The IPO process in India involves regulatory review, detailed disclosures, price determination, bidding, allotment, and listing.

A company must coordinate with registered intermediaries throughout these stages. It must also comply with SEBI, company law, and stock exchange requirements.

The process gives companies access to public capital. However, SEBI’s observations do not indicate that an IPO is financially sound or suitable for investors.