IPO Guide for Beginners: Should You Apply? How It Actually Works

IPO stands for Initial Public Offering — when a private company sells shares to the public for the first time. It's like a new restaurant opening its doors. Everyone's curious — will it be good?

Why Do Companies Do IPOs?

• Raise money for expansion, debt repayment, or new projects
• Early investors exit — founders and VCs can sell their shares
• Brand visibility — being listed on NSE/BSE is prestigious

How to Apply for an IPO

1. Open a Demat account (Zerodha, Groww, Angel One)
2. When an IPO opens, go to your broker app → IPO section
3. Select the IPO → choose number of lots (minimum 1 lot, usually ₹14,000-15,000)
4. Enter your UPI ID → approve the payment mandate on your UPI app
5. Money is blocked (not debited) until allotment
6. Allotment happens 5-7 days later — if you get shares, money is debited. If not, it's released.

What Is GMP (Grey Market Premium)?

Before listing, people trade IPO shares informally. If an IPO is priced at ₹500 and GMP is ₹150, people expect it to list at ~₹650. But GMP is unofficial and unreliable — treat it as gossip, not gospel.

Should You Invest in Every IPO?

No. Many IPOs are overpriced. Companies time IPOs when market sentiment is high to get the best price — which means YOU might be buying at the peak.

Listing Day: Sell or Hold?

If you got allotment and the stock lists at a premium:

• Short-term thinking: Sell on listing day and book profit
• Long-term thinking: If you believe in the company, hold for 1-3 years

Data shows that about 60% of IPOs trade below their listing price after 1 year. So “listing day sell” is often the safer bet for average IPOs.