If you are planning to get your company listed on the stock exchange, you are entering into one of the most transformative funding journeys a business can embark on through IPO. The public-listing route is not only about raising capital but about preparing your organisation for enhanced transparency in financial reporting, better governance and vast market presence. The IPO process enables your company to shift from a private entity with limited compliances & governance to a listed public company, with enhanced and structured regulatory framework, to improvise disclosures and reporting, to pitch to the prospective investors for funding, to get the regulatory clearance after thorough due diligence and ultimately to go live on the stock exchange. Understanding this process empowers you to lead it with confidence, align your vision and engage key advisors effectively.
The IPO Process in India involves four key stages- preparation, due diligence, marketing, and post-listing compliance. Learn how promoters can plan successful listings.
Detailed Roadmap of IPO Process in India
Phase 1 – Preparation & Readiness
1. Self-assessment & Strategic Planning
Before you formally enter the IPO process, evaluate whether your business is ready. Key questions include: Is your business model stable? Is profitability (or credible path to profitability) visible? Do you have robust financials, governance and audit controls? The IPO process demands high transparency, so now is the time to strengthen your internal systems.
Conduct an internal readiness checklist covering three years of audited accounts, board composition, internal controls, litigations and IP (intellectual property) clearance.
2. Selecting Advisors: Merchant Bankers/Lead Manager (BRLM)
Engagement of a merchant banker (also called lead manager) helps you kick-off the IPO process. The merchant banker will guide structuring, pricing, filings, reporting and marketing. It is advisable to choose a firm with prior IPO experience in your sector or industry. At the same time, secure legal and auditing professionals who understand public-market disclosures and compliance as per the regulatory framework in place.
3. Corporate Governance, Restructuring and Compliance
The IPO process also requires governance upgrades: clear shareholding, clean litigation records, dematerialised share capital, a qualified and experienced company secretary, and proper board structure and committees. In case of matters requiring professional guidance (e.g., unresolved audit qualifications, complex shareholder arrangements), fix them ahead of the filing.
Phase 2 – Due Diligence, Structuring & Filing
4. Due Diligence and Preparing Disclosures
Once advisors and professionals are on board, the merchant banker conducts substantive due diligence: financial statements, legal compliance, risk factors, business governance and management credentials. This phase is integral to the IPO process because it feeds into the public disclosure that investors will rely upon.
5. Structuring the Offering: Size, Instrument Type, Allocation Strategy
During the IPO process you must make strategic decisions: how much capital to raise, whether to offer fresh shares, whether to use book-building or fixed-price methods, anchor investor structure, promoter lock-in terms, etc. These decisions impact the attractiveness and outcome of your listing.
6. DRHP/RHP Filing with SEBI and Stock Exchanges
The core of the IPO process is the filing of the Draft Red Herring Prospectus (DRHP) or Red Herring Prospectus (RHP). This document contains your business model, growth strategy, risk factors, use of funds, management background, litigation disclosures, and financials. You file with SEBI, the stock exchanges and Registrar of Companies in line with regulations.
7. SEBI & Exchanges’ Observations and Approval (cooling-off period)
After filing your DRHP, a regulatory review begins. SEBI and respective stock exchange issues observations or comments, you respond and revise only after clearance, you can proceed to a public issue. This is a crucial part of the IPO process and sets your timeline.
Phase 3 – Marketing, Pricing, Allotment & Listing
8. Roadshow and Investor Marketing
With regulatory clearance in hand, you and your merchant banker embark upon investor-roadshows, presentations to large institutional and anchor investors, and perhaps global marketing. The IPO process blueprint includes building demand, explaining your business narrative and ensuring your audience understands the growth potential.
9. Pricing and Allocation: Fixed-price vs Book-building
In the IPO process you must choose how to price the shares. In a fixed-price issue, the price is set upfront. In the book-building route, you set a price band, allow bids and then price accordingly. Each has pros and cons. Most Indian issues adopt book-building for wider investor participation.
10. Opening the Issue, Collecting Applications, Allotment and Listing
After pricing, you open the issue to individual/non-institutional/institutional investors. Applications are collected typically through ASBA (Applications Supported by Blocked Amount) mechanism. After subscription closes, allotment is done, shares are credited to demat accounts, and listing takes place on the chosen exchange (for most companies: National Stock Exchange and/or Bombay Stock Exchange) on the stipulated date. This completes the IPO process in India.
Phase 4 – Post-IPO Obligations & Governance
11. Investor Relations, Disclosure, and Ongoing Compliance
Once listed, your company must maintain investor relations, publish quarterly/annual results, adhere to continuous disclosure norms, manage promoter lock-in expiries and maintain share price performance. These are integral parts of the IPO process in the sense of “after-listing” obligations.
12. Leveraging Listing for Further Growth
The IPO process doesn’t end at listing. Successful companies use the listing to enhance brand credibility, access future follow-on offerings, expand their business and deliver sustained performance.
Typical Timelines, Costs and Consideration
- Timelines: The full IPO process in India typically spans 6 to 9 months, depending on company size, sector, regulatory turnaround and market conditions.
- Costs: Advisory fees (merchant banker, legal, auditing), regulatory fees (SEBI filing, stock exchange listing), marketing/roadshow expenses, printing/disclosure costs, underwriting fees.
- When is the “right window” to file (market conditions)?
- What is the optimal issue size (raising too much dilutes value; too little may hamper credibility)?
- Which pricing method to use (fixed vs book building)?
- Acting early on these decision points improves your control over the IPO process.
Hypothetical Case Example : IPO Journey of XYZ Tech Limited
XYZ Tech Ltd., a Mumbai-based software services company, decided to raise ₹100 crore via public listing. Here is how their IPO process in India unfolded:
- Preparation (H3): 18 months before launch they cleaned up shareholder structure, resolved two pending legal cases and appointed a compliance officer.
- Advisor Selection (H3): They engaged a merchant banker with prior tech-sector IPOs, legal counsel and auditors familiar with public-market disclosures.
- Due Diligence and DRHP Filing (H3): The team compiled business overview, risk factors, audited accounts, use of proceeds, filed DRHP with SEBI and received observations two months later.
- Roadshow & Pricing (H3): After SEBI clearance, Sunrise Tech organised roadshows in Delhi, Mumbai and Bengaluru, targeting anchor investors. They used the book-building method with a price band of ₹90-₹105. Demand was strong and the final price was fixed at ₹100.
- Allotment & Listing (H3): Issue opened for five days, successfully subscribed three times. Shares listed on NSE with a 10% above-issue-price debut.
- Post Listing (H3): Sunrise established a formal investor-relations page, published quarterly results, and maintained promoter lock-in for 3 years. Through this structured IPO process, XYZ Tech not only raised capital but improved corporate governance and brand visibility.
Final Thoughts
The IPO process in India offers your company a powerful opportunity to access capital, enhance brand visibility and accelerate growth, but only if approached systematically and strategically. By understanding each phase, preparing rigorously, choosing the right partners, and avoiding common pitfalls, you enhance your chances of a successful public offering.
Frequently Asked Questions About the IPO Process
Q1: What is the typical duration of the IPO process in India?
Answer : On average the IPO process takes 6 to 9 months from decision-to-launch through listing, though a few companies may take longer depending on readiness and regulatory turnaround.
Q2: Can I choose between fixed-price and book-building methods in the IPO process
Answer: Yes, the choice between the fixed-price method and the book-building method in an IPO is made by the company that is issuing the shares, not by investors. In simple terms, if a company wants to go public, it can decide whether to set one final share price in advance (fixed-price method) or give a price range and let investors bid so the final price is decided based on demand (book-building method).
Fixed-Price IPO
The fixed-price method is an IPO process where the company decides one set price for its shares before the IPO opens. This price is announced in advance, so investors know exactly how much they will pay when they apply for the IPO. Investors do not bid or negotiate the price; they simply choose how many shares they want to buy at that fixed price. After the IPO closes, the company checks the total demand and then allots shares accordingly. In simple words, it is like buying an item from a shop with a fixed price tag, making this method easy to understand but less flexible in reflecting market demand.
Book-Building IPO
The book-building method is a way of deciding the price of shares in an IPO based on investor demand. Instead of fixing one price, the company gives a price range (for example, ₹90 to ₹100). Investors then apply for shares by bidding at a price within this range and stating how many shares they want. After the IPO closes, all these bids are collected and analyzed, and the company decides the final share price at which most shares can be sold. In simple words, it works like an auction, where the price is discovered based on how much investors are willing to pay, making it a more market-driven and commonly used method today.
Q3: What key roles does the merchant banker play in the IPO process?
Answer: The merchant banker (lead manager) guides through structuring, due diligence, DRHP/RHP filing, pricing, marketing, market making and underwriting. They are central to managing the IPO process end-to-end.
Q4: Are there minimum regulatory compliances before launching the IPO process?
Answer: Yes. You must comply with governance norms, have audited & restated financials, resolve material litigation/IP risks, appoint a company secretary, ensure dematerialisation of shares, obtain in-principle listing approvals, among others.
Q5: What happens after the shares are listed on the exchange? Is the IPO process over?
Answer: Not completely. Post-listing obligations, investor relations, quarterly disclosures, promoter lock-in, responding to market feedback are part of the extended IPO process. Good ongoing governance enables price and value discovery and sustains the value the listing has created.
Q6: Can a company delay or withdraw an IPO process in India if market conditions change?
Answer: Many companies stay ready but postpone the public issue if valuations or sentiment are weak. A disciplined approach means readiness without forcing an ill‐timed listing.
