An IPO is a company's first day of selling shares to the public — and for investors, a chance to get in early. But the process confuses most beginners. Here's exactly how it works in 2026, step by step. This is for learning only.
What an IPO is
IPO stands for Initial Public Offering. A private company offers its shares to the public for the first time and gets listed on the NSE/BSE. The money raised goes to the company (and sometimes to early investors selling their stake). After listing, the share trades normally in the secondary market.
What you need before you start
- A demat + trading account (to hold and trade the shares).
- A PAN, linked to your demat.
- A UPI ID (for the most common application route).
How to apply — the two routes
Both routes work by blocking the money in your bank account — it isn't actually debited until you get an allotment.
- UPI route (via your broker app): choose the IPO, enter the number of lots and price, submit, then approve the mandate request that pops up in your UPI app (GPay, PhonePe, etc.). The amount is blocked.
- ASBA route (via your bank's net banking): "Application Supported by Blocked Amount." You apply through your bank, which blocks the money directly. Some IPOs now require ASBA.
Lot size, limits and the money
- Shares are applied for in lots, not single shares. Each IPO sets its own lot size; for most mainboard IPOs, one lot costs roughly ₹14,000–₹15,000 — the minimum you can apply for.
- Retail category: individuals applying for up to ₹2 lakh get a special 35% reserved quota, which improves small investors' chances.
- The UPI application limit is up to ₹5 lakh per application.
Allotment — why you may not get shares
If an IPO gets more demand than shares available (oversubscribed), you may not get an allotment at all. For the retail quota, shares are then given by a computerised lottery — so applying for more lots doesn't guarantee more shares. If you don't get an allotment, the blocked money is simply released.
A reality check before you apply
Listing-day gains are not guaranteed. Big, hyped IPOs have disappointed badly — Paytm and LIC, for example, listed and then fell well below their issue price, leaving early investors in losses for a long time. And "grey market premium" (GMP) is an unofficial, unregulated rumour — don't treat it as a promise.
Apply to an IPO the same way you'd buy any share: because you understand the business and think the price is fair — not because everyone's queuing up. For how new listings fit the bigger picture, read do IPOs actually make money.
Do IPOs actually make money?
Everyone wants the "next big IPO." But do IPOs really make money? The honest answer, with real cases — the winners and the wipeouts.
Primary market vs secondary market: the difference
Where does your money actually go when you buy a share? The simple difference between the primary and secondary market — with real examples.
Anchor Investors Entered 242 IPOs. But Who Stayed Invested After the Lock-In?
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