An Initial Public Offering (IPO) is the process through which a private company offers its shares to the public for the first time. For investors, an IPO in India provides an opportunity to invest in a company before its shares are listed on the stock exchange. However, IPO investing carries market risks, so investors should research the company and its offer details before applying.
Some important details to check include the IPO’s opening and closing dates, price band, lot size, and issue size. The Motilal Oswal IPO platform allows investors to track upcoming IPOs in India and access important information about public issues in one place.
What Is an Upcoming IPO?
An upcoming IPO refers to a public issue that has been announced but has not yet opened for subscription. Before an IPO opens, the company typically makes regulatory filings that provide details about its business, financial performance, risk factors, promoters, and the proposed use of funds.
IPOs in India can broadly be classified into two categories:
Mainboard IPO: An IPO through which a company seeks to list its shares on the mainboard of a recognised stock exchange.
SME IPO: An IPO issued by a small or medium-sized enterprise seeking to list on an SME platform. These IPOs may have different eligibility requirements, lot sizes, and trading conditions compared with mainboard IPOs.
Important IPO Details to Track
An IPO calendar typically includes several details that can help investors assess an upcoming public issue.
IPO Opening and Closing Dates
The opening date is the first day investors can submit applications for an IPO, while the closing date is the last day to apply. Investors should submit their applications within the specified period and ensure that any required payment authorisation is completed before the applicable deadline.
Price Band
The price band indicates the minimum and maximum prices at which investors can bid for shares in a book-built IPO. For example, if the price band is Rs 100-Rs 110, investors can generally bid within that range. Retail investors may also choose the cut-off option, where available, indicating their willingness to pay the final issue price determined through the book-building process, subject to the applicable rules.
Lot Size and Minimum Investment
IPO applications are generally placed in multiples of a specified lot size. The lot size indicates the minimum number of shares an investor can apply for in a single lot.
For example, if the upper end of the price band is Rs 110 and the lot size is 100 shares, the minimum application value for one lot would be Rs 11,000, excluding any applicable charges.
Issue Size and Fresh Issue
The issue size represents the total value of shares offered in an IPO. A public issue may include one or both of the following:
- Fresh issue: The company issues new shares to raise funds. The proceeds may be used for business expansion, debt repayment, working capital requirements, or other stated corporate purposes.
- Offer for sale (OFS): Existing shareholders sell some of their shares to the public. In this case, the proceeds generally go to the selling shareholders rather than the company.
Understanding the issue structure helps investors assess how the IPO proceeds will be distributed and whether the company itself will receive funds from the offering.
How to Track Upcoming IPOs in India
1. Check the IPO Calendar
Start by checking the updated IPO calendar on the Motilal Oswal platform. An IPO calendar can list upcoming, open, and recently listed IPOs, along with details such as the company name, issue type, opening and closing dates, price band, lot size, and expected listing date.
Since IPO schedules and price details can change, check the latest information and official announcements before applying.
2. Read the Offer Document
The offer document, including the Red Herring Prospectus (RHP) for a book-built issue, provides important information about the company and its public offering. Investors should review details such as the company’s business model, revenue, profitability, debt, industry outlook, use of funds, and associated risks.
The document also explains how the company intends to use the money raised through the IPO, where applicable. Reviewing these details can help investors understand the business and assess whether the issue aligns with their investment goals.
3. Study the Financial Statements
A company’s historical financial statements can provide insights into its business performance. Investors should examine revenue growth, profitability, profit margins, cash flow, debt levels, and returns, among other factors.
However, strong past performance does not guarantee future returns. It is also useful to compare the company’s valuation with that of similar listed companies. A relatively high valuation may limit potential upside if the company’s future growth does not meet expectations.
4. Monitor Subscription Data
IPO subscription data indicate the level of demand from different investor categories, including retail investors, qualified institutional buyers (QIBs), and non-institutional investors (NIIs).
Subscription figures can offer insights into market interest in an issue, but they should not replace fundamental analysis. High subscription levels do not guarantee listing gains or strong long-term performance.
5. Check Allotment and Listing Updates
After an IPO closes, investors can check allotment status through the registrar’s website or other official channels, where available. If shares are allotted, they are credited to the investor’s demat account before listing. Funds for applications that are not allotted, or for the unallotted portion of an application, are unblocked or refunded as applicable.
Investors should also check the announced listing date and any official updates before trading begins.
Factors to Consider Before Applying
Before applying for an upcoming IPO in India, consider the following:
- The company’s business model and competitive position.
- Revenue, profits, debt, and cash-flow trends.
- The purpose of the IPO and the proposed use of funds.
- Valuation compared with similar listed companies.
- Promoter experience and shareholding structure.
- Industry conditions and potential regulatory risks.
- Your financial goals, risk tolerance, and investment horizon.
Grey market premiums (GMPs) may attract attention before an IPO listing, but they are unofficial indicators, can fluctuate quickly, and do not guarantee listing gains. Investors should avoid making decisions based solely on short-term market sentiment and should review the company’s fundamentals, valuation, and offer documents before applying.
