Frequently Asked Questions on IPOs & GMP

An IPO (Initial Public Offering) is the process by which a private company issues its shares to the public for the first time to raise capital from institutional and retail investors and list on stock exchanges like NSE and BSE.

A Fresh Issue creates new equity shares and the proceeds go directly to the company for business expansion or debt repayment. An Offer for Sale (OFS) involves existing promoters or investors selling their existing shares, where the money goes to the selling shareholders rather than the company.

A Price Band is the price range (e.g., ₹100–₹105) set by the company within which investors can bid. The Cut-off Price is the final issue price decided by the company after evaluating all bids. Retail investors are advised to always bid at the 'Cut-off Price' to avoid rejection if the issue is oversubscribed at the upper cap.

A lot size is the minimum fixed number of shares an investor must apply for in an IPO. For example, if the lot size is 30 shares and the upper price band is ₹500, one application lot requires an investment of ₹15,000 (30 × 500).

Grey Market Premium (GMP) is the unofficial premium over the issue price at which IPO shares trade in an unregulated over-the-counter market before their official stock exchange listing. It reflects market demand and investor sentiment.

Expected Listing Price = Upper Price Band + Current GMP. For example, if an IPO's upper price band is ₹200 and the current GMP is ₹50, the estimated listing price is ₹250 (a potential 25% listing gain).

No. GMP is an unregulated sentiment indicator and can fluctuate rapidly due to broader stock market volatility, global cues, or institutional subscription numbers. It should be used as a supplementary indicator alongside the company's financial health, valuation, and fundamentals.

Kostak rate is the fixed profit amount a buyer pays to an IPO applicant for their application before allotment, irrespective of whether shares are allotted. 'Subject to Sauda' is the agreed profit amount payable only if the applicant receives share allotment.

There are three primary categories: Retail Individual Investors (RII) applying for up to ₹2 Lakhs; Non-Institutional Investors / HNIs (bHNI for > ₹10 Lakhs, sHNI for ₹2L–₹10L); and Qualified Institutional Buyers (QIBs) including mutual funds, banks, and foreign portfolio investors.

RBI and NPCI have set the UPI transaction limit for IPO applications at ₹5 Lakhs per transaction via supported UPI apps like Google Pay, PhonePe, BHIM, and Paytm.

Your IPO application will be treated as incomplete and rejected by the registrar. You must approve the mandate on your UPI app before 5:00 PM on the IPO closing day.

No. The registrar checks all bids by PAN number. If multiple applications are submitted under the same PAN (even across different brokers), all your applications will be flagged as duplicate and rejected.

For the Retail category in an oversubscribed IPO, SEBI mandates a computerized lucky lottery draw where successful applicants receive exactly one minimum lot. For HNIs (NIIs), allotment is done proportionately for sHNI/bHNI categories.

You can check your status on our IPO Allotment Status tool, or directly on the registrar's official portal (Linkintime, KFintech, Bigshare, Skyline) or BSE/NSE websites using your PAN number or Application number.

If shares are not allotted, the blocked funds in your bank account are released within 1 to 2 business days following the basis of allotment date.

Mainboard IPOs are for large-cap/mid-cap companies listed on NSE & BSE with minimum investment around ₹14,000–₹15,000. SME IPOs are for small and medium enterprises listed on NSE Emerge or BSE SME platforms with minimum ticket sizes typically of ₹1 Lakh to ₹1.5 Lakhs per lot.

No. In SME platforms, trading happens in fixed lot sizes (e.g., 1,000 or 2,000 shares per order). You must buy or sell the full lot, which requires higher capital liquidity.

Profits realized from selling IPO shares within 12 months of listing are categorized as Short-Term Capital Gains (STCG) and taxed at 20% (as per latest Finance Act 2024 revisions) + applicable cess. If held for more than 12 months, Long-Term Capital Gains (LTCG) above ₹1.25 Lakhs per financial year are taxed at 12.5%.

On listing day, the discovery pre-open session takes place from 9:00 AM to 9:45 AM. Normal trading for the newly listed IPO shares commences at 10:00 AM on NSE and BSE.