Conceptual · Article 1.1.4.5
Mainboard IPOs.
A Company Going Public. A Process, Not a Product.
Published as on 29 June 2026
A Mainboard IPO is a private company offering shares to the public for the first time on the main exchanges — NSE or BSE — rather than the SME platform. It is a capital-market mechanism: it lets a company raise growth capital, lets early investors cash out, and lets the market discover a price. SEBI regulates eligibility, disclosure (DRHP/RHP), book-building, ASBA/UPI applications, and rule-based allotment across Retail (≤₹2L), NII and QIB. Listing now follows a T+3 timeline. Tax under Finance Act 2024: 20% STCG (≤12 mo), 12.5% LTCG with ₹1.25L exemption (>12 mo). An IPO is day one of a company's public life — not a guaranteed payday.
₹10 cr+
Min Post-IPO Capital
T+3
Close-to-List Timeline
20% / 12.5%
STCG / LTCG
~₹14-15K
Typical Min Application
Executive Summary · Page 2
Executive Summary · 6 Findings
A Mainboard IPO is a company's transition from private to public ownership on NSE or BSE. It is not a financial product you buy to make money — it is the mechanism that creates a market where shares can be bought and sold. SEBI approval signals disclosure compliance, not investment merit. Oversubscription signals demand, not quality. Understand the process and the outcomes — whatever they are — make sense.
Covers SEBI eligibility (profitability and 75%-QIB routes), the six-stage process (DRHP → SEBI review → price band/book-building → ASBA/UPI subscription → rule-based allotment → T+3 listing), the RII/NII/QIB split, lock-ins, fresh issue vs OFS, how to read the RHP, the grey-market caveat, tax under Finance Act 2024, and realistic expectations versus hype.
Key Findings
An IPO is a process, not a product.
A private company offers shares to the public for the first time on NSE/BSE. The purpose: raise growth capital (cheaper than 10-12% bank loans), create liquidity for early investors, and enable daily market-based price discovery. It does not guarantee profit — it simply creates a market.
Eligibility is gated by SEBI — two routes.
Standard route: ₹10 cr+ paid-up capital post-IPO, ₹3 cr+ net tangible assets and ₹1 cr+ net worth each of last 3 years, ₹15 cr average operating profit (3 yr). Alternative route for loss-makers: allot ≥75% to QIBs (how Zomato, Paytm listed). Clean regulatory record required throughout.
Six stages, control shifting at each.
Company files DRHP → SEBI reviews compliance (not merit) → price band set, institutions bid in book-building → 3-day subscription via ASBA/UPI (money blocked, not transferred) → rule-based proportionate allotment → listing on NSE/BSE within T+3. You cannot choose how many shares you get when oversubscribed.
Allotment is formula-driven across three buckets.
Book-built IPO split: 35% Retail (RII, ≤₹2L), 15% NII/HNI, 50% QIB. Oversubscribed retail gets proportionate allotment — apply for 100 shares at 50x oversubscription and you may receive only 10-20. "Adverse selection" is real: weak IPOs give full allotment; strong ones don't.
Tax: 20% STCG / 12.5% LTCG with ₹1.25L exemption.
Finance Act 2024 (post-July 23, 2024): sell within 12 months → 20% STCG (was 15%). Hold >12 months → 12.5% LTCG (was 10%), first ₹1.25L per year exempt across all equity. STT is paid on all listed shares, which is what qualifies you for these equity rates. An IPO share is taxed exactly like any market-bought share.
Listing gains are common — not guaranteed.
2024 was a record year: 93 Mainboard IPOs raised ₹1,63,000 cr; 74 (80%) listed with gains. But 1 in 5 listed below issue price (R K Swamy −13%, Carraro India −7.5%), and many big openers fell within months. Oversubscription, SEBI approval and banker reputation are not quality guarantees.
At A Glance
| Metric | Value | Detail |
|---|---|---|
| Exchanges | NSE / BSE main board | Not SME platform |
| Min Post-IPO Capital | ₹10 cr | SEBI ICDR 2018 |
| Allotment Split | 35 / 15 / 50 | RII / NII / QIB |
| Retail Cap | ₹2 lakh | Per IPO |
| Min Application | ~₹14-15K | One lot, typical |
| Listing Timeline | T+3 | SEBI mandate (2023) |
| STCG (≤12 mo) | 20% | Post-July 23 2024 |
| LTCG (>12 mo) | 12.5% | Above ₹1.25L exempt |
Exhibit 01: 2024 Mainboard IPO Record Year
| Measure | 2024 | FY25 |
|---|---|---|
| Mainboard IPOs | 93 | 80 |
| Capital raised | ₹1,63,000 cr | — |
| Listed with gains | 74 (80%) | — |
| Avg QIB oversub. | — | 102x |
| Avg retail oversub. | — | 35x |
Largest 2024 IPO: Hyundai Motor India at ₹27,870 cr. Top listing gains: Vibhor Steel Tubes (+181%), Bajaj Housing Finance (+114%). Even in a hot market, 1 in 5 listed below issue price — and listing gains do not predict long-term returns.
The Opening · Page 3
The Opening
A Mainboard IPO is a company's "coming-of-age" ceremony in the stock market. Until this point it has been privately owned — by founders, early investors, or venture capital. When it goes public, it offers shares to ordinary investors for the first time on the main exchanges (NSE, BSE), the big league reserved for larger, more established companies. The crucial frame: an IPO is not a financial product you buy to make money. It is a capital-market mechanism that lets a company raise funds and lets existing shareholders sell.
"An IPO is just day one of a company's public life. Before the IPO, founders decide everything. After it, shareholders, regulations and market sentiment all have influence. On day 1 the market knows very little; by month 6 it knows more; by year 2 it has a clearer picture. The price adjusts continuously as understanding improves."
The Process-Not-Product Frame
Why companies list. Three reasons: raise growth capital (a Pune manufacturer needing ₹500 cr can sell shares instead of borrowing at 10-12%); create liquidity for early investors (a ₹10 lakh 2015 stake now worth ₹5 cr on paper, but unsellable without a public market); and enable transparent, market-driven price discovery where thousands of buyers and sellers set the price daily rather than a private negotiation.
June 2026 context. SEBI regulates the entire process under the ICDR Regulations, 2018, to protect investors. Listing now follows a T+3 timeline (IPO close to listing in 3 working days, mandated since late 2023). Tax under Finance Act 2024 (post-July 23, 2024): 20% STCG (≤12 mo), 12.5% LTCG with ₹1.25L exemption (>12 mo). Read the prospectus, separate process mechanics from outcomes, and treat the IPO as an entry point — not a conclusion.
Structure
Part I
Eligibility, the Six-Stage Process, Mainboard vs SME
Part II
Allotment, Lock-ins, Fresh Issue vs OFS, Tax
Part III
Reading the RHP, GMP Caveat, Mistakes, Reality Check
Part IV
The Verdict: A Transition Mechanism, Not a Verdict
Apply If
✓ You'd own it long-term, even at a discount
✓ You've read the RHP risks
✓ Fundamentals justify the price band
✓ Money you won't need for a week+
Do NOT Apply If
✕ Chasing listing-day gains only
✕ Following GMP or "100x subscribed"
✕ Applying to every IPO to "diversify"
✕ Anchoring on the issue price
Part I
Eligibility, the Six-Stage Process, and Mainboard vs SME
Who can list under SEBI's profitability and 75%-QIB routes, how control shifts across the six stages from DRHP to T+3 listing, and what separates a Mainboard IPO from the SME platform.
Part I · Page 4
SEBI Eligibility — Standard Route
| Criterion | Requirement |
|---|---|
| Paid-up capital | ≥ ₹10 cr post-IPO |
| Net tangible assets | ≥ ₹3 cr each of last 3 yr |
| Operating profit | ₹15 cr avg (3 yr), positive each yr |
| Net worth | ≥ ₹1 cr each of last 3 yr |
| Track record | 3-year operating history |
Alternative Route — 75% QIB
A loss-making company that fails the 3-year profitability test can still list by allotting ≥75% of the IPO to QIBs (mutual funds, insurers).
This is how Zomato and Paytm listed despite negative profits — strong institutional backing substitutes for a profit record.
Clean Record Required
✓ No defaults to banks, FIs or debenture holders
✓ No SEBI ban or capital-market disqualification
✓ No insolvency or winding-up proceedings
Note: Companies exceeding ₹25 cr paid-up capital post-IPO must list on Mainboard. The ₹10-25 cr band may choose Mainboard or SME.
Minimum Public Shareholding
SEBI requires at least 25% of shares held by public investors after the IPO — ensuring adequate liquidity and preventing concentration of ownership.
The Six-Stage Process
Preparation — company in control
Hires merchant bankers (Kotak Mahindra Capital, ICICI Securities), files the Draft Red Herring Prospectus (DRHP) with SEBI — business, financials, risks, use of funds.
SEBI review — regulator in control
Reviews the DRHP for compliance, not investment merit. May ask for clarifications. Takes several weeks to months.
Price discovery — company + market
Announces a price band (e.g. ₹200-220). Book-building: institutions bid; final price set within the band based on demand.
Subscription — investor bidding
Open 3 working days. Apply via UPI mandate or ASBA — your money is blocked in your bank, not transferred. Three categories: Retail (≤₹2L), NII/HNI, QIB.
Allotment — rule-based
Oversubscribed retail gets proportionate allotment via SEBI formulas (35% RII / 15% NII / 50% QIB). You cannot choose your share count.
Listing — open market takes over
Shares list on NSE/BSE within T+3 working days. Price set by supply and demand. No guaranteed listing gains.
Part II
Allotment, Lock-ins, Fresh Issue vs OFS, and Tax
How the RII/NII/QIB allotment math really works, when promoter and anchor lock-ins expire and why that matters, the fresh-issue-vs-OFS distinction that reveals who is selling, and tax under Finance Act 2024.
Part II · Page 6
Tax — Finance Act 2024
STCG: 20% (Sell within 12 months)
Applies to listing-day sales and any sale ≤12 months. Rate 20% (raised from 15%). STT is paid on all listed shares.
Example — Priya: 100 shares at ₹100 (₹10,000). Sells on listing day at ₹135 → profit ₹3,500 → tax ₹700 → net ₹2,800.
LTCG: 12.5% with ₹1.25L Exemption
Hold >12 months. Tax 12.5% (raised from 10%); first ₹1.25L of LTCG per year exempt, cumulative across all equity.
Example — Priya holds 15 months, sells at ₹180 → profit ₹8,000. If first LTCG of the year → within exemption → ZERO tax. If exemption already used → ₹8,000 × 12.5% = ₹1,000.
Primary vs Secondary Market
IPO (primary): buy directly from the company, fixed price/band, allotment by rules, money goes to company or selling shareholders. Market (secondary): buy from another investor, price changes every second, instant execution. Tax: identical — an IPO share is taxed exactly like a market-bought one.
Fresh Issue vs Offer for Sale
| Type | Money Goes To |
|---|---|
| Fresh Issue | The company (expansion, debt, working capital) |
| Offer for Sale | Selling shareholders, NOT the company |
Why it matters: a ₹1,000 cr IPO split ₹700 cr fresh / ₹300 cr OFS sends ₹700 cr to the business. If 80% is OFS, promoters/investors are exiting heavily — ask why they're selling if the future is so bright.
Allotment Math (Book-Built)
| Category | Reservation |
|---|---|
| Retail (RII) | 35% · up to ₹2L |
| NII / HNI | 15% · above ₹2L |
| QIB | 50% · institutions |
The Adverse-Selection Trap
Oversubscribed 50x → apply for 100 shares, get just 10-20. Your ₹10,000 application becomes ~₹1,500 invested. Meanwhile weak IPOs nobody wants give you 100% allotment. Applying to every IPO to "diversify" guarantees mediocrity, not safety.
Lock-in Periods (SEBI ICDR 2018)
| Holder | Lock-in |
|---|---|
| Retail / ordinary | None — sell on listing day |
| Promoter (min 20%) | 18 months |
| Promoter (excess >20%) | 6 months |
| Pre-IPO / PE investors | 6 months |
| Anchor investors | 50% @ 30d, 50% @ 90d |
Use of Proceeds — Monitored
The RHP must state how funds are used (expansion, debt repayment, working capital, limited general purposes). Cannot fund speculation or benefit promoters personally; large changes need shareholder approval; unutilised funds parked in FDs/G-secs; monitoring agencies track deployment on large IPOs.
Part III
Reading the Prospectus, the GMP Caveat, and a Reality Check
The six red flags to hunt for in the Red Herring Prospectus, why the Grey Market Premium is noise not signal, the common mistakes Indian investors make, and the realistic expectations that keep outcomes from feeling like malfunctions.
Part III · Page 8
Six RHP Red Flags
High management attrition
Key executives — CFO, CEO — leaving just before the IPO can signal internal issues.
Excessive litigation
Legal claims exceeding net worth, or a large share of revenue at risk from disputes.
Related-party transactions
Lending to promoters' other businesses or off-market group dealings. SEBI requires disclosure if RPT exceeds 10% of turnover or ₹50 cr (lower of the two).
Customer / supplier concentration
One customer at 30%+ of revenue — could the business collapse if that relationship ends?
Unclear use of funds
80% to "general corporate purposes" hides the real plan. Specific, detailed use-of-funds is a good sign.
Promoter track record
Past listed companies and their performance; any prior regulatory violations or market bans.
Grey Market Premium (GMP)
An unofficial, unregulated market trading IPO applications before listing. Issue ₹100 + GMP ₹50 implies an expected ₹150 listing. Do not rely on it: no SEBI oversight, small and opaque, manipulable, often wrong for small IPOs. Like overhearing strangers' stock tips on a train — interesting, not a basis for decisions.
Realistic vs Unrealistic Expectations
| Expect This | Not This |
|---|---|
| 10-20% price swings in first weeks | Stable price discovery |
| Incomplete info even after RHP | Full knowledge of the future |
| Months/years to understand value | Day-1 verdict |
| Oversubscription = demand | Oversubscription = quality |
| Issue price = negotiated start | Issue price = fair value |
Three Common Mistakes
✕ 1. Demand as proof of quality — "100x subscribed" can mean a small issue, broker marketing, or retail FOMO. Many heavily-subscribed 2024 IPOs went negative within months.
✕ 2. Anchoring on issue price — "below issue price, so it's cheap." What matters is whether fundamentals justify the current price, not ₹X.
✕ 3. Ignoring governance change — public life brings quarterly disclosure, independent directors, scrutiny. Not all companies adapt; some stars stumble once public.
Listing Gains ≠ Long-Term Returns
2024-25 Evidence
80% of 2024 Mainboard IPOs listed with gains — but 1 in 5 didn't. Bajaj Housing Finance opened +114%; R K Swamy −13%. Winsol Engineers (SME) listed +387%, then fell 25% within months. The market decides, not the company.
Part IV
The Verdict
Neither opportunity nor trap by default. A transition mechanism.
Part IV: The Verdict · Page 10
30-Second Summary
A Mainboard IPO is a private company going public on NSE/BSE — a process, not a product. SEBI gates eligibility (₹10 cr+ post-IPO capital, ₹15 cr profit, or the 75%-QIB route) and reviews disclosure, not merit. The six stages run DRHP → SEBI review → price band/book-building → 3-day ASBA/UPI subscription (money blocked, not transferred) → rule-based allotment (35% RII / 15% NII / 50% QIB) → T+3 listing.
Tax under Finance Act 2024: 20% STCG (≤12 mo), 12.5% LTCG with ₹1.25L exemption (>12 mo) — IPO shares taxed exactly like market-bought ones. Read the RHP for red flags, ignore the GMP, and remember 2024's record year still saw 1 in 5 list below issue price. Listing gains and long-term returns are different things. The IPO is day one, not the conclusion.
"IPOs are neither opportunities nor traps by default — they are transition mechanisms that expose a company to public markets. If a stock lists at a premium, the market is saying it's worth more than the company priced it; at a discount, that it was overpriced. Both are valid market functions, neither is a malfunction. Once that frame is clear, outcomes — whatever they are — make sense."
The Final Orientation
ADWIZR · June 2026
Decision Rules
Apply Thoughtfully When
✓ You'd hold it long-term
✓ RHP risks read and accepted
✓ Fundamentals justify the band
✓ Mostly fresh issue, clear use of funds
Walk Away When
✕ Chasing listing-day flips
✕ Decision driven by GMP
✕ 80%+ OFS, promoters exiting
✕ "Apply to all" to diversify
Before You Apply — Checklist
Five Things to Confirm
(1) RHP read — six red flags checked, peer P/E compared. (2) Fresh vs OFS — who gets the money. (3) Use of funds — specific, not "general purposes". (4) Lock-in cliffs — when can big holders sell. (5) Cash ready — blocked via ASBA/UPI, not needed for a week.
Investor FAQ
Questions Indian Investors Ask
Seven questions, answered directly.
Investor FAQ · Page 12
Frequently Asked Questions
Q1 Minimum amount to apply for a Mainboard IPO?
Q2 How do I know if an IPO is fairly priced?
Q3 If I don't get an allotment, when is my money unblocked?
Q4 What's the difference between fresh issue and offer for sale?
Q5 Can I exit an IPO application after applying?
Q6 Can NRIs apply for Indian IPOs?
Q7 Book-building vs fixed-price IPO?
Key Terms & Definitions
Mainboard IPO
An Initial Public Offering in which a company lists on the main exchanges — NSE or BSE — rather than the SME platform (NSE Emerge / BSE SME). Reserved for larger companies meeting SEBI's eligibility thresholds (₹10 cr+ post-IPO capital). A capital-market mechanism to raise funds and allow existing shareholders to sell — not a financial product you buy to profit.
DRHP / RHP
The Draft Red Herring Prospectus is filed with SEBI for review; the Red Herring Prospectus is the near-final version disclosing business, financials, risks, peer comparison and use of funds. SEBI reviews these for disclosure compliance, not for investment merit.
Book-Building
The price-discovery method where a company sets a price band and institutional and other investors bid within it; the final issue price is fixed based on demand. Contrast with the now-rare fixed-price IPO where the price is set upfront.
ASBA / UPI Mandate
Application Supported by Blocked Amount: your application money is blocked in your own bank account (now commonly via a UPI mandate) rather than transferred. It is debited only on allotment and unblocked within 1-2 working days if you are not allotted.
RII / NII / QIB
The three applicant categories in a book-built Mainboard IPO: Retail Individual Investors (≤₹2L, 35% reservation), Non-Institutional Investors / HNIs (above ₹2L, 15%), and Qualified Institutional Buyers such as mutual funds and insurers (50%). Loss-makers can list via the 75%-QIB route.
Grey Market Premium (GMP)
An unofficial, unregulated price at which IPO applications trade before listing, implying an expected listing price. With no SEBI oversight and opaque, manipulable trading, it is a weak sentiment indicator — not a basis for investment decisions.