IPO Education Center – In-Depth Investor Tutorials & Guides

Plain-language guides to how IPOs, NCDs, Buybacks and Rights Issues work in India: from application and bidding to allotment, subscription, GMP, listing and taxation. Updated 2026-10-25.

Basics

What is an IPO? A simple guide for Indian investors

What an initial public offering is, why companies launch one, the main types of IPO in India and what happens from application to listing.

What is GMP in IPO? Grey market premium explained

Grey market premium (GMP) explained: what it is, how the estimated listing price is worked out, why it is unreliable and how to use it sensibly.

Mainboard vs SME IPO: differences, risks and lot sizes

How mainboard and SME IPOs differ in size, lot size, liquidity, listing rules and risk, and what to check before applying to an SME issue.

OFS, buyback, rights issue and NCD explained

Plain-language explanations of an offer for sale (OFS), share buyback, rights issue and non-convertible debenture (NCD) issue in India.

IPO checklist and risks: 12 questions to ask before you apply

A practical IPO checklist: business, financials, valuation, use of proceeds, promoters, anchor investors and the risks every applicant should weigh.

Kostak Rate & Subject to Sauda (SS) Explained: Unofficial IPO Deals

The complete beginner guide to Kostak rates, Subject to Sauda, and unofficial OTC grey market deals in India. How dealers quote prices and why retail investors face counterparty risk.

Applying

How to apply for an IPO in India (UPI and ASBA, step by step)

Step-by-step guide to applying for an IPO through UPI: documents, lot size, cut-off price, approving the mandate and common reasons applications are rejected.

How IPO allotment works: lottery, categories and your chances

How shares are allotted in an Indian IPO, why most retail applicants do not get shares in a heavily subscribed issue, the timeline and how to check allotment.

IPO price band, lot size and minimum investment: how to calculate

What price band, lot size and cut-off price mean and how to work out the minimum and maximum you can invest in an IPO, with worked examples.

IPO timeline: from opening day to listing (T+3 explained)

The day-by-day timeline of an Indian IPO: anchor day, three bidding days, allotment, refund and listing on T+3.

IPO Investor Categories Explained: Retail, sNII, bNII, QIB & Quotas

Detailed breakdown of all IPO applicant quotas under SEBI ICDR regulations: Retail (up to ₹2 Lakh), Small HNI (₹2–10 Lakh), Big HNI (> ₹10 Lakh), and QIBs.

Top 7 IPO Allotment Myths Busted & Real Tips to Improve Your Odds

Busting common IPO myths about bidding on Day 1, bidding big amounts in retail, and secret broker algorithms. Proven, legal mathematical strategies to maximize your allotment chances.

Reading the data

IPO subscription status explained: QIB, NII and retail times subscribed

How to read an IPO subscription table: what “times subscribed” means, how QIB, NII and retail categories differ and what the day-by-day pattern usually shows.

Anchor investors in an IPO: who they are and what the lock-in means

What anchor investors are, why they bid a day before the IPO opens, how the lock-in works and how to read an anchor list.

How to read an RHP / DRHP: the sections that matter

A practical guide to the red herring prospectus (RHP) and draft red herring prospectus (DRHP): where to find them and which sections to read first.

How to Value an IPO: P/E, P/B, RoCE, RoE & EV/EBITDA Explained Simply

Learn how to analyze whether an IPO is priced fairly or greedily overvalued. Clear definitions of P/E multiple, Price-to-Book, Return on Equity, and peer comparisons.

Anchor Investors: Quotas, Evaluation & The 30/90 Day Lock-In Rule

Everything you need to know about IPO Anchor Books: eligibility criteria, why marquee global funds matter, and how 30-day and 90-day lock-in expirations affect stock prices.

After the IPO

IPO listing day explained: pre-open, listing price and listing gain

What happens on IPO listing day: the special pre-open session, how the listing price is discovered, how to calculate listing gain and what to do with allotted shares.

IPO taxation in India: short-term and long-term capital gains

How profits from IPO shares are taxed in India: holding period, short-term and long-term capital gains rates, securities transaction tax and what to record.

Listing Day Rules: Pre-Open Call Auction, Circuit Limits & Trading Hours

How the special pre-open session works on IPO listing morning (9:00 AM to 10:00 AM). Equilibrium price discovery, circuit filters, and trade-to-trade (T2T) rules.

Fixed Income & NCD

What is an NCD (Non-Convertible Debenture)? Complete Guide for Indian Investors

Understand Non-Convertible Debentures (NCDs): secured vs unsecured debentures, credit ratings (CRISIL/ICRA), coupon yields, interest payment frequencies, cumulative vs non-cumulative, tax treatment, and how to apply in public issues.

IPO Glossary

Acceptance ratio: In a share buyback, the percentage of tendered shares accepted by the company from retail or general shareholders.
Allotment: The process of distributing IPO shares to applicants.
Anchor investor: A large institution that is allotted shares a day before the IPO opens, with a lock-in.
Anchor lock-in: The mandatory period (30 days for 50%, 90 days for remaining 50%) during which anchor investors cannot sell allotted IPO shares.
Application Supported by Blocked Amount (ASBA): The facility whereby an applicant’s money remains in their bank account under lien and is debited only upon allotment.
ASBA: Application Supported by Blocked Amount: money is blocked in your account and debited only on allotment.
Basis for issue price: The section in the Red Herring Prospectus (RHP) detailing financial ratios (P/E, RoNW, NAV) and comparing them with listed industry peers.
Basis of allotment: The method by which shares are allotted to each category and applicant group.
Bid: Your application for shares at a price within the band.
bNII (Big HNI): Non-Institutional Investors bidding for shares worth more than ₹10 Lakh in an IPO.
Book building: Price discovery by taking bids within a price band.
Book running lead manager (BRLM): The merchant bank appointed by the company to manage the IPO due diligence, pricing, roadshows, and exchange filings.
Call auction: The special pre-open trading session between 9:00 AM and 9:45 AM on listing day used to discover the opening price.
Cap price: The upper end of the price band.
Capital gain tax: The tax levied on profits realized from selling IPO shares (20% for Short-Term STCG under 12 months; 12.5% for Long-Term LTCG above ₹1.25 Lakh).
Circuit filter: The maximum percentage limit (5%, 10%, or 20%) by which a stock price can move up or down during a single trading session.
Coupon rate (NCD): The fixed annual nominal interest percentage paid by an NCD issuer to the bondholder across monthly, annual, or cumulative options.
Cut-off price: Bidding option that accepts the final issue price decided in the band.
Debenture Trustee: A SEBI-registered intermediary (such as Catalyst or IDBI Trusteeship) appointed to safeguard the interests of NCD holders and enforce asset collateral upon default.
Demat account: A depository account (with CDSL or NSDL) holding equity shares and securities in electronic form.
Draft Red Herring Prospectus (DRHP): The initial draft document filed by an issuer with SEBI for regulatory inspection and public commentary.
DRHP: Draft red herring prospectus: the draft offer document filed with SEBI.
Earnings Per Share (EPS): Net profit after tax divided by the total number of outstanding equity shares.
Enterprise Value (EV): Total company value calculated as Market Capitalization plus Net Debt, representing takeover cost.
EV/EBITDA: A valuation multiple comparing Enterprise Value against operating cash profit, neutral to financing and tax differences.
Floor price: The lower end of the price band.
Fresh issue: New shares issued by the company; money goes to the company.
GMP: Grey market premium: the unofficial premium at which an IPO is said to trade before listing.
Grey Market Premium (GMP): The unofficial over-the-counter price at which an IPO’s shares are bid or offered before official exchange listing.
Issue price: The final price at which shares are allotted.
Kostak: A grey-market amount paid for an IPO application regardless of allotment.
Listing gain: (Listing price − issue price) ÷ issue price.
Lock-in: A period during which certain shares cannot be sold.
Lot size: The minimum number of shares you must bid for.
Mainboard: The primary listing platform of NSE and BSE.
Market maker: A registered broker who provides continuous two-way bid and ask quotes for SME IPOs for at least three years post-listing.
Minimum lot size: The smallest number of shares that can be bid for in an IPO application.
NII / HNI: Non-institutional investors bidding above ₹2 lakh.
Non-Convertible Debenture (NCD): A fixed-income debt instrument issued by corporations and NBFCs that pays regular coupon interest and cannot be converted into equity shares.
NSE Emerge / BSE SME: Specialized stock exchange platforms dedicated to small and medium enterprises with lower post-issue capital.
Offer for Sale (OFS): A transparent stock exchange bidding mechanism enabling listed company promoters and large institutional holders to sell shares directly to the public.
OFS Floor Price: The minimum price set by selling promoters in an Offer for Sale below which no bids can be submitted by institutional or retail investors.
Oversubscription: When total bids received for an IPO exceed the total number of shares offered by the company.
P/E ratio (Price to Earnings): Market share price divided by Earnings Per Share, reflecting valuation multiple.
Price band: The range within which investors can bid.
QIB: Qualified institutional buyer such as a mutual fund or insurer.
Qualified Institutional Buyer (QIB): SEBI-registered financial institutions including mutual funds, FPIs, insurers, and commercial banks.
Red Herring Prospectus (RHP): The near-final offer document filed before public bidding containing issue dates and price bands.
Registrar: The agency that runs allotment and refunds for an issue.
Registrar and Transfer Agent (RTA): The agency (such as Link Intime or KFinTech) responsible for processing bids, allotment lotteries, and refunds.
Renunciation of Rights: The legal transfer or sale of Rights Entitlements (RE) by an eligible shareholder to another market investor in exchange for cash consideration.
Retail Individual Investor (RII): An individual retail investor applying for up to ₹2,00,000 in an IPO.
Retail investor: An individual bidding up to ₹2 lakh.
Return on Capital Employed (RoCE): Operating profit (EBIT) divided by total capital employed (Equity + Long-term Debt).
Return on Equity (RoE): Net annual profit divided by shareholder net worth, measuring capital productivity.
RHP: Red herring prospectus: the near-final offer document with the price band.
Rights Entitlement (RE): The temporary electronic demat credit representing a shareholder’s statutory right to subscribe to new rights shares, tradeable on the stock exchange.
Rights Issue: An offering of additional equity shares by an already listed company directly to its existing shareholders in proportion to their holding at a discounted price.
Secured NCD: A debenture backed by a charge or mortgage over the issuer’s tangible physical assets, providing higher capital safety in liquidation.
Small Shareholder (Buyback): A shareholder whose total holding market value of the target stock does not exceed ₹2,00,000 on the Record Date, qualifying for the 15% reserved retail quota.
SME IPO: An IPO of a smaller company listed on NSE Emerge or BSE SME.
sNII (Small HNI): Non-Institutional Investors bidding for amounts between ₹2 Lakh and ₹10 Lakh.
Subject to Sauda (SS): An informal grey market deal whose agreed payment is conditional upon actual share allotment.
Subscription: Total bids divided by shares on offer, shown as “times subscribed”.
T+3: Listing three working days after the issue closes.
T+3 listing timeline: The mandatory SEBI settlement cycle ensuring listing on the stock exchange 3 working days after issue close.
Tender Offer Buyback: A share repurchase where the company invites shareholders to tender their shares at a fixed pre-announced price during a specific 5-day window.
Theoretical Ex-Rights Price (TERP): The calculated theoretical stock price following the completion of a rights issue, factoring in existing shares and discounted new rights shares.
Trade-to-Trade (T2T): A trading surveillance segment where intraday netting is prohibited and all trades require 100% gross delivery.
Underwriter / lead manager: The merchant bank that manages the IPO process.
Underwriting: The legal obligation undertaken by merchant bankers to purchase any unsold shares if an IPO fails to meet minimum subscription.
UPI mandate: The request you approve in your UPI app to block money for an IPO bid.