IPO Investing in India 2024: How to Apply, Evaluate & Profit

What Is an IPO?

An IPO (Initial Public Offering) is when a private company first sells shares to the public on a stock exchange (NSE/BSE). For retail investors, IPOs can offer listing gains (sometimes 30–100%+ on listing day) or long-term wealth creation in strong businesses.

How to Apply for an IPO in India

• Open a Demat account (Zerodha, Groww, HDFC Securities etc.)
• Link your bank account with UPI ID
• Find upcoming IPOs on NSE India website or your broker app
• Apply through ASBA (Application Supported by Blocked Amount) — money blocked in account, not debited until allotment
• Or apply through UPI — approve mandate via your UPI app
• Allotment based on lottery if oversubscribed

IPO Allocation Categories

• Retail (RII): Up to ₹2 lakh investment, minimum 35% of issue reserved
• Non-Institutional (NII/HNI): ₹2 lakh+, 15% reserved
• Qualified Institutional Buyers (QIB): Mutual funds, FIIs — 50% reserved
• Better chances of allotment: Apply at cutoff price, apply for minimum lot size only

How to Evaluate an IPO

• Company fundamentals: Revenue growth, profitability, debt levels
• Promoter background: Experience and track record
• Industry prospects: Is the sector growing?
• Valuations: P/E vs industry peers — are they asking a fair price?
• Issue objective: Fresh capital for growth (good) or promoter exit (be cautious)
• GMP (Grey Market Premium): Unofficial indicator of listing premium

Tax on IPO Gains

• Listing day sale (STCG): 15% tax
• Sold after 1 year (LTCG): 10% above ₹1 lakh gains
• Loss on listing: Can be offset against other capital gains

IPO vs Regular Stock Investing

IPO allotment is partly luck. Regular stock market investing with a long-term horizon is more reliable wealth creation. Treat IPOs as a bonus opportunity, not a core strategy. Many IPOs underperform the market over 3–5 years post-listing.