The Indian stock market is buzzing with new companies going public, and Initial Public Offerings (IPOs) have become one of the hottest investment options for retail investors. If you’re planning to start investing in IPOs in 2025, this detailed guide will walk you through everything — from basics to expert strategies.
Let’s break it down step-by-step so that by the end, you’ll know exactly how to invest in IPOs in India confidently and smartly.
🧾 What is an IPO?
An Initial Public Offering (IPO) is when a private company offers its shares to the general public for the first time. It marks the transition of the company from being privately held to publicly traded on the stock exchanges like NSE or BSE.
After the IPO, the company’s shares are listed, and investors can buy/sell them in the open market.
📊 Why Do Companies Launch IPOs?
Companies raise capital through IPOs to:
- Expand operations or business
- Repay existing debts
- Fund new projects or acquisitions
- Increase public awareness and credibility
💼 Why Should You Invest in IPOs?
There are several reasons why investing in IPOs can be beneficial:
- Listing Gains: Many IPOs list at a premium, offering immediate profits.
- Early Entry: You invest in companies with strong future potential early.
- Long-Term Growth: Some IPOs turn into multibagger stocks over time (e.g., Infosys, TCS, IRCTC).
- Retail Quota Benefits: Retail investors often get discounted prices or a reserved quota.
🧠 Things to Check Before Investing in an IPO
Investing blindly in any IPO can be risky. Here’s what you must review:
- DRHP (Draft Red Herring Prospectus): This document includes all company details — finances, risks, future plans.
- Company Background: Look at the promoter’s history, management team, and revenue model.
- Valuation: Compare with listed peers — is the IPO overpriced?
- Purpose of the Issue: Is the company using funds to grow or to repay debt?
- Grey Market Premium (GMP): Indicates IPO demand in the unofficial market.
📝 Eligibility to Apply for an IPO
You must fulfill the following to apply for an IPO:
- Must be 18+ years old
- Must have:
- A PAN card
- An active Demat account
- A trading account (with brokers like Zerodha, Groww, Upstox, ICICI Direct)
- A bank account with net banking or UPI access
🪜 Step-by-Step Process: How to Invest in IPOs in India
🔹 Step 1: Open a Demat & Trading Account
If you don’t already have a Demat account, open one with a SEBI-registered broker. Popular options:
- Zerodha
- Groww
- Upstox
- Angel One
- ICICI Direct
This is where your IPO shares will be credited if you’re allotted.
🔹 Step 2: Check Upcoming IPOs
Use websites like:
- NSE India
- BSE India
- Chittorgarh.com
- IPO section of your broker’s app
🔹 Step 3: Apply for the IPO
You can apply in two ways:
A. Through UPI (via broker apps like Zerodha/Groww):
- Login to your app
- Go to IPO section
- Select the IPO
- Enter bid quantity and price (use cutoff price if unsure)
- Enter UPI ID
- Approve mandate in your UPI app
B. Through ASBA (via Net Banking):
- Login to your bank’s net banking (SBI, ICICI, HDFC etc.)
- Go to “IPO/ASBA” section
- Select IPO
- Enter Demat details and bid amount
- Submit
ASBA stands for Application Supported by Blocked Amount, meaning the amount stays blocked in your bank until allotment.
🔹 Step 4: Wait for Allotment
After the IPO closes, you’ll get to know if you’ve been allotted shares or not. This typically happens in 5–7 working days.
You can check allotment status on:
- Registrar’s website (like Link Intime or KFintech)
- BSE India IPO section
🔹 Step 5: Listing Day
If allotted, the shares will be credited to your Demat account before the listing date.
You can:
- Hold for long-term investment
- Sell on listing day if you wish to book listing gains
🔐 Documents Required for IPO Investment
- PAN Card
- Aadhaar (for KYC)
- Bank account linked with UPI
- Demat & Trading account credentials
💡 Expert Tips for IPO Investment in 2025
- Apply with multiple demat accounts in your family to increase allotment chances
- Don’t fall for grey market hype
- Read the DRHP thoroughly
- Prefer companies with strong fundamentals and growth plans
- Always invest only a small portion of your portfolio in IPOs
🚨 Risks of Investing in IPOs
- Overvaluation: Some IPOs are aggressively priced
- No prior stock history: Hard to predict short-term performance
- Volatility on listing day
- Low allotment chances due to oversubscription
Hence, caution and research are key!
📈 Best Performing IPOs in Recent Years (India)
| Company | IPO Year | Listing Gains | Long-Term Returns |
|---|---|---|---|
| IRCTC | 2019 | 101% | 600%+ |
| Happiest Minds | 2020 | 111% | 300%+ |
| Nykaa | 2021 | 79% | -50% (after peak) |
| Zomato | 2021 | 52% | Highly volatile |
As seen, not all IPOs perform the same — do your homework!
🧾 FAQs – IPO Investment in India
Q1: Can I apply for IPO without a trading account?
A: Yes, but a Demat account is compulsory. A trading account is needed only for selling shares post-allotment.
Q2: Can I apply for IPOs using Paytm Money or PhonePe?
A: Yes, if you have UPI access linked to your Demat.
Q3: Is IPO profit taxable?
A: Yes. Listing day profit is considered short-term capital gain and taxed at 15%.
🔚 Conclusion
IPO investing in India is a great way to build wealth, especially for long-term investors. But it’s not a lottery ticket. With research, patience, and a disciplined approach, you can make the most of the IPO boom in 2025.
This guide on how to invest in IPOs in India should now prepare you to take the right steps toward smart investing.
