Chapters in IPOs & Primary Market
Chapter 1 of 5 · 6 min read
What is an IPO and how does it work?
From DRHP to listing day: the full journey of an initial public offering.
An initial public offering (IPO) is when a private company sells shares to the public for the first time and lists on NSE and BSE. The money raised may fund growth, repay debt, or let early investors sell (an offer for sale).
The journey
- Company files a draft prospectus (DRHP) with SEBI.
- SEBI observations, then the final prospectus (RHP) with the price band.
- Anchor investors are allotted shares a day before the issue opens.
- Subscription window of about three days: retail, non-institutional and institutional categories.
- Basis of allotment, refunds, then listing on T+3 after the issue closes.
Fresh issue vs offer for sale
A fresh issue creates new shares and the company receives the money. In an offer for sale (OFS), existing shareholders sell and the company gets nothing. A high OFS share can mean insiders are cashing out.
Key takeaways
- IPO = first public sale of shares; read the RHP before bidding.
- Fresh issue funds the company; OFS funds selling shareholders.
- Listing happens a few days after the issue closes.
Put it into practice
Open the live page on Market Intelligence and see this concept on real data.
Keep learning
- How to read an IPO price band · IPOs & Primary Market
- What is IPO GMP? · IPOs & Primary Market
Education only, not investment advice. Updated 2026-10-09.