IPO stands for Initial Public Offering. It is the first time a company offers its shares to the public. After the IPO, the shares are listed on a stock exchange, and anyone can buy or sell them there.
How an IPO works, step by step
- The company files a draft document with SEBI explaining its business, its finances and the risks. This is called the draft red herring prospectus (DRHP).
- It announces a price band, for example ₹95 to ₹100 per share, and a lot size: the smallest number of shares you can apply for.
- The IPO is open for a few working days. People apply through their bank or broker app, often using UPI to block the money.
- If more shares are asked for than are on offer, the IPO is "oversubscribed". Shares for small investors are then given out by a lottery-like process, so many applicants get no shares at all.
- The blocked money is released for anyone who didn't get shares, and the shares start trading on the exchange on the listing day.
Being oversubscribed many times over does not mean the share price will go up after listing. It only means many people applied.
What is GMP?
GMP means "grey market premium". It is the extra amount people in an informal, unofficial market say they would pay for IPO shares before they are listed. You will often see headlines like "Sunrise Biscuits IPO GMP at ₹30".
Here is why to be careful with it:
- The grey market is not run or watched by SEBI or the stock exchanges. There is no official record of these deals.
- GMP numbers come from informal dealers, and different websites often show different numbers.
- GMP can change quickly, and the listing price can be very different from it.
That's why Hypeless never shows GMP as data. Our IPO tracker only shows names, dates, price bands and lot sizes from the NSE's public lists, plus headlines from named outlets.
Always read the company's offer documents, which are public, and remember that an IPO is a share like any other: its price can go up or down after listing.