IPOs Explained

An initial public offering, or IPO, is the first time a company offers its shares to the public. A share is a small piece of ownership. After the IPO, the shares are listed: they can be bought and sold on a stock exchange. Applying in the IPO and buying on the exchange later are two different things.

A company can raise money in other ways. It can keep its profits, borrow from banks, or sell a stake to private investors. Jio Platforms did all three before its IPO. In 2020 it sold about a third of itself to 13 investors for ₹1,52,055 crore, including Meta (₹43,573 crore) and Google (₹33,737 crore).

In 2022 and 2023 its main company, Reliance Jio Infocomm, took three foreign-currency loans to build 5G: ₹9,019 crore, ₹13,798 crore and ₹7,100 crore. That is ₹29,917 crore in all (our arithmetic). The 2026 IPO raises ₹30,213 crore at the top of the price band, and ₹27,500 crore of it is meant to repay those loans early.

So an IPO is one choice among several. It brings costs, strict disclosure rules and the public's eyes on every result. Listing does not make a business better; it makes it public.

An IPO is not the same as a follow-on public offer (FPO), which is a later public sale by a company that is already listed. A rights issue offers new shares only to existing holders. And when you buy a share on the exchange, your money goes to the seller, not to the company.

A fresh issue creates new shares. The money paid for them goes to the company. An offer for sale, or OFS, is different: existing owners sell some of their shares, and the money goes to those sellers. The company gets nothing from an OFS.

Three real IPOs show the range. Hyundai Motor India (October 2024) raised ₹27,870.16 crore, all of it an OFS by its parent, Hyundai Motor Company. The Indian company received nothing. Swiggy (November 2024) raised ₹11,327.43 crore: a fresh issue of ₹4,499 crore for Swiggy, and ₹6,828.43 crore for the selling shareholders (our arithmetic).

Jio Platforms (October 2026) is the opposite of Hyundai. All ₹30,213 crore is a fresh issue, with no OFS. Of that, ₹27,500 crore is for repaying debt and ₹2,713 crore is for general purposes and issue costs (our arithmetic). Note that ₹30,213 crore is the gross amount at the top of the band; costs come out of it.

Every offer document has a section called Objects of the Offer. It says how much is fresh, how much is OFS, and what the fresh money will be used for. Read it first. Neither a big fresh issue nor a big OFS tells you on its own whether the price is fair.

Lesson 01 shows who is paid when shares change hands on the exchange. This lesson stays with the IPO itself.

Dilution means each existing owner's percentage falls because the total number of shares has grown. A fresh issue dilutes. An OFS does not: it only changes who holds the shares that already exist.

Before its IPO, Jio Platforms had 893.90 crore shares. The 27 crore new shares take the total to 920.90 crore. Reliance Industries, the promoter (the controlling owner), keeps the same 593.78 crore shares, but its stake falls from 66.43% to 64.48%. Meta's falls from 9.98% to 9.69%, and Google's from 7.73% to 7.50%. New IPO shareholders end up with 2.93%.

In an all-OFS IPO such as Hyundai's, the total share count does not change. The parent simply holds fewer of the same shares.

A smaller percentage does not by itself mean an owner has lost value, because the company has also received new money. That money can still be used well or badly. Check the share capital before and after the offer, as well as the percentages.

The issuer is the company selling shares: here, Jio Platforms Limited. Its promoter is Reliance Industries. Book-running lead managers, or BRLMs, are merchant bankers who prepare the offer, check the disclosures and run the bidding. Jio has 19 of them, led by Kotak Mahindra Capital, with names such as Morgan Stanley, Goldman Sachs, JP Morgan, HDFC Bank, ICICI Securities and SBI Capital Markets.

The registrar keeps the application records and works out who gets how many shares. Jio's registrar is KFin Technologies. Jio's monitoring agency, Crisil Ratings, will report on how the fresh money is spent. NSE is the designated stock exchange, and the shares will also list on BSE.

On the investor's side there are three more players. Your bank blocks and later debits your money. Your broker, Sahi for Mr. Chartist, sends your bid to the exchange. Your depository, CDSL or NSDL, holds your shares in your demat account, the account where shares are kept in electronic form. After listing, trades settle through a clearing corporation such as NSE Clearing.

SEBI writes and enforces India's rules for public offers. Its review of the documents is not a stamp of approval on the price and not a promise of returns. HDFC Bank appears twice in Jio's IPO, as a lead manager and as Mr. Chartist's own bank; those are two separate jobs.

Some offers are underwritten. That means a banker has agreed to buy shares if the issue falls short, on agreed terms. It protects the issue from failing; it does not protect your investment from losing value.

The draft red herring prospectus, or DRHP, is the first full document. It describes the business, its accounts, its risks and the planned offer, but not the price. Jio Platforms filed its DRHP with SEBI in June 2026. SEBI's observations on it were reported on 28 August 2026.

The red herring prospectus, or RHP, is the document you bid on. It updates the draft but can still leave the final price blank. Jio's RHP is dated 14 October 2026 and was posted on SEBI's website on 15 October. The price band, ₹1,065 to ₹1,119, was announced on 14 October, a week before bidding opened.

The prospectus comes last. It is filed after the price is fixed and records the final terms. On 21 October 2026, while bidding was open, Jio's final prospectus did not exist yet.

Always read the latest version, the price band notice and any addendum, which is an official correction or update. An older draft can differ from the terms you actually apply on. An offer can also be changed, delayed or withdrawn.

SEBI's observations are not approval of the price or a recommendation. They do not take away your own job of judging the business and the price.

An RHP is long: Jio's runs to 591 pages. You do not need every page. Start with the cover and its dates (page 4 in Jio's RHP), The Offer (page 72), Capital Structure (page 99) and Objects of the Offer. Together they tell you the size, the fresh and OFS split, the share count and where the money goes.

Then read the restated financial statements. 'Restated' means past accounts are shown on one consistent basis so years can be compared. Look at revenue, profit, cash from operations, debt and related-party transactions, which are deals with companies or people linked to the owners. For Jio, related-party expenses were 9.34% of revenue in 2025-26.

Read Risk Factors and Outstanding Litigation. Jio's RHP lists 65 risk factors, and the second is its dependence on the Reliance group: Reliance Retail sells its prepaid plans, and the 'Jio' brand is licensed from Reliance Industries. A disclosed risk is not a forecast of loss, and it is not something to skip because every RHP has many.

Finish with Basis for Offer Price and Offer Procedure. For practice on a finished issue, open Hyundai Motor India's prospectus dated 17 October 2024. Its Objects of the Offer says the issue is entirely an OFS and the company receives no proceeds.

The price of one share tells you very little on its own. What matters is the price of the whole company, called its market value or market capitalisation: the number of shares times the price of one share.

Compare ITC with Jio. ITC closed at ₹260.80 on NSE on 19 October 2026, and it has about 1,253.05 crore shares. That makes it worth about ₹3,26,795 crore (our arithmetic). Jio will have 920.90 crore shares after the IPO. At ₹1,119 each, it is worth about ₹10,30,491 crore. Jio's share costs over four times ITC's, and the whole company is valued at over three times as much. You cannot tell either from the share price alone.

One common yardstick is the price-to-earnings ratio, or P/E: market value divided by yearly profit. Jio's profit after tax for 2025-26 was ₹30,049 crore. At the top of the band its P/E is about 34.3 times; at the bottom (₹9,80,762 crore) it is about 32.6 times (our arithmetic). The RHP puts Bharti Airtel at about 40.7 times, on its 13 October close.

On that measure Jio looks cheaper than Airtel. On another, EV/EBITDA, which also counts debt and ignores depreciation, Jio is about 14.8 times against about 10.6 times for Airtel, so it looks dearer. Both are the site's own estimates, and the two may not count debt such as spectrum dues the same way. One ratio is never the whole story. Compare similar businesses, over the same period, on the same basis.

A company that makes losses has no useful P/E. It needs other measures, explained carefully. No ratio turns an issue price into a guaranteed value.

In a book-built IPO, you bid inside a price band. The bottom is the floor and the top is the cap. Jio's band is ₹1,065 to ₹1,119. Under India's main-board rules, the cap must be at least 105% and at most 120% of the floor. Jio's cap is 105.07% of its floor (our arithmetic), just inside the rule.

The band must be announced at least two working days before the issue opens. Jio announced it on 14 October for an issue opening on 21 October. Some offers are fixed-price instead, with one price stated upfront.

A lot is the smallest number of shares you can bid for, and you bid in whole lots. Jio's lot is 12 shares. One lot at the cap costs 12 × ₹1,119 = ₹13,428 (our arithmetic). The rules say one lot must cost between ₹10,000 and ₹15,000, and ₹13,428 fits.

Lots also decide your category. At the cap, 14 lots (168 shares) cost ₹1,87,992, still within the ₹2 lakh retail limit. 15 lots (180 shares) cost ₹2,01,420, which makes you a small non-institutional bidder. From 75 lots (900 shares, ₹10,07,100) you are a big non-institutional bidder.

Face value is the nominal value of a share in the company's books: ₹10 for Jio. It is not the price. A price far above face value is normal and does not by itself mean the share is overpriced.

A bid says how many shares you want and the highest price you will pay. Book building collects all the bids inside the band to see how much demand there is at each price. The company and its lead managers then fix the final price under the rules. It is not a simple auction formula.

Here is how a book reads, using Jio's real band but made-up quantities (an illustration: real order books are not published). Suppose bids for 22 crore shares come in at ₹1,119, 8 crore more at ₹1,100, 5 crore more at ₹1,080 and 4 crore more at ₹1,065. Demand at or above each price is then 22, 30, 35 and 39 crore shares. Jio offers 27 crore shares, so in this illustration the book covers the issue at ₹1,100 and below, but not at ₹1,119 alone.

A bid that qualifies on price still has to win an allotment. Demand is not a right to shares.

Part of the book is filled before the public can bid. On Monday 19 October 2026, anchor investors, large institutions that bid on the last working day before the issue opens, took 7,24,74,066 shares at ₹1,119. That is about ₹8,109.85 crore (our arithmetic). Strong anchor demand is useful information, but it is not proof that the price is fair or that the share will rise.

An IPO is split into separate portions, and you compete only inside yours. In India's main-board offers, a retail individual investor (RII) bids for no more than ₹2 lakh. A non-institutional investor (NII) bids for more. Qualified institutional buyers (QIBs) are banks, mutual funds, insurers and similar institutions.

For a company that qualifies under the usual route, Regulation 6(1), Regulation 32(1) gives at least 35% of the net offer to retail, at least 15% to NII and at most 50% to QIBs. Companies listing under Regulation 6(2) follow other limits (Regulation 32(2)): retail at most 10%, NII at most 15%, QIBs at least 75%.

Jio's 27,00,00,000 shares split like this. 2,23,41,376 are reserved for Reliance Industries shareholders who held RIL shares on 14 October 2026, and 46,94,836 for eligible employees, who get ₹54 off each share. The other 24,29,63,788 shares are the net offer. Of these, QIBs get 12,14,81,894, including the 7,24,74,066 that went to anchors. Retail gets 8,50,37,326. NII gets 3,64,44,568, with two-thirds (2,42,96,379) for bids above ₹10 lakh and one-third (1,21,48,189) for bids of ₹2 lakh to ₹10 lakh.

Anchors are part of the QIB portion, not a separate category you can join. They can take up to 60% of it, with a minimum bid of ₹10 crore each. Since 1 December 2025, 40% of the anchor portion is kept for domestic mutual funds (33.33%) and for life insurers and pension funds (6.67%).

Net offer means the shares left after reserved portions. It has nothing to do with money after expenses.

First check that the offer is open to you. Jio's IPO runs under Indian rules. Applicants who live outside India have their own conditions, so they must follow the document and use an authorised channel. A screen shown in this lesson does not make anyone eligible.

You need three things that match. Your PAN, India's tax ID. Your demat account, opened through a depository participant (DP) such as Sahi, with its DP ID and client ID. And your bank account, with a UPI ID if you use UPI. The registrar checks that the PAN on your demat account matches the PAN on your bank account. A mismatch makes the application invalid.

Use only your own bank account or a UPI ID linked to your own account. SEBI's rules say an application paid from someone else's account is liable for rejection. Make sure the money is in the account and that no limit on the account will stop the block.

Keep the bid confirmation. A bid that was submitted, a mandate that was approved, money that was blocked and a bid the exchange accepted are four different states. Never send your PAN, bank login or UPI PIN to anyone who contacts you about an IPO.

ASBA means Application Supported by Blocked Amount. Your money does not leave your account when you bid. Your bank puts a block on it instead, so you cannot spend that amount while the bid is processed.

Say Mr. Chartist has ₹50,000 available in his HDFC Bank account (an illustration). He bids for one lot of Jio at the cap. The bank blocks ₹13,428 and he can use the remaining ₹36,572 (our arithmetic). The ₹13,428 is still his. It has not gone to Jio, and it earns interest only as his account normally would.

After allotment, only the amount for shares actually allotted is debited. Anything else is unblocked. If he gets no shares, the whole block is released. That is your own money being freed, not a refund arriving from the company.

Check your bank's record together with your bid and your allotment status. If a block stays on after the expected date, ask your bank, your broker or the registrar. A failed block, a lost allotment draw and a fall in share price are three very different things.

UPI, the Unified Payments Interface, is one way individuals in India can authorise the ASBA block. After you bid through your broker, a mandate request appears in your UPI app. A mandate is your permission for the bank to block the amount now and debit it later if you are allotted shares.

Check the request before you approve it: the issue name, the amount (₹13,428 for one Jio lot at the cap) and the account. Approve it with your UPI PIN. Never share that PIN with a broker, a registrar or a caller. A message saying 'bid placed' does not mean the mandate was approved or the money was blocked.

Individuals can use UPI for applications up to ₹5 lakh. That is a payment limit, not the retail limit. Retail still ends at ₹2 lakh, so a UPI bid of ₹2 lakh to ₹5 lakh is an NII bid.

Deadlines matter. SEBI's general timetable has bids close at 5 pm on the last day. For Jio, the RHP (page 4, as quoted in the press) gives 7:00 pm IST on Friday 23 October 2026 as the last time to accept the mandate. Brokers and banks may set earlier times. Approve early. A late or failed mandate can leave your bid out, and an approved one still does not guarantee shares.

A valid Jio bid is in multiples of 12 shares. Mr. Chartist's slip reads: retail category, 12 shares, cut-off ticked, ₹13,428 blocked. If he typed 15 shares the bid would be invalid, and if he asked for 180 shares at ₹1,119 (₹2,01,420) he would no longer be a retail bidder.

Cut-off means 'I will pay whatever final price is fixed'. In a main-board offer it is for retail individuals and, where the offer allows, reserved individual bidders; QIB and NII bidders cannot use it. Cut-off gives no priority, no discount and no place in a queue. The bank blocks the amount at the cap.

If you type a price instead, it must reach the final price. Suppose, as an assumption, Jio's final price is fixed at ₹1,119 (it is not known until after the close). Then a bid at ₹1,100 without cut-off does not qualify, while a bid at ₹1,119 or a cut-off bid does. Qualifying on price is only one condition. Identity, money and the mandate must also be in order.

More than one application under the same PAN in the same category is liable for rejection. The offer may let you also apply in a reserved portion, such as RIL shareholders, under its own terms. Bidding again through a different app is not a way to improve your chances.

Subscription compares the shares bid for with the shares on offer in each portion. '3 times subscribed' means bids for three times as many shares as were available. Always ask: which portion, and at what time?

LIC's IPO in May 2022 was subscribed 2.95 times overall, as reported in the press: QIBs 2.83 times, NII 2.91 times, retail 1.99 times, policyholders about 6 times and employees 4.4 times. Hyundai Motor India's in October 2024 was 2.37 times overall, but its QIB portion was 6.97 times while NII was 0.60 times and retail only 0.50 times. Swiggy's in November 2024 was 3.57 times overall.

Hyundai shows why the overall number can mislead: 2.37 times overall, yet retail was only half booked. Early figures during bidding also change as bids are revised, checked and closed.

Jio's issue is open until 23 October 2026. The day-one figures reported in the press disagree with each other, so this lesson shows none. Final figures come after the close.

Five times subscribed does not mean a one-in-five chance for everyone. And strong demand does not tell you what the share will trade at, how easy it will be to sell, or how well the company will use the money. LIC and Hyundai were both oversubscribed and both closed their first trading day below the issue price.

The basis of allotment applies each portion's rules to the valid bids. For retail in a main-board offer, the rule is that every successful retail applicant gets at least one lot, as far as shares allow. Any shares left over are shared out in proportion.

Jio's retail portion is 8,50,37,326 shares. Divided into 12-share lots, that is enough for at most 70,86,443 retail applicants to get one lot each (our arithmetic). If more valid retail applications than that come in, a computerised draw picks who gets the one lot and who gets nothing.

For example, if 2 crore valid retail applications came in (an illustration, not a forecast), only about 35 in every 100 could get a lot. Applying for more lots does not give you more tickets in that draw; you are still one applicant.

Check your result with the registrar or the exchange, using your PAN or application number. KFin's IPO allotment status page asks you to select the IPO, choose Application No, Demat Account or PAN, and press Submit; the result screen's fields vary. A broker's message, a social-media guess or a subscription number is not the allotment record.

Take a bid for 3 lots of Jio, 36 shares, at cut-off. The bank blocks 36 × ₹1,119 = ₹40,284 (our arithmetic). Assume the final price is ₹1,119; that is an assumption, because it is fixed only after the close.

If one lot is allotted, the bank debits 12 × ₹1,119 = ₹13,428 and releases the other ₹26,856. If nothing is allotted, nothing is debited and all ₹40,284 is released. If all 3 lots are allotted, the full ₹40,284 is debited.

The bank debit, the release of the rest, and the arrival of shares in your demat account are three separate records. For Jio, the RHP gives Tuesday 27 October 2026 'on or about' as the day for unblocking and demat credit. Check your bank and your demat account separately. Seeing the shares in your demat does not yet mean you can sell them; trading starts on listing day.

If the records do not agree, or a block stays on past the timetable, keep your application proof and contact your bank, your broker or the registrar through their official channels. Never pay anyone who says a fee will release your IPO money or get you an allotment.

In India, T is the day the issue closes. Under SEBI's T+3 rule, shares list three working days later. Working days skip weekends and holidays. The rule was made compulsory for issues opening on or after 1 December 2023.

Jio closes on Friday 23 October 2026, so that day is T. Saturday and Sunday do not count. T+1 is Monday 26 October: the basis of allotment. T+2 is Tuesday 27 October: unblocking and credit to demat. T+3 is Wednesday 28 October: listing on NSE and BSE. Only the open and close dates are fixed; the RHP gives the rest as 'on or about'.

SEBI's timetable sets cut-off times for each step. On T, applications close (5 pm in the general timetable). On T+1, the exchange approves the basis of allotment before 9 pm. On T+2, unblocking is done before 4 pm, the share credit is done before 6 pm, and the allotment notice goes up before 9 pm. On T+3, trading starts.

Before T+3 the wait was longer. LIC closed on 9 May 2022 and listed on 17 May 2022, under the older six-working-day timetable. Hyundai (closed 17 October, listed 22 October 2024) and Swiggy (closed 8 November, listed 13 November 2024) both listed on T+3.

An issue can still fail. If it does not get bids for at least 90% of the fresh issue, the money must be released. The timetable is not a promise that every issue will list.

The issue price is fixed for the offer. On listing day, the price is set by buy and sell orders on the exchange. A special pre-open session finds the first price. Nobody promises it will open above the issue price.

Three finished IPOs show both directions, using NSE's official end-of-day data. LIC, issued at ₹949, opened at ₹872 on 17 May 2022 and closed at ₹875.25: 7.77% below the issue price. Hyundai Motor India, issued at ₹1,960, opened at ₹1,934 on 22 October 2024 and closed at ₹1,819.60: 7.16% below. Swiggy, issued at ₹390, opened at ₹420 on 13 November 2024 and closed at ₹456: 16.92% above. The percentages are our arithmetic.

Until you sell, a gain or loss is only on paper. Whether you can sell at a given price depends on buyers, order type and price limits, and charges and taxes come on top. The opening price does not mean your whole holding could have been sold there.

Grey-market prices are unofficial and unregulated; they are not a guide.

Some offers include a green-shoe option, a regulated arrangement that can support the price for a short time after listing. If an offer has one, its terms are in the document. It does not set a floor under the price or protect you from loss.

After listing, a company must publish its results, important news, governance details and annual reports. Compare what it does with what the offer document said, including how it spends the fresh money. For Jio, Crisil Ratings will report on that.

A lock-in stops certain holders from selling their shares for a set time, counted from allotment. Different holders unlock on different dates. For Jio, half of the anchor shares unlock about 25 November 2026 (30 days) and the other half about 24 January 2027 (90 days). Other pre-IPO holders, such as Meta, Google and the 2020 funds, unlock after six months, about 26 April 2027.

Promoter lock-ins are longer. The usual periods are 18 months for the promoter's minimum contribution and six months for the rest. They become three years and one year when most of the fresh money is for capital spending, which includes repaying loans taken for it. Jio's money repays loans taken to build 5G, so the lock-ins run to about October 2029 for Reliance Industries' 20% contribution and about October 2027 for the rest.

An unlock allows a sale; it does not mean one will happen, or that the price must fall. Listing is where watching a public company begins, not where research ends.

SME stands for small and medium enterprise. NSE Emerge and BSE SME are separate platforms for smaller companies, with their own rules for who can list, how to apply and how shares trade. A small company is not automatically a bad one, but its disclosures, its dependence on a few customers and how easily its shares trade all need careful reading.

Under the SME process in force since 1 July 2025, an individual investor must apply for exactly two lots, with a minimum application above ₹2 lakh. More than two lots makes you an NII. So the main-board habit of one lot for about ₹13,000 to ₹15,000 does not apply to SME issues.

SME bids cannot use cut-off, cannot be lowered and cannot be cancelled. Bidding closes at 4 pm on the last day and the UPI mandate must be accepted by 5 pm. After listing, SME shares still trade in lots, not one share at a time.

Market makers in SME shares do not promise you can always sell, or sell at a good price. Be wary of promotions and sudden price excitement. Main board and SME are different rulebooks, not a ranking of safe and unsafe.

Before any IPO, write down a few lines. What does the business do? Who gets the money, the company or selling owners, and for what? For Jio: telecom and digital services; all ₹30,213 crore to the company; ₹27,500 crore to repay 5G loans.

Then your own details: your category, the lot, the money you need, your price choice and the deadlines. For Jio retail: 12 shares, ₹13,428 a lot at the cap, cut-off or a price, mandate by the time your broker and bank set. Note where you will check the bid, the mandate, the block, the allotment and the demat credit.

Write down the open questions too. For Jio: ₹1,04,514 crore of spectrum dues to the government stay untouched by the IPO; on EV/EBITDA it is priced above Bharti Airtel; and it depends on its own group for sales and its brand. Say what evidence would change your mind. If something is unclear, answer it from the official document, not from social media.

An IPO is only one way to own shares. You can also buy after listing, or not take part at all. Using borrowed money, or money you will need soon, adds risk to an outcome nobody can know in advance.