InvestmentFinancial Glossary
IPO (Initial Public Offering)
Definition
The process by which a private company offers shares to the public for the first time, listing on a stock exchange (BSE/NSE in India). The company files a Draft Red Herring Prospectus with SEBI, sets a price band, and allocates shares through a book-building process.
Why It Matters
IPO investing carries unique risks and opportunities. While listing gains can be attractive, not all IPOs perform well post-listing. Retail investors get a reserved quota but also face lottery-based allotment. Understanding the prospectus, company financials, and valuation metrics is critical before applying.