An IPO follows a fixed sequence: the company files a draft prospectus (DRHP), the market regulator reviews it, a final prospectus (RHP) sets the dates and price band, investors bid during a short window, shares are allotted, unsuccessful money is unblocked, and the stock lists on the exchange. Each step below.
Step 1: The DRHP. The company shows its homework
The Draft Red Herring Prospectus (DRHP) is a long document the company files with the market regulator, the Securities and Exchange Board of India (SEBI). It covers the business, its finances, its risks, and what it plans to do with the money. Suppose Sundar Textiles, a fictional garment exporter, files a DRHP, from this point its IPO plan is public, but nothing is on sale yet.
Step 2: SEBI review
SEBI examines the draft and sends back observations, questions and required clarifications. This is not an approval of the company's quality; SEBI checks that disclosures are complete and honest, not whether the business is a good investment. This stage can take months.
Step 3: The RHP. Dates and price band are set
Once observations are resolved, the company files the Red Herring Prospectus (RHP). This is the version that matters to you as an applicant: it announces the issue dates, the price band (say ₹230–₹242 for Sundar Textiles), the lot size, and how shares are split between investor categories.
Step 4: The bidding window
The issue opens for bidding, normally for at least three working days. Vikram applies for one lot at the cut-off price through his broker, and the application amount is blocked (not debited) in his bank account under the ASBA system. Anchor investors, a set of large institutions, place their bids one day before the public window opens.
Step 5: Allotment
After the issue closes, the registrar finalises who gets shares. If the IPO is oversubscribed, small investors are allotted by lottery. The details are in how does IPO allotment work? Allotted shares are credited to demat accounts before listing.
Step 6: Refunds and unblocking
If Vikram gets no allotment, the blocked amount in his bank account is released. If he gets a partial allotment, only the allotted portion is debited. Timelines for this are covered in when will I get my money back after an IPO?
Step 7: Listing day
The stock starts trading on NSE and BSE. Under current rules, listing happens within three working days of the issue closing (the "T+3" timeline). A special pre-open session discovers the opening price, and then normal trading begins. What that morning looks like, including why the opening price can be far from the issue price, is in what happens on an IPO's listing day?
The whole timeline at a glance
| Stage | What happens | Money movement |
|---|---|---|
| DRHP + SEBI review | Draft filed, regulator reviews disclosures | None |
| RHP | Dates, price band, lot size announced | None |
| Bidding window | You apply; typically open 3 working days | Amount blocked in your bank |
| Allotment | Registrar finalises winners | Debited only if allotted |
| Refund / unblock | Non-allottees released | Block removed |
| Listing (T+3) | Trading begins on NSE/BSE | — |
Things to keep in mind
- SEBI's clearance of a DRHP is a disclosure check, not a recommendation. Read the RHP's risk factors yourself.
- Your money is only blocked during the process; it leaves your account only if you are allotted shares.
- The gap between applying and listing is short under the T+3 timeline, but the exact dates for each IPO are in its RHP and on the exchanges' websites.
- Listing day prices are set by demand on the day. They can open above or below the issue price.
Read next
What is the difference between a fresh issue and an Offer for Sale (OFS)? — Where your money actually goes: the company, or an existing shareholder.