How to Launch Your IPO: Complete Step-by-Step Guide and Cost Breakdown (India 2025)

2 days ago

Introduction

How to Launch Your IPO starts with a moment—

That moment when you look around your buzzing office and realize: This is no longer just a startup. This is a force. Your product is winning, your revenue charts look like skyscrapers, and investors aren’t just interested—they’re chasing you.

But then comes the game-changer:
Is it time to go public?

Suddenly, you’re standing at the edge of the biggest financial leap of your company’s life. Going public isn’t just a process—it’s a transformation. One day you’re private, the next you’re opening your story to millions of new shareholders, analysts, and regulators waiting to judge your every number.

An IPO is part thriller, part marathon, part masterstroke—full of documents, deadlines, strategy, and the rush of seeing your company name shine on the market screen for the first time.

This guide takes you inside that thrilling journey—step by step—so you don’t just go public…
you launch with impact.

What is an IPO and Why Would You Want One?

Before we dive into the “how,” let’s understand the “why.”

An IPO is the first time a company offers its shares to the general public. Essentially, you’re going from being a private company owned by a handful of shareholders (founders, early investors, and employees) to a public company where anyone can buy a piece of your business through stock exchanges.

Why would you launch an IPO? The primary reason is capital raising. When you go public, you can raise substantial amounts of money—sometimes hundreds or even thousands of crores—without taking on debt. For instance, when LIC (Life Insurance Corporation) launched its IPO in May 2022, it raised ₹21,008 crores! This capital can be used to expand operations, develop new products, pay off debt, or invest in growth.

But there’s more to it. Going public also increases your company’s credibility, makes it easier for employees to feel invested through stock options, provides an exit opportunity for early investors, and creates a liquid market for your shares.

The IPO Timeline: How Long Does It Really Take?

Here’s what you should know upfront: an IPO is not a sprint; it’s a marathon. The entire process typically takes 6 to 9 months, though it can extend up to 12 months depending on regulatory approvals and market conditions.

Stage	Duration	Key Activities
Planning & Preparation	2 weeks	Company assessment, appointing advisors
Due Diligence	4-5 weeks	Financial review, compliance check
DRHP Preparation & Filing	1 week	Document drafting
SEBI Approval	4-8 weeks	Regulatory review and observations
RHP Filing & Roadshows	2-3 weeks	Marketing and investor meetings
IPO Launch	Minimum 3 days	Bidding period
Listing	Within 3 days of closure	Shares start trading
Post-Issue Activities	2-3 weeks	Allotment and settlement
Total	6-12 months	Complete process

Step 1: The Starting Point – Assessing Your Readiness

Before you even think about filing paperwork, you need to ask yourself: Is my company ready?

SEBI (Securities and Exchange Board of India) and stock exchanges have strict eligibility criteria for mainboard IPOs:

Minimum operational history: Your company must have been operating for at least 3 years
Net tangible assets: ₹3 crores in each of the three preceding years
Profitability: Average operating profit (before tax) of at least ₹15 crore in any one of the three years out of the last five years
Minimum capitalization after IPO: Post-issue paid-up capital must be more than ₹10 crores with market capitalization exceeding ₹25 crores

If your company doesn’t meet these criteria, you might consider an SME IPO (for smaller enterprises), which has relaxed requirements. For SME IPOs, the post-issue paid-up capital shouldn’t exceed ₹25 crores.

Real-world example: When Infosys went public in 1993, it was a relatively young IT company but had demonstrated strong growth and profitability. It raised $4 million at ₹95 per share and transformed the Indian IT landscape.

Step 2: Building Your IPO Dream Team

You cannot launch an IPO alone. You need a squad of financial, legal, and technical experts. This is where substantial costs kick in.

Key team members you need:

Merchant Bankers / Investment Banks / Lead Managers: These are your main coordinators. They’ll manage the entire IPO process, prepare documents, and handle regulatory filings.
- Cost: ₹25-30 lakhs (fixed fees) + 2-5% of the IPO size as underwriting fees
- For a ₹10 crore IPO, expect ₹30 lakhs fixed + ₹20-50 lakhs variable
Legal Advisors: They ensure compliance with all legal requirements and draft necessary documents.
- Cost: ₹10-15 lakhs
Auditors: They verify financial statements and ensure accuracy.
- Cost: ₹8-10 lakhs
Registrar and Transfer Agents (RTA): They handle share allotment and investor servicing.
- Cost: Usually covered by merchant banker fees
PR and Marketing Agencies: They promote your IPO.
- Cost: ₹10-15 lakhs

Step 3: The All-Important Document – DRHP

Once your team is in place, they prepare the Draft Red Herring Prospectus (DRHP).

Think of the DRHP as your IPO biography. It contains everything potential investors need to know about your company—except the final price and exact number of shares being offered. This document typically includes:

Company profile and business model: What your company does and how it makes money
Financial statements: Last 3 years of balance sheets, income statements, and cash flow statements
Management team information: Backgrounds of directors and senior management
Risk factors: Honest disclosure of what could go wrong
Use of funds: Exactly how you’ll spend the money raised
Legal compliance: Any ongoing litigation or regulatory issues
Market opportunity: Why your business has growth potential

The cost of preparing DRHP: ₹10-15 lakhs (included in merchant banker and legal fees)

Once prepared, your merchant banker files this with SEBI (Securities and Exchange Board of India) and the relevant stock exchange (NSE or BSE).

Step 4: The SEBI Observation Process – Regulatory Checkpoint

This is perhaps the most crucial stage. SEBI scrutinizes your DRHP with a magnifying glass to ensure investor protection.

Here’s what happens:

Submission to SEBI: Your DRHP is uploaded on SEBI’s website for public review and comments
Review period: SEBI typically issues an “Observation Letter” within 30 days of receiving your DRHP
Observations and questions: SEBI might ask questions or request clarifications about your financials, business model, or risk disclosures
Your response: You have 15 days to respond to SEBI’s queries
Validity of observation: Once SEBI issues its Observation Letter, it remains valid for 12 months

What if SEBI rejects or has major concerns? You’ll need to address them before proceeding.

Real-world example: When Coal India went public in October 2010, SEBI’s review process was rigorous due to the company’s strategic importance. The process took several weeks, but the eventual ₹15,199 crore IPO was one of India’s largest at that time.

Step 5: Filing the Red Herring Prospectus (RHP)

After SEBI’s approval, you update the DRHP with all necessary changes and file the Red Herring Prospectus (RHP) with:

SEBI
Registrar of Companies (RoC)
Stock Exchanges

The RHP vs. DRHP: What’s the difference?

DRHP: Draft version, contains company info but no pricing
RHP: Updated version after SEBI approval, ready for marketing, but still no final price

The RHP must be filed with RoC at least 3 days before the IPO opens to the public.

Step 6: Stock Exchange Approval

The stock exchange(s) where you want to list (usually NSE and/or BSE) review your application and grant in-principle approval. They assess:

Your company’s financial health
Your ability to raise the required capital
Compliance with exchange regulations
Post-issue market capitalization

Approval fees: ₹5-10 lakhs

Step 7: The Roadshow – Selling Your Story

Now comes the marketing phase. Your management team, along with merchant bankers, goes on a roadshow to present your company to institutional investors, fund managers, and other potential buyers.

During roadshows, you’ll present:

Your business model and competitive advantages
Financial performance and growth trajectory
Future expansion plans
Why investors should buy your shares

Cost: ₹10-15 lakhs for advertising, presentations, and travel

This is where storytelling matters. For instance, when Zomato (food delivery giant) launched its IPO in July 2021, the company’s founders presented a compelling narrative about disrupting India’s food industry. The IPO raised ₹9,375 crores despite market skepticism about profitability in the sector.

Step 8: Price Discovery Through Book Building

This is where the actual pricing happens. There are two methods:

Fixed Price Method

You decide the price upfront. Investors can only buy at that price—no negotiation.

Book Building Method (More Common)

Here’s how it works:

Price Band Announcement: You announce a price range (e.g., ₹100-120 per share)
Bidding Phase: Institutional investors submit bids indicating how many shares they want at what prices
Building the Book: Merchant bankers collect and aggregate all bids
Price Discovery: Based on demand, a cutoff price is determined
Allocation Basis: Shares are allotted based on bid levels and investor categories

Example: If your price band is ₹100-120, and most institutional investors bid at ₹115 or above, the final price might be set at ₹118. Retail investors then get shares at this final price.

Step 9: The IPO Launch – Opening to the Public

Finally, the IPO opens to the general public for a 3-5 working day subscription period. Here’s what happens:

Day	Time	Activity
Day 1-5	During business hours	Public can bid through banks/brokers via ASBA (Application Supported by Blocked Amount)
Day 5	5 PM	IPO subscription closes
Day 6-7	–	Basis of allotment finalized
Day 8	–	Shares credited to investors’ demat accounts
Day 9-10	–	Listing on stock exchange

Investors can apply in different categories:

Retail investors: Individual investors (up to ₹2 lakhs investment)
HNI/Non-institutional investors: High net worth individuals
QIB: Qualified institutional buyers like mutual funds and insurance companies

Step 10: Listing Day – Your Company Goes Live

This is the emotional climax. Your company is now listed on the stock exchange, and shares can be freely bought and sold in the secondary market.

Listing typically happens:

Pre-market session: 9:00-9:45 AM (orders placed in first 45 minutes are matched)
Opening price determination: 9:45-9:55 AM
Buffer period: 9:55-10:00 AM
Regular trading: Starts at 10:00 AM

Real-world example: When Paytm listed in November 2021 (raised ₹18,300 crores), it created history as one of India’s largest tech IPOs. The first day of trading saw significant activity as millions of investors participated.

The Real Cost of Launching an IPO

Let’s break down every penny you’ll spend for a ₹10 crore SME IPO:

Cost Component	SME IPO (Approx. Range)	Mainboard IPO (Approx. Range)
Merchant Banking/Underwriting Fees	₹25L – ₹30L (fixed) + 8-10% of issue size (variable)	₹3cr – ₹5cr (fixed) + 2-6% of issue size (variable)
Legal & Regulatory Costs	₹5L – ₹10L	Varies; SEBI fee max ₹2.5 cr + exchange fees
Auditing & Accounting Fees	₹2L – ₹5L	Higher, depends on complexity
Printing & Distribution	₹3L – ₹6L	₹5L – ₹10L
Marketing & Roadshow Expenses	₹5L – ₹10L	Varies, can be substantial
Registrar & Transfer Agent (RTA) Fees	₹1L – ₹2L	₹5L – ₹10L
Total Estimated Cost	₹40L – ₹90L+ or ~7-15% of issue size	Several Crores or ~4-8% of issue size

For larger mainboard IPOs, these costs proportionally increase. For instance, a ₹50 crore IPO might cost ₹3-5 crores in total expenses.

Common Pitfalls to Avoid

Rushing the process: Don’t try to accelerate regulatory approvals. SEBI’s scrutiny is designed to protect investors and market integrity.
Poor financial records: Auditors will scrutinize your finances. Ensure all books are clean and properly audited.
Inadequate disclosure: Better to disclose risks than face investor backlash or regulatory action later.
Wrong pricing: Price too high, and your IPO won’t get subscribed. Price too low, and you leave money on the table.
Ignoring investor relations: After listing, communication with shareholders is critical. Many IPOs underperform because post-IPO management neglects investor relations.

Post-IPO Responsibilities

Your journey doesn’t end at listing. You now have compliance obligations:

Quarterly financial reporting to stock exchanges
Annual audit reports and annual meetings
Corporate governance disclosures as per regulatory requirements
CEO and CFO certification of financial statements
Regular shareholder communications through announcements and reports

Conclusion: Your IPO Journey Awaits

Launching an IPO is one of the most complex but rewarding decisions you can make for your company. It requires meticulous planning, expert guidance, substantial financial investment, and unwavering commitment to regulatory compliance.

The process demands that you open your company’s books to the world, submit to regulatory scrutiny, and commit to transparency and good governance. But the rewards—capital to fuel growth, market validation, employee motivation, and liquidity for investors—make it worthwhile.

As you embark on this journey, remember: preparation is everything. Build a strong team, ensure your financials are impeccable, tell your company’s story authentically, and focus on long-term value creation rather than short-term stock price fluctuations.

The next unicorn might be your company. The next transformational IPO could carry your vision to millions of investors. All it takes is the right preparation, the right team, and the determination to go public the right way.

Your IPO journey starts with a single step. Make it count.

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References

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