Quick answer: A successful initial public offering (IPO) follows three phases. In planning, the company gets its finances, governance and timing ready. In execution, it appoints advisers, files the offer documents and markets the issue. In realisation, it lists and then delivers on what it promised investors. In India, the process is governed by the Securities and Exchange Board of India (SEBI) under its Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018, and shares must list within three working days of the issue closing.
Why an IPO needs a strategy
An IPO is when a private company offers its shares to the public for the first time and lists them on a stock exchange such as the National Stock Exchange (NSE) or BSE. Established firms and young companies alike go public to raise capital, give early investors an exit or raise their profile.
When this article first appeared in 2018, IPOs were as widely discussed as bitcoin: everyone was talking about them, but few people understood what goes into one. An IPO is a permanent change to how a company is owned, governed and scrutinised. Every business is structured differently, so no single strategy fits all. Most IPO journeys still pass through the same three phases, which together cover ten steps.
Phase 1: Planning
1. Assess IPO readiness and value
The first step largely determines the value the market will place on the offer. The company needs a clear strategic plan and a solid understanding of what drives its valuation, such as growth, margins and market position. It also needs to know what investors in its sector look for.
In India, the company must also meet SEBI’s eligibility rules. Under Regulation 6(1) of the ICDR Regulations, a company qualifies on track record if it had, among other tests:
- net tangible assets of at least ₹3 crore in each of the preceding three full years;
- an average operating profit of at least ₹15 crore over the preceding three years, with an operating profit in each of those years;
- a net worth of at least ₹1 crore in each of the preceding three full years.
Companies that do not meet these tests can still list under Regulation 6(2), but they must then allocate at least 75% of the net offer to qualified institutional buyers (QIBs).
2. Keep more than one option open
An IPO should not be the only plan on the table. Even when listing is the right route, the company should keep alternatives open, such as a private placement, a strategic sale or simply staying private. Market conditions can close the IPO window quickly, and a fallback protects the business if they do.
3. Get the timing right
As with much of the equity market, timing matters a great deal. Market sentiment, sector demand and the company’s own results all affect how an issue is received. Companies that list well usually start preparing well in advance, often a year or more before the issue. Audited financials, governance changes and the offer document all take time.
Phase 2: Execution
4. Recruit the right team
Going public changes a lot inside a company. Alongside its regular legal advisors and accountants, the company needs specialists with IPO experience:
- SEBI-registered merchant bankers to act as book running lead managers;
- legal counsel for the company and for the lead managers;
- statutory auditors to prepare the restated financial statements;
- a registrar to the issue, who processes applications and allotment.
5. Strengthen the company’s systems
Before the company sells shares to the public, it needs to reinforce its “load-bearing pillars”: financial reporting, internal controls, risk management and compliance systems. Strong systems support accurate forecasts, help meet listing obligations and reduce the risk of surprises after listing.
6. Set up public-company governance
A listed company is governed differently from a private one. It needs a board with independent directors, board committees such as the audit committee, and policies on related-party transactions and disclosures. Clear governance gives shareholders confidence. Promoters often find this the hardest adjustment, because decisions face far more scrutiny.
7. File the offer documents and manage investor communication
In India, the company files a draft red herring prospectus (DRHP) with SEBI and the stock exchanges. The DRHP sets out the business, risks, financials and the purpose of the issue. After SEBI’s observations, the company files a red herring prospectus (RHP), announces a price band and opens the issue. Shares are allotted after the issue closes.
Investors need enough information to make an informed decision, not a promise that their money is safe. Clear, honest disclosure in the offer document, roadshows and analyst meetings builds the investor relationships a listed company depends on.
Phase 3: Realisation
8. Bring in research coverage and investor-relations expertise
After listing, the company needs people who can explain its numbers to the market. It may build an investor-relations team and hope to attract coverage from research analysts. Finding people with public-market experience for a previously private company can be hard and expensive, but it helps sustain interest in the shares.
9. Get the right investors on board
While preparing for listing, the company should also campaign to attract the right investor base, a mix of long-term institutions and individual investors. In Indian IPOs, part of the issue can go to anchor investors before it opens. The rest is split across institutional, non-institutional and retail categories as SEBI’s rules require. Roadshows and the offer document do most of this work.
10. Deliver on the promises
Listing is not the finish line. A public company creates value for shareholders by doing what it said it would, including spending the IPO proceeds on the purposes stated in the offer document. An earlier version of this article claimed that most IPOs “fall face first” within a couple of years. We could not find reliable data to support that claim. What is certain is that post-listing share prices can fall below the issue price when results disappoint, which is why execution after listing matters.
How long the final stage takes
SEBI has made the T+3 listing timeline mandatory for issues opening on or after 1 December 2023. Shares must be listed within three working days after the issue closes (T), down from six working days earlier. The registrar has to finalise the basis of allotment by T+1.
If you are an investor applying in an IPO
This guide is written from the company’s side, but the same documents help investors. Before applying:
- read the risk factors, financials and “objects of the issue” sections in the RHP;
- remember that listing gains are never guaranteed and some issues list below the offer price;
- apply only through your bank (ASBA) or your broker using UPI, with a demat account in your name. See our guide on how to open a demat account.
You can track upcoming issues on exchange websites or on broker pages listing the current IPO calendar.
This guide is general information, not investment advice.
Frequently asked questions
What are the three stages of an IPO?
Planning (readiness, valuation and timing), execution (advisers, governance and filing the offer documents) and realisation (listing, investor relations and delivering on the plan).
Who regulates IPOs in India?
SEBI regulates public issues under the ICDR Regulations, 2018. The stock exchanges also grant in-principle approval for listing.
How long after an IPO closes are shares listed?
For issues opening on or after 1 December 2023, shares must list within three working days of the issue closing date (T+3).
Can a loss-making company launch an IPO in India?
Yes. A company that does not meet the profitability track record under Regulation 6(1) can use Regulation 6(2), provided at least 75% of the net offer goes to qualified institutional buyers.
How early should a company start preparing for an IPO?
Companies that list successfully usually begin a year or more ahead, because restated financials, governance changes and the offer document take time.
Checked in October 2026 against SEBI’s ICDR Regulations, 2018 and SEBI’s T+3 listing circular. IPO rules are amended from time to time, so check the current regulations on sebi.gov.in before relying on any threshold.
