For a startup founder or business owner, the idea of going public can feel like a far-off milestone — or a leap into the unknown. But it’s not as distant as it seems. Every company that’s listed on the stock exchange today once stood exactly where you are now — crunching numbers, asking hard questions, and wondering if they were truly ready.
The truth is, taking your company public isn’t a one-page checklist. It’s a process — a journey, really — that requires planning, patience, and a good deal of introspection. It’s not just about ticking regulatory boxes; it’s about understanding who you are as a business and where you want to go. Whether you’re planning a large-scale mainboard IPO or exploring the SME route, this guide walks you through the process in plain, human language — because this is more than just a financial transaction. It’s a transformation.
What Is an IPO — and Why Do Companies Even Do It?
An IPO — or Initial Public Offering — is when your company decides to raise capital by offering shares to the public for the very first time. Up until now, maybe it’s just been you, your co-founders, a few investors, and some close supporters. But going public opens the door to a new kind of shareholder — the public. Anyone who believes in your business can now own a piece of it.
Why would you do it? For many companies, it’s a way to scale — fast. It’s also an exit route for early investors who’ve supported you through thick and thin. It elevates your brand, adds credibility, and, frankly, forces your company to grow up — in terms of governance, financial discipline, and transparency.
Think about when Zomato went public. It wasn’t just about raising funds — it was about entering a new league. The world started watching them differently. That’s what an IPO can do — it changes the game.
The Real Work Starts Before the Filing
Here’s what most people don’t tell you: the IPO process begins long before the paperwork hits SEBI’s desk. Before anything else, your company needs to be prepared from the inside out. Your financials must be in shape — clean, audited numbers, typically for the last three years. Your board structure should align with SEBI’s corporate governance requirements. Your legal documentation needs to be watertight.
But beyond compliance, it starts with clarity. Why are you raising funds? How much do you need — and what will you use it for? Investors don’t just look at your past performance; they invest in your future potential. They want to understand your story, your vision, and the road ahead.
You Can’t Go Public Alone — and You Shouldn’t
An IPO isn’t something you do solo. You’ll need a team — and the right team can make all the difference.
At the heart of it all is your merchant banker. They’re your quarterback — leading the charge, coordinating with regulators, overseeing the paperwork, and helping you figure out your valuation. Then there’s your legal advisor, ensuring every word and number in your documents stands up to scrutiny. A registrar helps manage share applications and investor communication. Auditors double-check that every financial figure adds up.
If you’re a smaller company planning an SME IPO, your merchant banker becomes even more important. They don’t just manage the process — they help shape your pitch and get the right investors to the table. They’re your guide through the maze.
This Is Where It Gets Real: Writing the DRHP
Once your team is in place and your numbers are sorted, it’s time for your first big reveal — the Draft Red Herring Prospectus (DRHP). This isn’t just a document. It’s your company’s story, laid out in black and white — who you are, what you do, why you’re raising funds, and what risks investors should be aware of.
SEBI reviews this draft closely. They may come back with questions or suggestions for changes. Once everything checks out, the final version — the Red Herring Prospectus (RHP) — is published. This version includes pricing details, lot sizes, and the key dates that mark your IPO calendar.
At this point, transparency is everything. The clearer your intentions and disclosures, the more trust you build — not just with regulators, but with potential investors too.
Can an SME Go Public?
Yes — and more are doing it every year. But there are a few minimum requirements. Your company should have a net worth of ₹1 crore or more, and profits in at least two of the past three years. The promoters should have a clean record, with no legal issues or pending cases.
After the IPO, you must ensure that at least 25% of your shares are held by the public. And since trading volumes can be lower in SME stocks, you’ll need to appoint a market maker — someone who ensures there’s enough activity to keep the stock liquid.
The takeaway? You don’t have to be a giant to go public. But you do have to be prepared.
The Final Stage of Launching an IPO!
Once your prospectus is filed and approved, it’s time to get the word out. This is the marketing phase of your IPO — the roadshow.
For large companies, this might mean press events and high-profile investor meetings. But for SMEs, roadshows often happen over webinars, investor calls, and targeted campaigns on digital platforms. No matter the format, the goal is the same — show investors what makes your business unique, why now is the right time, and what returns they can expect.
The more compelling your story, the more confident investors will feel hitting that “apply” button.
The IPO Window Opens
When the IPO goes live, investors can start placing their bids. This happens via the ASBA process, which ensures that their funds remain locked (not debited) until shares are actually allotted.
If demand is strong, your IPO may be oversubscribed — which is usually a good sign. After the bidding window closes, allotments are processed. Investors who didn’t get shares get their funds released shortly after.
It’s important that this phase runs smoothly. The more transparent and efficient your allotment and refund process, the more goodwill you build in the market.
The Big Day: Listing on the Exchange
Once the shares are allotted, your company is officially listed. Your stock goes live on NSE, BSE, or whichever platform you chose. The market reacts in real time.
Some companies open strong, with prices surging on listing day. Others stay steady — or even dip. The reaction depends on many factors — demand, pricing, broader market conditions, and investor sentiment.
SMEs, in particular, may see more volatility due to lower volumes — which is exactly why your market maker is so crucial in the early days of trading.
Life After the IPO
The IPO may feel like a finish line — but it’s actually the starting point for a new phase in your company’s life. Once you’re listed, your company enters a more transparent, more structured world.
You’ll now be required to publish quarterly financial results, disclose major developments, and follow corporate governance norms. You’re now answerable to shareholders — and the market is watching. That added accountability might feel intense, but it also opens the door to bigger funding rounds, better partnerships, and a much wider network of stakeholders rooting for your success.
What If Things Don’t Go According to Plan?
Let’s be honest — not every IPO is a smooth ride. SEBI may flag issues. Market conditions might shift. Demand might not meet expectations.
That’s okay. The companies that navigate turbulence best are the ones that remain transparent, agile, and honest about where they stand. Sometimes, delaying the listing or restructuring the offer is the right move. What matters is staying true to your fundamentals and being prepared to pivot.
Mainboard or SME — Which Path Should You Choose?
If your company is established, with solid operations and a post-issue capital of over ₹10 crore, the mainboard could be your stage. It comes with stricter norms — but also greater reach and visibility.
If you’re still scaling and looking to raise between ₹1–25 crore, the SME platform offers a more accessible route. And down the line, once you’ve grown, you can always migrate to the mainboard.
The Final Word: Should You Go Public?
Going public isn’t just a financial event. It’s a mindset shift. It’s about stepping out of the startup lane and into the spotlight of public scrutiny, public funding, and public accountability.
If your company is ready — financially, structurally, and emotionally — don’t let the process intimidate you. With the right team, the right advisors, and a strong story, your IPO can be more than just a milestone. It can be your company’s most defining moment yet.
The real question isn’t, “Can you go public?”
It’s, “Are you ready to lead your business through what comes next?”
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https://muds.co.in/sebis-new-icdr-rules-2025-what-every-investor-must-know/
https://muds.co.in/pre-ipo-and-post-ipo-shares-a-comparative-analysis/
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