IPO Cycle Advantage, Process and Different Stages

An Initial Public Offering is the transition of a private company into a publicly traded entity by offering shares to the public for the first time. By understanding these phases, investors and companies can navigate the IPO journey more efficiently.

From a company’s perspective, the IPO cycle runs from a board and management decision to go public through preparation, due diligence, regulatory filings, marketing and price discovery, investor subscription and allotment, listing on the exchange, and post-listing compliance.

From an investor’s perspective, the cycle signals when to review the DRHP/RHP, note the price band, lot size and key dates, apply via ASBA or UPI during the window, track allotment, and plan listing-day and post-listing actions.

The IPO cycle outlines the journey of a private company transforming into a publicly traded entity. It begins with a board and management decision to go public and runs through preparation, appointment of intermediaries, due diligence, structuring and filings (DRHP/RHP), regulatory review, marketing and price discovery, investor subscription and allotment, and listing. It ends with post-listing trading and compliance, when the company operates as a listed entity under ongoing disclosure norms.

The IPO cycle can be divided into multiple stages: Pre-IPO preparation, regulatory filings, marketing, subscription, allotment, listing, and post-listing compliance. Each stage has a clear focus, defined actions, and tangible outputs that move the company from private to public markets. The outline below helps teams coordinate timelines while giving investors clarity on what happens when.

Pre-IPO Stage

• Focus: Readiness and feasibility.
  

• Key tasks: Board and management decision, appoint advisors informally, assess market timing, clean up financials and corporate structure, strengthen governance and internal controls.
  

• Outputs: IPO roadmap, tentative timetable, early risk register, readiness gap list.

This stage ensures the company is prepared before approaching formal intermediaries and regulators.

Appointment of Key Intermediaries

• Focus: Build the execution bench.
  

• Key tasks: Appoint lead managers, legal counsel, auditors, registrars, PR and investor relations support.
  

• Outputs: Engagement letters, responsibilities matrix, working group list, communication protocols.

The right team accelerates filings and reduces execution risk.

Due Diligence and Compliance Setup

• Focus: Fact finding and control testing.
  

• Key tasks: Business, legal, tax and financial due diligence, related-party review, ESG and litigation checks, control remediation.
  

• Outputs: Diligence reports, verified data room, updated policies and disclosures.

Robust diligence underpins credible disclosure and investor confidence.

IPO Structuring and Filing

• Focus: Shape the offer and documentation.
  

• Key tasks: Decide primary versus secondary mix, use of proceeds, issue structure and categories, prepare DRHP content and financial sections, draft risk factors.
  

• Outputs: Draft DRHP, offer structure, working capital and capex narratives, peer benchmark tables.

Clear structure and crisp disclosure make the offer easier to evaluate.

Filing with SEBI

• Focus: Regulatory review and iteration.
  

• Key tasks: File DRHP, respond to observations, incorporate updates, prepare the RHP with price band and final terms post-clearance.
  

• Outputs: SEBI observation letter, updated drafts, final RHP for launch.

Addressing observations early reduces timeline uncertainty later.

Marketing and Investor Outreach

• Focus: Education and demand discovery.
  

• Key tasks: Analyst meets, roadshows, advertisements as permitted, publish price band and timetable, broker education.
  

• Outputs: Investor feedback, demand indicators, refined equity story.

Effective communication improves book quality and price discovery.

IPO Application and Subscription Phase

• Focus: Accept and record bids.
  

• Key tasks: Open the window, accept applications via ASBA or UPI, display category-wise subscription data, allow bid revisions.
  

• Outputs: Daily subscription figures, validated applications, blocked funds.

Transparent bidding builds trust and supports orderly allocation.

Subscription Window

• Focus: Timelines and mechanics.
  

• Key tasks: Typically a 3-working-day window, cut-off bidding where allowed, handle institutional and retail categories, close and freeze data.
  

• Outputs: Final bid book, category-wise coverage, closing day totals.

A clean close sets up a smoother allotment process.

Allotment and Listing

• Focus: Allocate fairly and commence trading.
  

• Key tasks: Apply proportionate allotment rules, finalise basis of allotment, credit shares to demat, announce listing date, commence trading on NSE and BSE.
  

• Outputs: Allotment file, demat credits, first day of trading, stabilisation arrangements if applicable.

Accurate allotment and timely credits are essential for a successful listing day.

Post-Listing Compliance

• Focus: Life as a listed company.
  

• Key tasks: Continuous disclosure, quarterly results, insider-trading controls, investor relations, board committee functioning, post-issue monitoring of use of proceeds.
  

• Outputs: Regular filings, investor updates, audited utilisation reports, governance scorecards.

Strong post-listing discipline sustains credibility and shareholder support.

For companies, completing the IPO cycle brings multiple strategic advantages beyond simply raising funds. The process professionalises governance, broadens ownership, and creates a durable platform for long-term growth.

Access to Capital

Fresh equity finances expansion, R&D, acquisitions, and deleveraging, improving balance-sheet strength and lowering the overall cost of capital over time.

Increased Visibility

Listing elevates brand credibility with customers, suppliers, lenders, and partners, while regular disclosures enhance trust and analyst coverage.

Liquidity for Existing Shareholders

A public market provides orderly liquidity for promoters, employees, and early investors, enabling diversification and transparent price discovery.

Talent Acquisition and Retention

Equity-linked incentives such as ESOPs become more meaningful with a trading market, helping attract high-calibre talent and align teams to long-term value creation.

By opening access to capital, credibility, liquidity, and talent, the IPO cycle supports both immediate funding needs and the company’s long-term sustainability.

While an IPO provides meaningful benefits, it also brings execution, regulatory, and market challenges that companies must weigh carefully. Clear planning and buffers for time and cost help reduce surprises.

Cost and Time

Upgrading audits and controls, preparing DRHP/RHP, marketing, and paying intermediary fees demand significant cash and management bandwidth. Timelines can stretch across months, and a delayed window risks missing favourable market conditions.

Regulatory Pressure

SEBI and exchange reviews require precise, consistent data and robust risk disclosures, with iterations common. Post-listing, continuous reporting, insider-trading controls, and governance obligations add ongoing workload and liability for errors or omissions.

Market Volatility

Shifting sentiment can force price-band changes, postponements, or downsized issues. Listing-day swings may affect brand perception and early shareholder experience, making contingency plans and conservative guidance important.

Dilution of Control

Fresh equity reduces promoter ownership and can alter voting dynamics. Greater board independence and public scrutiny raise expectations on capital allocation, governance, and long-term performance.

Weigh execution costs, compliance burden, timing risk, and dilution against the benefits of capital, visibility, and liquidity—and proceed with realistic timelines, disciplined disclosures, and strong internal readiness.

The IPO cycle is a structured journey that transforms private companies into public ones. It also opens new investment opportunities and promotes market transparency. By understanding the IPO cycle, 

you can engage with IPOs confidently. Awareness of the allotment process and timelines further supports informed decision-making. 

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.