How does a company apply for an Initial Public Offering (IPO) on NSE/BSE?

An Initial Public Offering (IPO) is a process through which a private company issues shares to the public for the first time and gets listed on stock exchanges like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). This allows the company to raise capital for growth and expansion. Applying for an IPO involves regulatory approvals, documentation, and compliance with SEBI guidelines.

1. Eligibility Criteria for IPO on NSE/BSE

A company must meet certain eligibility requirements before applying for an IPO. The key criteria include:

• Minimum Net Tangible Assets: ₹3 crore in each of the last 3 years.
• Net Worth: At least ₹1 crore in each of the last 3 years.
• Profitability Track Record: Must have reported profits in at least 3 of the last 5 years.
• Minimum IPO Size: ₹10 crore or more.
• Minimum Post-IPO Capital: ₹10 crore for BSE and ₹25 crore for NSE.

2. Steps to Apply for an IPO

The IPO application process includes the following key steps:

Step 1: Hire a Merchant Banker

A company must appoint a SEBI-registered merchant banker (also known as a lead manager) to handle the IPO process.

Step 2: Prepare the Draft Red Herring Prospectus (DRHP)

The DRHP is a preliminary IPO document that contains company financials, risks, and business details. It must be submitted to SEBI for approval.

Step 3: SEBI Review & Approval

SEBI reviews the DRHP and may ask for modifications. Once approved, the company can proceed with IPO planning.

Step 4: Apply for Stock Exchange Listing

The company must submit an application to NSE and BSE along with necessary documents for listing.

Step 5: IPO Pricing & Roadshows

The company and its merchant banker decide the IPO price and conduct roadshows to attract investors.

Step 6: Public Issue & Subscription

The IPO opens for investors, and shares are allocated based on demand.

Step 7: Listing on NSE/BSE

After successful subscription, shares get listed on NSE/BSE, making them available for trading.

3. Post-IPO Compliance

After the IPO, the company must comply with:

• Quarterly & Annual Financial Reporting
• Minimum Public Shareholding of 25%
• Insider Trading Regulations
• Disclosure of Material Events

4. Conclusion

Applying for an IPO on NSE/BSE involves multiple steps, including regulatory approvals, financial disclosures, and compliance with SEBI norms. Companies looking to go public must carefully follow the process to ensure a smooth listing.