# How IPOs Work in India: DRHP to Listing in Plain English

> How IPOs work in India: DRHP vs RHP, book building, lot size, retail and HNI quotas, UPI/ASBA, allotment and the T+3 listing timeline, explained simply.
- **Published**: 2026-10-18
- **Modified**: 2026-10-18
- **Category**: ipo
- **URL**: https://www.tldr.money/articles/ipo/how-ipos-work-india

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This is our evergreen guide to **how IPOs work in India**, from the draft offer document to the first day of trading. We use the [Jio Platforms IPO](/articles/ipo/jio-ipo) as a running example. It is part of our [IPO guides](/ipo).

> **Educational content, not investment or tax advice.** tldr.money is not a SEBI-registered investment adviser or research analyst, and nothing here is a recommendation to apply for, buy, sell or hold any security. IPO investments can lose money. Always read the offer document for the specific issue, and speak to a SEBI-registered adviser or a tax professional if you need personal advice.

## What an IPO is

An initial public offer (IPO) is when a company sells shares to the public for the first time and lists them on a stock exchange, NSE and/or BSE in India. There are two ways shares can be offered:

- **Fresh issue:** the company creates new shares. The money goes to the company.
- **Offer for sale (OFS):** existing shareholders sell some of their shares. The money goes to them, not the company.

Many IPOs mix the two. The Jio Platforms IPO is a fresh issue only, of up to 27 crore shares.

## The offer documents: DRHP, RHP and prospectus

| Document | When | What it contains |
|---|---|---|
| **Draft red herring prospectus (DRHP)** | Filed with SEBI and the exchanges first | Business, financials, risks, objects, shareholders. No price band |
| **SEBI observations** | After SEBI review | SEBI's comments; the company must address them and open the issue within 12 months |
| **Red herring prospectus (RHP)** | Filed with the Registrar of Companies before the issue opens | Updated DRHP, still without the final price. Dates, quota structure |
| **Price band advertisement** | At least two working days before opening | Floor and cap price, lot size |
| **Prospectus** | After bidding closes | Final price and issue size |

It is called "red herring" because the document is incomplete: the final price and number of shares are not yet fixed.

**Jio example:** DRHP filed 19 June 2026; SEBI observation letter 28 August 2026; RHP filed 14 October 2026 with a price band of INR 1,065 to INR 1,119. See the full [Jio IPO DRHP and RHP breakdown](/articles/ipo/jio-ipo).

### How to read an RHP without reading 500 pages

Start with these sections:

1. **Offer document summary**, near the front: a few pages on the business, issue size, objects and key financials.
2. **Risk factors**: specific risks first; generic ones are usually towards the end.
3. **Objects of the issue**: what the money will be used for.
4. **Basis for issue price**: earnings per share, return on net worth, P/E and peer comparison.
5. **Restated financial information** and **management's discussion and analysis**.
6. **Outstanding litigation**.

## Book building and the price band

Most Indian IPOs use **book building**. The company sets a price band, investors bid within it, and the final price is set after looking at demand. Retail investors can bid at the **cut-off**, meaning "whatever the final price is". Their money is blocked at the top of the band. Non-institutional and institutional investors must bid at a specific price.

Bids are in **lots**, the minimum number of shares per bid. SEBI's rules require the minimum application to fall within a set value range, which is why lot sizes differ between issues. Jio's lot is 12 shares, or INR 13,428 at the cap.

## Who gets what: the quotas

For a company that meets SEBI's profitability track-record route, under Regulation 6(1) of SEBI's ICDR Regulations, the net issue is split as follows:

| Category | Who | Share of net issue |
|---|---|---|
| Qualified institutional buyers (QIBs) | Mutual funds, insurers, banks, foreign portfolio investors and similar | Not more than 50% |
| Non-institutional investors (NIIs, or HNIs) | Individuals and others bidding above INR 2 lakh | Not less than 15% |
| Retail individual investors | Individuals bidding up to INR 2 lakh | Not less than 35% |

Companies that do not meet the track-record conditions use Regulation 6(2) instead, which flips the split: at least 75% to QIBs and at most 10% to retail.

Within the NII category, one-third is for bids above INR 2 lakh and up to INR 10 lakh (small NII) and two-thirds for bids above INR 10 lakh (big NII). Up to 60% of the QIB portion can go to **anchor investors** a day before opening.

Issues can also reserve portions for employees and for shareholders of a listed parent. Jio has both. See:

- [Jio IPO HNI (NII) quota](/articles/ipo/jio-ipo-hni-nii-quota)
- [Jio IPO RIL shareholder quota](/articles/ipo/jio-ipo-ril-shareholder-quota)
- [Jio IPO anchor investors](/articles/ipo/jio-ipo-anchor-investors)

## How you pay: ASBA and UPI

All public investors except anchors must use **ASBA** (application supported by blocked amount). Your bank blocks the bid amount in your account. It is debited only if you get shares. You can apply:

- **Through a broker app with UPI**, for individual bids up to INR 5 lakh. You approve a mandate in your UPI app.
- **Through net banking**, where your bank offers ASBA.
- **With a physical form** at a bank branch or broker.

Step by step: [how to apply for the Jio IPO](/articles/ipo/how-to-apply-jio-ipo).

## How allotment works

When a category is oversubscribed:

- **Retail:** each successful applicant gets the minimum lot. If there are more applicants than lots, winners are chosen by a draw. Bidding for more lots does not improve your chances of getting one.
- **NII:** each successful applicant gets at least the minimum NII application size (just over INR 2 lakh for small NII, just over INR 10 lakh for big NII), chosen by draw if needed.
- **QIB:** allotted proportionately.

The registrar finalises the **basis of allotment** with the designated stock exchange.

## The T+3 timeline

Since December 2023, SEBI requires listing within **three working days** of the issue closing (T+3), for all public issues.

| Day | What happens |
|---|---|
| T | Issue closes |
| T+1 | Basis of allotment finalised |
| T+2 | Shares credited to demat accounts; money unblocked for those who did not get shares |
| T+3 | Shares start trading |

For Jio: closes Friday 23 October 2026; indicative listing Wednesday 28 October 2026 (the weekend does not count). Track it in [Jio IPO dates and allotment status](/articles/ipo/jio-ipo-dates-allotment-status).

## Grey market premium (GMP)

You will see "GMP" figures in the news before most IPOs. They come from unofficial, unregulated trading and are not recognised by SEBI. Read [what Jio IPO GMP means and why it is unreliable](/articles/ipo/jio-ipo-gmp).

## After listing

- **Lock-ins.** Promoters and anchors cannot sell for set periods. When anchor lock-ins end (30 and 90 days after allotment), some may sell.
- **Tax.** Gains are capital gains. Sell within 12 months and they are short-term, taxed at 20%. See [tax on IPO listing gains](/articles/ipo/ipo-listing-gains-tax).

## Keep reading

- [Jio IPO: DRHP and RHP breakdown](/articles/ipo/jio-ipo)
- [Jio IPO GMP tracker](/articles/ipo/jio-ipo-gmp)
- [How to apply for the Jio IPO](/articles/ipo/how-to-apply-jio-ipo)
- [Jio IPO HNI (NII) quota explained](/articles/ipo/jio-ipo-hni-nii-quota)
- [Tax on IPO listing gains](/articles/ipo/ipo-listing-gains-tax)

## Sources

Primary sources first. All links accessed 18 October 2026.

- [SEBI, Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018, last amended 21 March 2026](https://www.sebi.gov.in/legal/regulations/mar-2026/securities-and-exchange-board-of-india-issue-of-capital-and-disclosure-requirements-regulations-2018-last-amended-on-march-21-2026-_100581.html)
- [SEBI circular, Reduction of timeline for listing of shares in public issue from T+6 to T+3 days, 9 August 2023](https://www.sebi.gov.in/legal/circulars/aug-2023/reduction-of-timeline-for-listing-of-shares-in-public-issue-from-existing-t-6-days-to-t-3-days_75122.html)
- [SEBI, Jio Platforms Limited: Red Herring Prospectus dated 14 October 2026 (filing page, posted 15 October 2026)](https://www.sebi.gov.in/filings/public-issues/oct-2026/jio-platforms-limited-rhp_105274.html), and the [full RHP PDF](https://www.sebi.gov.in/sebi_data/attachdocs/oct-2026/1792045029108.pdf)
- [Jio Platforms price band advertisement, 14 October 2026 (hosted by lead manager JM Financial)](https://www.jmfl.com/Common/getFile/6109)
- [SEBI, Jio Platforms Ltd: Draft Red Herring Prospectus dated 19 June 2026](https://www.sebi.gov.in/filings/public-issues/jun-2026/jio-platforms-ltd-drhp_102248.html)
- [SEBI observation letter on the DRHP, 28 August 2026 (hosted by Jio)](https://myjiostatic.cdn.jio.com/cms/assets/iv3/Final%20observation%20letter%20dated%20August%2028,%202026%20issued%20by%20SEBI%20(Ref.%20No.%20HO491111(307)2026-CFD-RAC-DIL1).pdf)
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