Are there any specific qualifications required to invest in an IPO?
- Answer Field
-
You need to have a demat account to place your bids in an IPO and you have to buy at least one lot to place your order.
Launching an IPO (Initial Public Offering) is a complex process. Companies must fulfil various regulatory requirements and provide full disclosure of their financial data and other important details to investors.
If a company wants to be publicly listed in the Indian stock market, it must meet all the eligibility criteria of the Indian stock market regulator (SEBI) and stock exchanges (NSE & BSE). In this blog, we will learn the different IPO eligibility criteria in India.
When a large company with a post-issue paid-up capital of Rs. 10 crore lists its shares through the IPO process, it is a mainboard IPO. Popular IPOs launched in recent years, including Paytm, Zomato, MobiKwik, LIC, etc., are all mainboard IPOs. These are some requirements that a company must meet before launching its mainboard IPO:
SEBI has mentioned two routes for private companies to issue an IPO:
Entry Norm I or Profitability Route:
Entry Norm II or QIB Route:
Besides SEBI, National Stock Exchange (NSE) also has its IPO eligibility criteria for private companies:
There are some other eligibility criteria for companies to list themselves in the BSE:
An Initial Public Offering by a small or mid-sized company is called SME IPO. As the SME companies do not have enough track records it is hard to conduct a mainboard IPO or to raise funds from financial institutions.
Additional Read: How does an IPO work?
To allow them to raise funds, NSE and BSE allow the listing and trading of SME companies with the following eligibility criteria:
To launch an SME IPO in BSE, the issuer should meet these requirements:
Eligibility | Eligibility Requirement |
Net worth | At least Rs. 1 crore for last 2 financial years |
Operating profits | Should be positive for 2 out of the last 3 fiscal years |
Leverage ratio | Less than 3:1 |
Net Tangible Assets | Rs. 3 crore in the last fiscal year |
Track record (operations) | Min 3 years |
There are some additional eligibility for Microfinance and Broking Companies:
Client Base | More than 10,000 |
Asset Under Management | More than Rs. 100 crore |
Public Deposit | None |
Net Tangible Assets | Rs. 3 crore as last audited financial report |
Net Worth and Profit | At least Rs. 5 crore each in any 2 out of 3 fiscal yearsOrMinimum net worth of Rs. 25 crore in any 3 out of 5 fiscal years |
Post issue paid up capital | Rs. 3 crore |
NSE also has its IPO eligibility in India for SME IPOs:
In this blog, you have learned the most important IPO Eligibility for the public listing of a privately owned company. To protect public interest, regulatory bodies including the Securities and Exchange Board of India and the stock exchanges place strict regulations on companies about to go public. This provides the benefit of transparency, liquidity and a fair chance to investors.
To apply for an IPO you need a demat account. Open your demat and trading account with Bajaj Broking and get a simplified and faster IPO application.
Share this article:
How to Opt for Mutual Fund Redemption
20 May, 2024 | 7 Min. read
HOAC Foods India Limited IPO: Price, Lot Size, Strengths and Risks
19 May, 2024 | 5 Min. read
Benefits, and Types of Debit Cards
19 May, 2024 | 5 Min. read
Unraveling the Legacy: History of Tata Group of Companies
19 May, 2024 | 5 Min. read
Best Ethanol Stocks In India
19 May, 2024 | 3 Min. read
AWFIS Space Solutions Limited IPO: Price, Lot Size, Strengths and Risks
19 May, 2024 | 5 Min. read
JSW Steel Q4 Results: Q4 Profit falls to ₹1,322 Crore
18 May, 2024 | 4 Min. read
Explore Best EV Stocks in India
18 May, 2024 | 4 Min. read
Rulka Electricals Limited IPO: Price, Lot Size, Strengths and Risks
18 May, 2024 | 5 Min. read
Top AI Stocks in India: Investing in the Future of Tech
18 May, 2024 | 4 Min. read
Most Volatile Stocks in India: How to Identify Them?
18 May, 2024 | 4 Min. read
Best Indicators For Intraday Trading
18 May, 2024 | 4 Min. read
Analysis to Become a Pro Investor
28 Dec, 2023 | 4 Min. read
Women In Real Estate Investing (Investree)
28 Dec, 2023 | 5 Min. read
How To Check Prudent Corporate Advisory IPO Allotment Status
27 Dec, 2023 | 3 Min. read
How To Boost Credit Score? – Steps to Improve Creditworthiness
27 Dec, 2023 | 4 Min. read
Advantages and Disadvantages of Opening Multiple Demat Accounts
26 Dec, 2023 | 4 Min. read
7th CPC LTC: Leave Travel Concession Rules for Central Government Employees
26 Dec, 2023 | 4 Min. read
7th Pay Commission: House Building Advance (HBA) Interest Rate FY 2023-24
26 Dec, 2023 | 5 Min. read
The Future of Trading: Exploring Bajaj Broking’s Demat Features
26 Dec, 2023 | 6 Min. read
7th Central Pay Commission Cpc Fitment Table
23 Dec, 2023 | 7 Min. read
You need to have a demat account to place your bids in an IPO and you have to buy at least one lot to place your order.
You should find the DHRP document on the public issues page of SEBI.
You need a demat account with CDSL or NSDL to participate in an IPO. You will need to provide KYC documents like PAN card, Aadhaar card, etc., to open a demat account.
The requirement varies for different types of investors. For orders under the retail category, you have to subscribe for at least one lot and the amount can be between Rs. 10,000 – Rs. 15,000.
Already listed companies can not issue new IPOs. It can issue new shares and the process is known as a Follow-on public offering (FPO).
No, IPO is the process where a company issues shares for the first time. If it issues shares again, it is known as a Follow-on Public Offering (FPO).
Yes. If a private company wants to go public, it can issue its IPO.
When a company meets all the eligibility criteria of SEBI and stock exchanges of IPO listing. Then it can issue an IPO.
A company with a profitable track record (in the last 3 financial years), a net worth of Rs. 3 crore, a debt-to-equity ratio below 2:1 and a pre-IPO market cap of Rs. 100 crore, is eligible for an IPO.
No Result Found
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading