What Is an IPO, What Are IPO Listing Gains and How Do They Work?

Every few weeks, a new company arrives on the stock market.

Its name appears in the news. Investors apply for shares hoping to profit when it lists. And on listing day, the stock opens at a price that is either higher, lower, or exactly at the issue price.

That opening price difference between what you paid and what the stock opens at is the listing gain
or loss.

India had 366  in FY26 raising approximately ₹1.9 lakh crore accounting, for 14% of global IPO listings in March 2026, second only to China. 

Here is everything you need to know.

What Is an IPO?

An Initial Public Offering is the process through which a private company offers its shares to the public for the first time and gets listed on NSE or BSE.

Before an IPO, the company is privately owned by founders, early investors, and private equity firms. An IPO allows the company to raise capital from public investors and gives early shareholders an opportunity to exit. 

Once listed, anyone with a demat account can buy or sell shares during market hours.

Why Do Companies Do IPOs?

Companies come to the market for several reasons:

To raise capital — fund expansion, pay down debt, invest in new products or infrastructure.

To give early investors an exit — founders and early backers who have held shares for years can sell part of their stake through the IPO.

To increase credibility — being a listed company on NSE or BSE carries institutional credibility that private companies do not have.

To use shares as currency — for acquisitions, ESOPs, and corporate purposes 

How Does an IPO Work in India?

The IPO process in India follows a defined sequence regulated by SEBI.

Step 1 — DRHP filing: Company files a detailed prospectus with SEBI covering business, financials, risks, and use of proceeds.

Step 2 — SEBI approval: SEBI reviews and approves after ensuring complete disclosures.

Step 3 — Price band: Company announces floor and ceiling price for the offer.

Step 4 — Subscription window: Open for three days. Retail investors, HNIs, and institutions apply.

Step 5 — Allotment: Oversubscribed IPOs use a lottery for retail investors.

Step 6 — Listing: Shares list on NSE & BSE typically six days after subscription closes. Trading begins.

What Are IPO Listing Gains?

Listing gain is the percentage difference between the IPO issue price and the opening price on listing day.

If you were allotted shares at ₹200 per share and the stock opens at ₹240 on listing day; your listing gain is 20%.

If the stock opens at ₹180, you have a listing loss of 10%.

Listing gains are not guaranteed. They depend on market conditions, investor demand, company fundamentals, and sentiment on listing day.

In FY26; average listing day gains moderated to approximately 7% for mainboard IPOs. In bullish market years median listing gains have historically been 15% to 20% for mainboard IPOs. In difficult market conditions, 40% to 50% of IPOs can list below their issue price.

What Determines Listing Gains?

Subscription levels — a heavily oversubscribed IPO signals strong demand and often leads to stronger listing gains. An undersubscribed IPO is a warning sign.

Grey Market Premium (GMP) — the grey market is an unofficial market where IPO shares trade before listing. A high GMP is often an indicator of expected listing gains, though it is not regulated and can be manipulated.

Market conditions — even a strong company can list weakly if broader markets are falling on listing day. Timing matters.

Company fundamentals — valuations, profitability, growth trajectory, and sector sentiment all influence how institutional investors price the stock on listing day.

Issue pricing — an IPO priced aggressively at peak valuations leaves little room for listing gains even if demand is strong.

Listing Gain vs Long-Term Investment 

Listing gains are a short-term phenomenon.

Research covering 161 IPOs listed between January 2024 & October 2025 showed average listing gains of 22% but roughly half of these stocks gave negative returns over the following three months.

This highlights a critical distinction. A strong listing gain does not mean the company is a strong long-term investment. And a weak listing does not mean the company is a poor long-term investment.

Many of India's best-performing listed companies had unremarkable listing days. Many stocks that delivered spectacular listing gains subsequently fell significantly.

Applying for an IPO purely for listing gains is a short-term strategy with variable outcomes. Investing in an IPO as a long-term shareholder requires the same fundamental analysis as any other equity investment.

How to Apply for an IPO in India

Applying for an IPO through Bigul is simple:

Step 1 — Open a demat and trading account on Bigul if you do not already have one.

Step 2 — During the IPO subscription window, go to the IPO section on the Bigul platform.

Step 3 — Select the IPO, enter the number of lots you want to apply for, and complete the application using UPI or ASBA.

Step 4 — The application amount is blocked in your bank account until allotment. If you are not allotted shares, the amount is released.

Step 5 — Check allotment status on the registrar's website or through Bigul on the allotment date.

FAQs

What is the minimum investment for an IPO in India?

Retail investors must apply for at least one lot typically 10-15 shares depending on the IPO. The minimum application amount for retail investors is capped at ₹2 lakh per IPO.

Is IPO allotment guaranteed?

No. For oversubscribed IPOs allotment for retail investors is done through a lottery. Applying for more lots does not improve your odds, only one lot is considered per application in the retail category.

What happens if I am not allotted shares?

The blocked amount is released back to your bank account within a few days of the allotment date.

Can I sell IPO shares immediately after listing?

Yes. Once the shares are credited to your demat account on listing day, you can sell them during market hours at the prevailing market price.

Also Visit :- Invest in IPO