With its initial public offering (IPO) opening for subscriptions on October 31 and closing on November 4, eyewear retailer Lenskart is poised to make its eagerly anticipated market debut. In order to raise new funds and give early investors a sizable exit opportunity, the business has set the price range at INR 382–402 per equity share of face value INR 2. Supported by billionaire Radhakishan Damani, Lenskart’s initial public offering (IPO) is one of the year’s most anticipated in India’s rapidly expanding consumer technology sector.
October 30th is the planned date for the anchor investor allocation. Bids must be made in multiples of the lot size, which has been fixed at 37 equity shares. With a fresh issuance of INR 2,150 crore and an offer for sale (OFS) of up to 12.75 crore shares by promoters and current investors, the overall issue size is projected to be around INR 7,278 crore, or roughly INR 5,128 crore at the top end of the price range.
How Lenskart Plans to Utilise Proceeds?
Promoters and early investors will sell 12.75 crore shares through an offer for sale (OFS), while the business intends to raise INR 2,150 crore through a new share issuance. The new issue’s proceeds will be utilised to improve brand and marketing campaigns, fortify technology infrastructure, and open more company-owned stores.
Investor confidence in Lenskart’s development potential is demonstrated by the IPO, which comes after a pre-IPO investment of INR 90 crore from DMart founder Radhakishan Damani. Alpha Wave Ventures, Temasek, Kedaara Capital, and SoftBank are among the current investors in the eyewear company. After Tata Capital, HDB Financial Services, and LG Electronics, Lenskart’s IPO is expected to rank as the fourth-largest public offering of 2025 with this offering.
Lenskart’s Dominance in India’s Eyeware Sector
Peyush Bansal founded Lenskart in 2008 as an online platform for eyewear. Since then, it has grown into an omnichannel retailer with more than 2,500 locations in Southeast Asia, the Middle East, and India. It has been able to scale quickly while maintaining affordability and high margins thanks to its vertically integrated business model, which spans design, manufacture, and retail.
With revenue of INR 6,625 crore, up 22% year over year, Lenskart declared a net profit of INR 297 crore in FY25, a significant turnaround from a loss of INR 10 crore in FY24. Stronger brand engagement, more cost-effectiveness, and benefits from its technology-led model were cited by the corporation as the reasons for its better success.
Quick Shots
•Lenskart’s IPO opens on October 31 and closes on
November 4, 2025.
•Anchor investor allocation is scheduled for October
30.
•Fixed at INR 382–INR 402 per equity share of face
value INR 2.
•Investors can bid in multiples of 37 equity shares.
According to various media reports, Mukesh Ambani, who announced that Reliance Industries’ telecom division, Reliance Jio, would go public next year, is also working on listing Reliance Retail, which may be valued at around $200 billion.
With the demerger of the fast-moving consumer goods (FMCG) division, Reliance Consumer Products, which will now be a direct subsidiary of Reliance Industries, the process of shrinking and simplifying Reliance Retail, the biggest retailer in the nation, has already begun.
According to sources, the FMCG demerger and the rationalisation of Reliance Retail’s store network—which includes eliminating underperforming locations—are being carried out to increase the company’s margins with the goal of obtaining a favourable valuation so that it can enter the market.
Providing a Healthy Exit Opportunity to Investors
Although it is still early, there are signs that a public offering is imminent, with Reliance Jio’s listing coming a year later in 2027. Investors like Singapore’s GIC, the Abu Dhabi Investment Authority, the Qatar Investment Authority, KKR, TPG, Silver Lake, and others will have exit opportunities as a result of the listing.
Reliance Smart, Freshpik, Reliance Digital, JioMart, Reliance Trends, 7-Eleven, Reliance Jewels, and other formats will remain part of Reliance Retail following the split of Reliance Consumer. After receiving all necessary regulatory permissions, the demerger of Reliance Consumer is anticipated to be finished by the end of this month.
Financial Dynamics of Reliance Retail
Reliance Retail has been streamlining its shop network over the last few quarters by shutting down underperforming locations. Reaching a double-digit operating margin is the goal. Reliance Retail reported $2.9 billion in operating profit on $38.7 billion in revenue in FY25. In FY25, its EBITDA margin was 8.6%; in the June quarter, it increased slightly to 8.7%. According to sources, although the discussions are still in their early stages, there might even be a consolidation of the models.
Dunzo Write-off & Market Strategy
All of Reliance Retail’s investments in the now-defunct hyperlocal delivery business Dunzo have been formally wiped off. The conglomerate’s 78,923 equity shares of Dunzo, which were internally valued at INR 1,645 Cr in FY24, were worth nothing during the fiscal year under review, according to Reliance Industries Ltd.’s (RIL) FY25 annual report.
According to the report, the now-defunct business generated INR 1 Cr in operating revenue in FY25. This comes more than seven months after Reliance Retail, the biggest shareholder in the hyperlocal firm, wrote off its $200 million investment in it, according to various media reports.
Kabeer Biswas, the CEO and cofounder of Dunzo, left his position that same month to join Flipkart’s Minutes, a fast commerce startup.
Quick
Shots
•Mukesh Ambani eyes $200 billion IPO
valuation for Reliance Retail.
•Reliance Jio listing expected in
2027, Reliance Retail IPO likely before that.
•FMCG arm Reliance Consumer demerged
into a direct subsidiary of Reliance Industries.
•Retail rationalisation underway –
closing underperforming stores to improve margins.
Nine initial public offerings (IPOs) will be available for subscription on mainboard and SME platforms this week, making it a busy week for primary markets. Investor interest is booming, ranging from well-known brands like Urban Company to specialised firms in engineering, metallurgy, and retail. Some issues have a great hunger among GMPs, while others have not yet gained traction. Here is the quick look at the upcoming IPOs.
Airfloa Rail Technology Ltd. IPO
The subscription period for the Airfloa Rail Technology IPO begins on September 11, 2025, and ends on September 15, 2025. On September 16, 2025, the allocation for the Airfloa Rail Technology IPO is anticipated to be finalised. The proposed listing date for Airfloa Rail Technology’s initial public offering (IPO) is set for September 18, 2025, on the BSE SME. The pricing range for Airfloa Rail Technology’s first public offering is INR 133.00 to INR 140.00 per share. An application’s lot size is 1,000. Based on the highest price, a retail individual investor must invest a minimum of INR 2,80,000.00 (2,000 shares). HNI requires a minimum investment of INR 4,20,000, or three lots (3,000 shares).
Shringar House of Mangalsutra
The subscription period for the Shringar House of Mangalsutra IPO begins on September 10, 2025, and ends on September 12, 2025. On September 15, 2025, the allocation for the Shringar House of Mangalsutra IPO is anticipated to be finalised. The proposed listing date for the Shringar House of Mangalsutra IPO is set for September 17, 2025, and it will be listed on the BSE and NSE. The pricing range for the Shringar House of Mangalsutra initial public offering is INR 155.00 to INR 165.00 per share. An application’s lot size is 90. Based on the highest price, a retail investor must invest a minimum of INR 14,850 (90 shares).
Dev Accelerator
The subscription period for the Dev Accelerator IPO begins on September 10, 2025, and ends on September 12, 2025. On September 15, 2025, the Dev Accelerator IPO allocation is anticipated to be finalised. The tentative listing date for the Dev Accelerator IPO is set for September 17, 2025, and it will be listed on the BSE and NSE. The pricing range for the Dev Accelerator IPO is INR 56.00 to INR 61.00 per share. An application’s lot size is 235. Based on the highest price, a retail investor must invest a minimum of INR 14,335 (235 shares).
Jay Ambe Supermarkets
The proposed listing date for the Ambe Supermarkets IPO is set for September 17, 2025, on the BSE SME. The price range for Jay Ambe Supermarkets’ IPO is INR 74.00 to INR 78.00 per share. An application’s lot size is 1,600. Based on the highest price, a retail individual investor must invest a minimum of INR 2,49,600.00 (3,200 shares).
The Urban Company
On September 15, 2025, the allocation for the Urban Company IPO is anticipated to be finalised. The proposed listing date for the Urban Company IPO is set for September 17, 2025, and it will be listed on the BSE and NSE. The price range for Urban Company’s IPO is INR 98.00 to INR 103.00 per share. An application’s lot size is 145. Based on the highest price, a retail investor must invest a minimum of INR 14,935 (145 shares).
Taurian MPS
The subscription period for the Taurian MPS IPO begins on September 9, 2025, and ends on September 11, 2025. On September 12, 2025, the allocation for the Taurian MPS IPO is anticipated to be finalised. The proposed listing date for the Taurian MPS IPO is set for September 16, 2025, on the NSE SME. The pricing range for the Taurian MPS IPO is INR 162.00 to INR 171.00 per share. An application’s lot size is 800. Based on the highest price, a retail individual investor must invest a minimum of INR 2,73,600.00 (1,600 shares).
Karbonsteel Engineering
The Karbonsteel Engineering initial public offering (IPO) will go live on September 9, 2025, and end on September 11, 2025. On September 12, 2025, the Karbonsteel Engineering IPO allocation is anticipated to be finalised. The proposed listing date for the Karbonsteel Engineering IPO is set for September 16, 2025, on the BSE SME. The price range for Karbonsteel Engineering’s IPO is INR 151.00 to INR 159.00 per share. An application’s lot size is 800. Based on the highest price, a retail individual investor must invest a minimum of INR 2,54,400.00 (1,600 shares).
Nilachal Carbo Metalicks
The Nilachal Carbo Metalicks initial public offering (IPO) will go live on September 8, 2025, and end on September 11, 2025. On September 12, 2025, the allocation for the Nilachal Carbo Metalicks IPO is anticipated to be finalised. The IPO of Nilachal Carbo Metalicks is scheduled to go public on the BSE SME on September 16, 2025. The IPO price of Nilachal Carbo Metalicks is INR 85.00 per share. An application’s lot size is 1,600. Based on the highest price, a retail individual investor must invest a minimum of INR 2,72,000.00 (3,200 shares).
According to various media reports, Tata Capital, a non-banking financial company (NBFC), is scheduled to commence its much-awaited $2 billion (INR 17,200 crore) IPO the week of September 22. Reports said that the corporation is anticipated to be worth approximately $11 billion as a result of the issue.
Tata Capital IPO Date & Expected Valuation
By September 30th, Tata Capital is probably going to launch on the stock market. According to the revised draft red herring prospectus (DRHP) submitted in August, the planned IPO of 47.58 crore shares consists of an offer for sale (OFS) of 26.58 crore shares and a new issue of 21 crore equity shares.
Tata Sons will sell 23 crore shares under the OFS component, and the International Finance Corporation (IFC) will sell 3.58 crore shares. At the moment, IFC owns 1.8% of Tata Capital, while Tata Sons controls 88.6%.
How Tata Capital Will Use IPO Proceeds?
In order to meet future capital needs, such as further lending, the company’s Tier-1 capital base will be strengthened with the help of the IPO proceeds. This IPO will grow to be the biggest public offering in the Indian financial industry if it is successful.
In addition, it will be the second public listing of the Tata Group in recent years, after Tata Technologies’ November 2023 debut. The IPO is being conducted in accordance with the listing mandate of the Reserve Bank of India (RBI), which stipulates that upper-layer NBFCs must be listed within three years of their categorisation. In September 2022, Tata Capital received its designation as an upper-layer NBFC.
Comparison with Other NBFC IPOs (HDB, Bajaj Housing Finance)
Similar to this, HDB Financial Services, HDFC Bank’s non-banking division, went public in June with an INR 12,500 crore offering. In September 2024, another upper-layer NBFC, Bajaj Housing Finance, made a spectacular market debut by completing the first day of trading at a 135% premium over the issue price.
Experts’ Review: Should You Invest in Tata Capital IPO?
According to market experts, IPO investors can feel confident in Tata Capital’s capacity to maintain performance because of its steady asset quality, increasing and diverse loan book, strong domestic ratings, and seasoned leadership. With total gross loans of INR 2.26 lakh crore as of March 2025—a compound annual growth rate of 37% during FY23 and FY25—Tata Capital has demonstrated steady performance.
With a compound annual growth rate (CAGR) of 10%, its profit after tax increased from INR 3,029.2 crore in FY23 to INR 3,646.6 crore in FY25. Asset quality has remained steady despite this explosive increase; at the end of FY25, combined gross bad loans were 1.9% and net bad loans were 0.8%, backed by a provision coverage ratio of 58.5%.
In FY25, its net interest margin was 5.2%, indicating strong spreads throughout its lending operations. Tata Capital reported a consolidated net profit of INR 1,041 crore in Q1 FY26, more than doubling the INR 472 crore earned in the same quarter the previous year. Total income increased to INR 7,692 crore from INR 6,557 crore for the quarter ended June 2024, continuing the upward trend into the current fiscal year.
As it prepares for an IPO on the New York Stock Exchange, Figma is looking for a fully diluted valuation of up to $16.4 billion, a move that could boost the tech IPO market, which is currently recovering, according to a Reuters story.
According to a statement made on July 21, the San Francisco-based design software company and some of its investors intend to raise up to $1.03 billion by offering almost 37 million shares at a price of $25 to $28 each.
More than a year after Adobe’s $20 billion proposed acquisition of Figma was thwarted owing to regulatory issues in the UK and Europe, this IPO represents a significant milestone for the company.
Figma’s IPO Details and Valuation Strategy
The recent recovery of the overall market and the success of initial public offerings (IPOs) such as Circle’s have rekindled interest in tech listings. Figma’s pro-Bitcoin position and social media buzz have already generated interest in the company’s impending debut. According to its filing, as of March 31, it had invested $70 million in Bitwise’s bitcoin ETF and intended to spend an additional $30 million.
The sale will be managed by Morgan Stanley, Goldman Sachs, Allen & Co., and J.P. Morgan, and the business will list under the ticker symbol “FIG.” The latest secondary share sale of Figma, which involved early investors and staff, brought the company’s worth down to $12.5 billion in 2024.
Figma’s Growth Metrics and Financials
With clients including SAP, Workday, and ServiceNow, Figma provides a collaborative design platform for creating websites, apps, and user interfaces. In the first quarter of 2025, the company’s revenue increased by 46%, while its net income tripled.
The collaborative elements of Figma encourage viral user adoption and sales efficiency, according to venture financier Tomasz Tunguz, who commended the company’s product-led growth model. Dylan Field, the CEO, has also indicated that the business is open to making daring purchases that might not seem like the norm at first.
Challenges Figma Faces Post-IPO
The IPO does, however, coincide with shifting market conditions. Figma recognises that AI-powered design tools may lessen reliance on customers, even as it makes investments in AI.
Additionally, the business cited stringent immigration laws as a barrier to employment and cautioned about the risks to global demand associated with tariffs and economic uncertainties. According to corporate lawyer Leslie Marlow, investors are giving preference to companies with solid financials and obvious routes to success in this changing climate.
According to reports, AceVector, the parent company of e-commerce site Snapdeal, is getting ready to submit its draft red herring prospectus (DRHP) for an INR 500 Cr IPO. According to a media report, which cited sources, AceVector’s public offering will mostly consist of a new share offering.
A media report that cited a source in the firm states that CLSA and IIFL are expected to serve as the proposed IPO’s bankers and that the proposed issue will be mostly primary capital. In addition to Snapdeal, AceVector is the parent company of Stellaro Brands, a house of brands platform, and Unicommerce, a listed e-commerce enabling platform.
In 2022, the three companies were combined under a single group brand. The largest shareholders in the combined business are SoftBank, Nexus Venture Partners, and cofounders Kunal Bahl and Rohit Bansal.
AceVector’s Ventures and Current Position
Snapdeal was founded in 2010 and caters to consumers in smaller cities and towns with an emphasis on value e-commerce. Non-metropolitan regions account for more than 80% of Snapdeal’s orders.
Clothing, home goods, and personal care items make up the great bulk of the products offered on the platform, a value-based shopping site, and most of them cost less than INR 600. On one occasion, though, the platform lost steam and was about to shut down.
In 2017, Snapdeal seriously considered merging with Flipkart, but the deal fell through. It gradually got back on track with its transition to a value-based e-commerce proposition. According to experts, about 65% of Indian internet buyers would come from Tier-2 and Tier-3 cities by 2030, which is in accordance with Snapdeal’s business strategy.
A technology platform called Unicommerce offers online retailers a complete solution for handling orders, inventory, shipping, and marketing. The company’s offerings will be expanded after Unicommerce purchased Shipway, a shipping solutions provider, in 2024 after a highly successful initial public offering (IPO) that was oversubscribed 168 times.
A platform called Stellaro Brands creates reasonably priced consumer brands. The primary brand is Rangita, which specialises in South Indian ethnic clothing sales for women both online and in-store. Through a variety of local and online means, Rangita is currently seeking to increase its presence in additional cities.
Indian Startups’ IPO Carnival Continues
AceVector is now the newest IT company to join the IPO trend as a result of this. This year, Ather Energy and ArisInfra have both gone public on stock exchanges. On 17 July, coworking giant Smartworks is anticipated to go public on the stock exchanges.
Moreover, 19 cutting-edge tech firms, including Groww, Meesho, Urban Company, and others, have submitted their DRHPs for listing with SEBI. The market regulator has given regulatory clearances to a number of them.
The massive coworking company WeWork India also received SEBI approval yesterday to begin its first public offering (IPO). A few days ago, Smartworks’ public offering ended with a 13.45X oversubscription, with buyers purchasing 13.9 Cr shares instead of the 1.04 Cr available.
As it prepares for a public offering, meat and seafood firm Captain Fresh became a public corporation last week.
In order to earn INR 1,200 crore through an initial public offering (IPO), Hero Motors has resubmitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI), the market regulator.
For both electric and non-electric powertrains, Hero Motors offers a broad range of solutions, including system-level powertrain design, prototype, validation, development, and delivery.
It has a major first-mover advantage in this industry since it was one of the first Indian companies to take advantage of the worldwide e-bike powertrain market opportunity. The company operated six production facilities in Thailand, the United Kingdom, and India as of December 31, 2024.
These facilities were positioned strategically to ensure cost-effectiveness and closeness to consumers.
Recent Financial Outlook of Hero Motors
Hero Motors earned INR 807.26 crore in the nine months before December 31, 2024, and its operational revenue increased from INR 914.19 crore in fiscal 2022 to INR 1,064.39 crore in fiscal 2024.
Furthermore, with a compound annual growth rate (CAGR) of 22.08%, gross profit increased from INR 281.38 crore in fiscal 2022 to INR 419.37 crore in fiscal 2024, reaching INR 330.47 crore in the nine months that concluded on December 31, 2024.
The profit after tax for the nine months ending December 31, 2024, was INR 22.39 crore, up from INR 17.04 crore in the fiscal year 2024.
Planning for the IPO
With a face value of INR 10, the initial public offering (IPO) consists of an offer for sale (OFS) by the promoters of up to INR 400 crore and a new issue of stocks worth up to INR 800 crore.
O P Munjal Holdings shares valued at INR 390 crore and Bhagyoday Investments and Hero Cycles shares valued at INR 5 crore each are included in the OFS. The following is how the money received from the new share offering will be distributed: INR 285 crore will be used to pay back, prepay, or fully or partially redeem some of the company’s outstanding debts.
Further, INR 237 crore will be used to finance potential acquisitions and other strategic projects. Lastly, INR 285 crore will be used for capital expenditures associated with buying equipment required to increase the capacity of the company’s facility in Gautam Buddha Nagar, Uttar Pradesh.
The issue’s book-running lead managers are ICICI Securities Limited, DAM Capital Advisors Limited, and JM Financial Limited; the offer’s registrar is KFin Technologies Limited.
In 2022, Hero Motors purchased a strategic interest in the British company Hewland from Hero International B.V., which had been connected to Hewland since 2017.
In 2021, it formed a joint venture with Yamaha Motors Japan to produce electric motors under the “HYM” brand, and operations started in 2022. It also entered the micro-mobility electric drive unit (“EDU”) market in 2023 under the “ESYNC” brand.
Shiprocket, a rapidly expanding logistics technology firm supported by Temasek and Zomato, has filed a draft red herring prospectus (DRHP) with Sebi in confidence through the pre-filing process, marking the first official step towards becoming public.
It is anticipated that the proposed IPO will cost between INR 2,000 and INR 2,500 crore. A new issuance component of around INR 1,000 to INR 1,200 crore will be part of this. Existing stockholders will make an offer to sell the remainder.
The offering is being advised by investment banks Bank of America, JM Financial, Kotak Mahindra Capital, and Axis Capital.
Shiprocket Opting for Confidential Filing Mechanism
Shiprocket has chosen to use the Sebi confidential filing process, which enables businesses to postpone making sensitive business information publicly available until closer to the initial public offering. Swiggy, Boat, PhysicsWallah, and other well-known firms have already taken this approach.
Established in 2012, Shiprocket offers complete logistics services to more than 100,000 small sellers and direct-to-consumer (D2C) firms throughout India. More than half of its merchant base currently resides in Tier-II and Tier-III cities, where the company has established itself as a leader in facilitating e-commerce shipments.
According to one of its investors, Shiprocket achieved an estimated 20–25% increase and turned cash-flow positive in FY25, even though the growth of e-commerce as a whole slowed.
Although its net loss increased to INR 595 crore in FY24 as a result of the financial impact of integrating several acquisitions, including RocketBox, Omuni, and Pickrr, it reported operating revenue of INR 1,316 crore, up 21% from the year before.
Shiprocket Focusing on Three Startegic Areas
These days, Shiprocket is concentrating on three key areas: rapid commerce, cross-border shipping, and digital payments. It is incorporating logistics platforms such as Porter, Borzo, and Shadowfax under its fast commerce vertical to enable hyperlocal delivery for small and medium-sized enterprises.
Additionally, it has started collaborating with Swiggy Instamart and Zepto to oversee stock replenishment for dark businesses.
In a funding extension round last year, Shiprocket raised INR 219 crore at a valuation of $1.2 billion, adding new investors Koch Group, MUFG Bank, Tribe Capital, and Susquehanna to its current backers Temasek, Bertelsmann, PayPal, and Info Edge Ventures.
IPO Getting Popular Among Indian Startups
According to a survey by venture debt firm InnoVen Capital, despite global obstacles, a number of high-quality startup companies are expected to go public in 2025, and the funding environment is also expected to improve this year.
Additionally, it stated that 47% of the 100 startup entrepreneurs who took part in the study anticipate hiring to pick up speed this year.
According to the India Startup Outlook Report, 63% of people who tried to raise money in 2024 had a positive experience. 79% of founders believe that by 2025, the fundraising climate will improve.
According to the report, 73% of startup founders now choose domestic initial public offerings (IPOs) as their preferred exit strategy, up from 64% in 2023.
As per the report, 28% of respondents think AI would significantly affect their business models over the next two to three years, mainly in the fintech and enterprise sectors, given the speed at which AI capabilities are developing. Hiring is also anticipated to increase in 2025.
Most companies focus on IPO (Initial Public Offering) only after they have attained unicorn status. But, is it actually the criteria for it? After all, this is one of the best measures to generate funds for your company.
In this blog, we will discuss the various aspects of IPO and how you can determine whether your company is ready for IPO status.
Initial Public Offering or IPO is the process through which a private corporation offers its shares to the public for the first time, in new stock issuance. It is also a measure for the company to raise capital from public investors.
It is one of the ways for private investors to fully realize their investments. Sometimes it also works as an exit strategy for the earlier investors or founders by fully realizing their gains. It provides the opportunity for the company to obtain capital through their primary market by offering its shares.
Usually, the companies hire investment banks to help with the market demand and set the price for IPO.
How IPO works?
Total Value of IPOs in Public Markets of India from 2015 to 2021
A company before IPO is considered a private firm. It only comprises of a few shareholders including the founders, cofounders, or professional investors like angel investors or venture capitalists.
IPO does not just allow the company to gather capital but, it also provides an opportunity to expand and grow faster. As stated earlier, typically the companies that have acquired unicorn status i.e., have reached the valuation of 1 billion, advertise their interest in going public.
However, private companies that have proven their calibre for profitability and have well-built fundamentals can also qualify for an IPO. A company should reach the maturity stage where it is able to stand up to the rules and regulations of the Securities and Exchange Commission (SEC).
Also, it should be able to take care of the benefits of the shareholders and its responsibility towards them. Overall the market competition and the company’s ability to deal with the list of requirements make it eligible for starting the IPO process.
When a company decides to go public, its previously private shares are converted into public shares. The worth of the shares already existing with the previous private shareholders becomes equal to the public trading price.
Now, every individual who is interested in investing in the company has the opportunity to contribute towards the company’s shareholders’ equity. Therefore, the new value of the company’s shareholders’ equity depends upon the number and price of shares it sells.
The IPO process is divided into two parts, the premarketing phase and the actual initial public offering. A company first advertises to underwriters, these are the individuals responsible for evaluating and assuming the company’s risk for payment.
These underwriters are requested for private bids after which the company chooses one or more of them to lead their IPO process. There can be several underwriters responsible for managing different parts of the process viz. filing, marketing, document preparation, etc.
The various steps included in the IPO process are as follows:
Proposals
After the company’s advertisement, underwriters submit their proposals describing their services, offering prices, share amount, as well as the time duration for the market offering.
Underwriter selection
The Company goes through the proposals and then chooses the underwriter and an underwriting agreement with terms is prepared.
Team formation
A team comprising of underwriters, lawyers, SEC experts, and Certified Public Accountants (CPA) is formed to lead the process.
Documentation
The primary document for IPO filing is the S-1 Registration Statement which is divided into two parts viz. the prospectus and the privately held filing information. This document also includes information regarding the expected filing date. It undergoes multiple revisions throughout the pre-IPO process.
Marketing & Updates
New stock of issuance is pre-marketed by the underwriters and executives to estimate the market demand for deciding the final offering price of the shares. Throughout the marketing process, underwriters revise the financial analysis based on market response. This might also include changing the issuance date or even the price of the IPO. The SEC as well as exchange listing requirements are well taken care of by the companies.
Board & Processes
A Board of Directors is formed to look after the financial and accounting information as per the audit requirements for quarterly reporting.
Issuance of Shares
The Company issues the shares on the pre-decided date. The primary shareholder issuance is received as cash and is recorded in the balance sheet as stakeholder’s equity.
Post-IPO
There are certain post-IPO provisions. The underwriters also have the opportunity to buy additional shares within a specified time duration.
The key objective of an IPO is to raise additional capital for a company. It also benefits the company through increased prestige and exposure amongst the public which may boost sales and profits. Moreover, IPO can help a company lower the cost of capital for both equity and debt.
Every year several companies start their journey as an IPO. India saw an IPO boom in 2021 with around 125 companies making their debut in the market.
Although the highest number of IPOs were registered in 2017 reaching a mark of 172, the capital raised was highest in 2021. These 125 companies raised around 18 billion USD in comparison to 10 billion USD by 170 companies in 2017.
Other than earning handsome returns, the companies listed in the IPO have also experienced strong gains in listings as well as an increased number of subscribers. Zomato and Tatva Chintan Pharma are an example of this.
But, what does it take for a company to be IPO-ready? In this section, we will discuss the factors that differentiate an IPO company from others.
The process to become IPO-ready is long and tedious. It isn’t so that a company thinks of it and makes an announcement the next day. A number of things have to be managed.
The process of getting IPO ready begins at least 12˗18 months before the actual announcement. Some of the major factors looked after during this time frame include:
Influential Board of Directors
When you are thinking of bringing your company to the public for funding, having a board comprised of members well recognized for their potential and decisions is always a good idea.
This plays a significant role in establishing your firm as a reputed and confident organization. This is why most companies focusing on getting IPO-ready look for admired experts from different sectors.
There are a number of examples in the market to prove this fact. For example, ixigo is an AI-based travel portal. Just sometime before the company filed for IPO they hired former IRCTC Chairman, Mahendra Pratap Mall as one of the board members.
Similarly, former HDFC MD, Aditya Puri joined API holdings, PharmEasy’s parent company, before their announcement of being an IPO contender.
Restructuring the Business
Internalrestructuring mightbe required by some businessesto put theirbest arm to work. However, just like the board, these decisions must also be taken well in advance before the IPO process begins.
For example, in Nuvoco Vistas, the cement arm of Nirma group, internal restructuring was undertaken before IPO. As a part of it, the Rajasthan cement unit was brought under the hold of the firm. The company had a 5000 crore IPO.
Physical or Digital
The experts claim that the coming time would make it mandatory for Indian businesses to work in both physical and digital ways. Taking this into caution, many deals are being made, where a digital business acquired a physical one and vice versa.
These deals are majorly done for scaling up, by filling in the gaps in the portfolio and strengthening different verticals of the company.
For example, Pharmeasy, an online pharmacy startup acquired a 66.1% stake in diagnostics chain thyrocare technologies, for Rs 4,546 crore, to diversify its business.
Experts believe that more such omnichannel transactions will follow in the coming time and such deals will soon become a part of pre-IPO requirements.
Executive Support
Another important but often ignored aspect of IPO is finance function. While most businesses focus on a board full of influential directors there is the least attention paid to the finance division.
The fact is that during the entire IPO process the company face a number of stumbling blocks. That is why they need a team who can back them up during their stresses.
Considering an experienced Chief Finance Officer (CFO) for the company is a great step to include in the IPO process. After going public, the CFO has to face challenges such as greater reporting, governance, regulatory, and audit standards.
Although not seen everywhere but the food delivery company Zomato, opted for a new CFO well before its IPO process. They promoted their Corporate Development Head, Akshant Goyal, to the position of CFO.
Businesses should also look for experienced individuals for the posts such as executives, company secretaries, etc.
Financial Transparency
Irrespective of business size or model, financial transparency forms an essential aspect of the IPO process. This is also a part of the equity strategy of the IPO-bound company.
Generally, financial statements for the past 3 years before the IPO announcement are considered optimum. Yet, experts believe that preparing financial statements and subjecting them to review by the board must begin well in advance.
In many cases, the lack of quality financial statements becomes the reason for missing the IPO timelines while other such reasons maybe not be SEBI ready.
For a startup or any business going public means more responsibility, financial discipline, planning as well as its execution.
There is a tough road ahead so before you finally decide to have IPO, the following checklist must be marked:
Growth
Investors will only be interested in spending their money on a healthy and thriving business. With growth, here we mean revenues. Growing revenue is an indicator that the company has more new customers, or old customers buying more products and that the customer churn rate is low.
Experts believe that revenue growth of 30% for the last two years will ensure that the company will be able to stand against its competitors in the market.
Capital
Although gathering resilient capital is the main reason for any business to opt for IPO but going public at a time when the business really needs capital can be the worst decision.
There should be enough cash in your balance sheet not just to attract investors but also to make you appear trustworthy. Just like you, investors are also here for the money. They want to see that soon their investment will be able to provide them with good returns.
Market Size
Large market size is an indicator of opportunity and potential. This means the company is able to expand without much hassle.
Although calculating the exact market size can be tricky, it is traditionally done by gauging the revenues of the legacy players. Also, factors like high growth, scaling up, etc., are indicators of good market size.
Competitors
Direct or indirect, having a track of competitors is important. The investors would only want to spend their money on a winning bet. The overall IPO opportunity as well as the total addressable market depends upon the competitors.
A more crowded market tends to receive a lower valuation. Unless there is a clear differentiation between the company under question and other competitors in the market, it is difficult to bag the deal.
A systematic, dominant company with an already large market is preferred by public investors.
This refers to the analysis per product revenue and cost. This helps in isolating the core cost of the business and helps gauge how the business would perform at maturity. It also analyses the long-term margins.
Leadership
Good leadership inspires the trust of investors. The CEO and CFO are the faces of the company. The reputed and recognized faces help attract public attention as well as investment.
So before thinking about IPO, think about the board of directors, executives, and finance in charge of your company.
Legal Compliance
The company should be a law-abiding entity and must have all the required licenses and other necessary formalities completed as per law. Not having any legal issues pending strengthens the trust of the investors.
Therefore, it is also essential to get rid of any vetting issues. Any vetting issues must be managed with utmost concern before the company is listed for IPO
It is always good to have a legal team to guide you through the process. They may also be helpful in the preparation of documentation submitted during the time of IPO processing, ensuring that they are as per the rules and regulations of the Security and Exchange Commission. Moreover, the company should be apt with the tax payment and other legal responsibilities.
Conclusion
We have shared with you an extensive checklist while trying to cover major aspects of the IPO process and the necessary details that must be taken care of before deciding to go for it. Still, the IPO process is complex and always requires expert advice.
It is essential to go through every detail carefully while making the final decision. The legal, as well as financial issues, must be handled as a priority without ignoring the other related functions.
FAQs
What are the benefits of buying an IPO?
There are several benefits of buying shares in an IPO such as:
High growth potential
High chance of big returns in the long term
More price-related transparency
Shareholder ownership authority
Small investments may provide great profit
How can I buy shares in an IPO?
Buying shares in an IPO is a complicated task. This is the common procedure for buying shares in an IPO:
Choose the right IPO
You must have a Demat account/trading account and PAN card with a broker that offers IPO access
Arrangement of Funds
Bidding of Shares
Get an allotment of shares
How can I find the best IPO?
To find the best IPO you need to do the following things:
