Stock Market Basics

IPO (Initial Public Offering)

The process by which a company sells its shares to the public for the very first time, raising money and becoming publicly listed.

An IPO (Initial Public Offering) is the process a private company goes through to sell shares to the public for the first time, becoming a “publicly listed company” in the process. This happens in the primary market.

Why Companies Do an IPO

  • To raise a large amount of money without taking on debt (loans)
  • To give early investors and founders a way to convert their ownership into cash
  • To increase the company’s visibility, credibility, and access to future fundraising

What Happens After the IPO

Once the IPO is complete, the company’s shares get listed on a stock exchange (like NSE or BSE), and from that point on, investors buy and sell those shares among themselves in the secondary market — the company itself no longer receives money from this everyday trading.

Example

When a well-known Indian company launches an IPO, it typically announces a price range (e.g., ₹72–₹76 per share), and interested investors apply to buy shares within that range through their broker or bank app during a fixed application window.

See how an IPO fits into the full stock market lifecycle in What Is the Stock Market? A Complete Beginner’s Guide.