IPO, or Initial Public Offering, is a golden gateway for investors looking to buy shares of a company when it is first listed on the stock market. IPO investments in 2025 are attracting a lot of attention as more startups and established private companies are going public to raise capital. If done correctly, investing in IPOs can be a lucrative way to grow your wealth.
However, making money from IPO investments requires proper research, strategy, timing, and an understanding of risks. In this guide, we break down everything you need to know about IPO investing in 2025, including key steps, benefits, risks, and smart tips.
Table of Contents
What Is an IPO?
IPO stands for Initial Public Offering. It marks the first time a private company offers its shares to the public through a stock exchange. Companies issue IPOs to raise capital for expansion, pay off debt, or increase their public profile. Investors who buy shares during an IPO become part-owners of the company.
Why IPOs Are Attractive to Investors in 2025
- Early Access: IPOs provide an opportunity to invest in promising companies at an early stage.
- High Growth Potential: IPO companies, especially in emerging sectors like tech and green energy, offer the potential for strong returns.
- Market Excitement: IPOs often generate buzz, and initial days of listing can see sharp price surges.
- Diversification: Investing in IPOs can diversify your stock portfolio.
Step-by-Step Guide to Earning Money from IPO in 2025
The IPO market in 2025 is expected to remain active with many startups and unicorns looking to go public. Sectors like fintech, EV, AI, renewable energy, and healthcare will lead IPO filings. Retail participation is likely to increase due to better awareness and digital platforms.
Step 1: Research the Company Before Investing
Never apply blindly to an IPO just because it’s trending. A company’s financials, future outlook, and sector relevance should be assessed first.
- Read the Red Herring Prospectus (RHP) for details about business, risks, and promoters.
- Compare valuations with listed peers in the same industry.
- Look at profitability trends and debt levels.
- Consider market buzz, but don’t let it drive your decision entirely.
Step 2: Open a Demat and Trading Account
To invest in IPOs, you must have an active Demat and trading account.
- Choose brokers like Zerodha, Upstox, Angel One, or Groww.
- Ensure your bank account is linked and UPI is enabled.
- KYC must be completed with Aadhaar, PAN, and mobile number.
Step 3: Track Upcoming IPOs
Staying informed helps you act early and prepare for promising listings.
- Monitor IPO calendars on Moneycontrol, NSE, BSE, and broker platforms.
- Analyze grey market premium (GMP) to gauge early investor interest.
- Shortlist IPOs with strong fundamentals and high institutional demand.
Step 4: Apply via ASBA or UPI Method
Applying for an IPO is simple once your account is ready.
- Use the UPI method via broker apps for a quick process.
- Or apply via your net banking under the ASBA facility.
- Apply within the retail investor quota (₹2 lakh limit).
- Applying through multiple Demat accounts in the family can improve chances.
Step 5: Check Allotment and Refunds
After applying, you’ll need to track the allotment status.
- Check the IPO registrar site (e.g., Link Intime, KFintech) or NSE/BSE allotment pages.
- If not allotted, the blocked amount is refunded automatically.
- Allotment emails/SMS will be sent to your registered contact.
Step 6: Plan Your Listing Day Strategy
Listing day can bring quick profits, but smart planning is key.
- If there’s a strong listing gain, consider booking partial or full profits.
- If you believe in long-term growth, hold on for better returns.
- Avoid panic-selling due to short-term volatility.
Step 7: Monitor Stock Post-Listing
Making money from IPOs isn’t just about listing gains—it’s also about long-term potential.
- Follow company news, quarterly earnings, and industry updates.
- Reassess if fundamentals weaken or external risks increase.
- Add more during dips if the company is strong.
Step 8: Know the Tax Rules
Profits from IPOs are taxable, so plan accordingly.
- Short-term capital gains (sold within 1 year): 20% tax.
- Long-term gains (held over 1 year): 12.5% tax beyond ₹1.25 lakh gain.
- Maintain accurate records for tax filing.
Key Factors That Impact IPO Returns in 2025
- Company Fundamentals: Revenue, profit, debt, and assets.
- IPO Pricing: Overpriced IPOs may underperform.
- Subscription Demand: High demand usually means strong listing gains.
- Market Trends: Bullish or bearish market mood affects listing performance.
- Sector Trends: Sector-specific demand impacts valuations.
Benefits & Risks
Tips for Making Money from IPO
- Don’t follow hype blindly; do your own research.
- Prefer companies with strong financials and proven models.
- Monitor GMP but don’t rely solely on it.
- Apply within your budget; avoid loans for IPO investing.
- Track SEBI alerts and registrar announcements.
Real Examples of IPO Success Stories
IRCTC (Indian Railway Catering and Tourism Corporation)
IRCTC’s IPO in October 2019 was priced at ₹320 per share. On its listing day, the stock more than doubled, closing at ₹728. Investors who held the stock saw stellar returns, as it touched over ₹5,000 at its peak in less than two years. The monopoly in railway catering, ticketing, and tourism services gave it a strong economic moat, making it a rare public sector multibagger.
Zomato
Zomato’s IPO in July 2021 was a defining moment for India’s new-age tech startups. Priced at ₹76, the stock listed at a premium of over 50%. Although it has seen volatility, early investors who exited during the listing rally made substantial gains. It showcased how investor appetite for digital-first, loss-making companies had evolved in India.
Nykaa
Nykaa’s IPO, launched in November 2021 at ₹1,125 per share, attracted significant interest due to its unique e-commerce and beauty brand model. On debut, it listed at a whopping ₹2,001, giving over 75% gains on day one. While the stock corrected later, those who sold early booked impressive profits, making it one of the fastest-growing IPOs in women-led businesses.
Common Mistakes to Avoid in IPO Investing
- Applying without research
- Chasing every IPO listing
- Ignoring valuation
- Falling for rumors or unverified GMP data
- Holding weak companies too long
Long-Term Strategy for IPO Investors
- Don’t invest in IPOs just for listing gains
- Identify companies with long-term growth vision
- Build a diversified IPO-based portfolio
- Regularly monitor company performance post-listing
- Reinvest gains wisely
IPO investments in 2025 can be a smart way to grow your wealth if you approach them strategically. With increased participation, a vibrant market, and robust platforms, retail investors have a golden opportunity to tap into promising companies early. Focus on fundamentals, avoid speculation, and treat IPO investing as part of your broader wealth-building journey.
Whether you are a beginner or an experienced investor, understanding IPO investing thoroughly can help you earn substantial returns and minimize risks in 2025 and beyond. Start small, learn continuously, and always invest wisely.
Frequently Asked Questions (FAQs)
Q1: What is the 3 day rule for IPO?
The 3-day rule for IPOs suggests waiting three days after listing to invest, allowing volatility and hype to settle.
Q2: Is IPO good for beginners?
Yes, IPOs can be good for beginners if researched well, but they also carry risks and market volatility. Invest cautiously.
Q3: Can I sell my IPO immediately?
Yes, you can sell your IPO shares immediately after listing, but prices may fluctuate sharply on the listing day.
