Path to Mainboard IPO
The definitive guide for founders and CAs on NSE/BSE Mainboard listing — eligibility, DRHP process, SEBI regulations, and the strategic trade-offs of going fully public.
🎯 Who is this for?
Founders of companies with ₹100Cr+ revenue targeting a Mainboard IPO, and CAs advising large SMEs or mid-sized companies on their listing journey.
Mainboard vs SME — The Key Differences
| Parameter | SME IPO (NSE Emerge / BSE SME) | Mainboard IPO (NSE / BSE) |
|---|---|---|
| Min Post-Issue Paid-up Capital | ₹1 Cr – ₹25 Cr | ₹10 Cr minimum |
| Min Application Size | ₹2 Lakh (SEBI minimum) | ₹14,000–₹15,000 (1 lot) |
| Retail Investor Quota | 35% of non-anchor | 35% of non-anchor |
| QIB Quota | Not mandatory | 50% minimum (book build) |
| SEBI Involvement | Exchange approval only | SEBI observations mandatory |
| Market Maker | Mandatory 3 years | Not required |
| Typical IPO Size | ₹10Cr – ₹100Cr | ₹100Cr – ₹10,000Cr+ |
| Greymarket Presence | Active for SME IPOs | Very active |
Mainboard Eligibility — The Three Routes
Route 1 — Profitability
- →Net tangible assets ≥ ₹3 Cr in each of last 3 years
- →Distributable profits in at least 3 of last 5 years
- →Net worth ≥ ₹1 Cr in each of last 3 years
- →Issue size ≤ 5x pre-issue net worth
Route 2 — QIB
- →At least 75% allocation to QIBs mandatory
- →No minimum profitability requirement
- →Min project appraisal by scheduled bank/FI
- →No distributable profit requirement
Route 3 — Appraisal
- →Project appraised by bank/FI for ≥15% of issue size
- →At least 10% of issue size to QIBs
- →Flexible profitability criteria
- →Used by infrastructure/infra-adjacent companies
The Mainboard IPO Timeline
Pre-IPO Preparation
Appoint investment bank (Book Running Lead Manager). Conduct legal, financial, HR, technical due diligence. Restruct board, appoint independent directors.
DRHP Preparation & SEBI Filing
Comprehensive DRHP prepared (typically 400–600 pages). Filed with SEBI. SEBI has 30 days to issue observations.
SEBI Observations & Revisions
Address SEBI comments. May require multiple rounds of revision. Update financials if required.
Roadshow & Price Discovery
Domestic and international institutional roadshow. Anchor investor allocation (min 30% of QIB portion). Price band finalized.
IPO Open (3 days)
Public subscription. Book building. Final allotment basis finalized.
Listing
Shares listed on NSE/BSE. Lock-in period for promoters (18 months for 20% holding, 6 months for remaining).
Cost of a Mainboard IPO
| Expense Head | Typical Cost | Notes |
|---|---|---|
| Investment Bank / BRLM | 1.5–3% of issue size | Negotiable for larger issues |
| Legal Advisors | ₹50L – ₹2Cr | Indian + international counsel for large issues |
| Auditors (Reporting Accountants) | ₹25L – ₹75L | Big 4 preferred for mainboard |
| RTA | ₹15L – ₹40L | KFin, Link Intime dominate |
| SEBI Filing Fees | 0.005% of issue size | Capped at ₹25L |
| Advertising & PR | ₹75L – ₹3Cr | Newspaper ads mandatory |
| Rating / Grading (optional) | ₹15L – ₹50L | Not mandatory post-2012 but adds credibility |
| Total (₹200Cr issue) | ₹8–15Cr | ~4–7% of issue size |
🏦 Banker's Hat — What Banks Look For
- ✓Revenue visibility: 3 years of audited + 1 year projected with credible assumptions
- ✓Promoter credibility: Clean background check, no NPA history, no litigation
- ✓Corporate governance: Independent directors, audit committee, proper board structure
- ✓Industry tailwind: Companies in growing sectors command higher PE multiples
- ✓Anchor investors: Secured anchor allocation signals institutional confidence
🏢 Merchant Banker's Hat — The Strategic Reality
The biggest mistake founders make is rushing the IPO. A company listed at ₹100Cr market cap is not a success if it deserved ₹300Cr. Spend 6–12 extra months fixing your balance sheet, improving margins, and building an institutional investor story. The extra time pays 3x in IPO valuation.
⚠️ Post-Listing Compliance Burden
Many founders underestimate this. Listed companies must file: Quarterly financial results within 45 days, Annual report within 60 days of AGM, Board meeting intimations, related party transactions, insider trading disclosures, and more. Budget ₹50L–₹1Cr/year for compliance costs.
How Is It for Investors?
Mainboard IPO participation differs materially from SME IPOs — especially in HNI/NII allotment mechanics after SEBI's April 2022 reforms.
Mainboard NII Allotment (Post-April 2022)
The entire NII category is now governed by a draw of lots when oversubscribed — not proportionate allotment. This was designed to prevent ultra-rich investors from cornering allotments via leveraged funding.
| Sub-Category | Quota Split | Allotment Method | Typical Allotment if Selected |
|---|---|---|---|
| sNII (Small HNI) | ₹2L – ₹10L bids — 1/3rd of NII quota | Draw of lots if oversubscribed | Base minimum application size (usually just over ₹2 Lakhs) |
| bNII (Big HNI) | Bids above ₹10L — 2/3rd of NII quota | Draw of lots if oversubscribed | Base minimum application size (usually just over ₹10 Lakhs) |
Note: SME HNI allotment can still involve proportionate distribution after base-lot assignment — see our Path to SME IPO guide for SME-specific mechanics.
The Shareholder Quota — Two Legal Lottery Tickets
If the company going public has a listed parent (e.g., Tata Technologies and Tata Motors, or Bajaj Housing Finance and Bajaj Finance), holding even one share of the parent on the day the RHP is filed can make you eligible for the Shareholder Category.
SEBI allows an investor to apply in both the Retail Category and the Shareholder Category using the same PAN — two independent lottery entries, fully legal.
Practical Application Tips
- →PAN–Bank match: ASBA applications are rejected if the PAN on your Demat account does not match the PAN linked to the bank/UPI account used for payment — even if the mandate appears approved.
- →Day 3 vs Day 1: Applying early avoids technical glitches, but many experienced investors wait until Day 3 (before 2 PM) to observe QIB subscription on Days 1–2. High institutional interest is one signal of stronger fundamentals — though it does not change allotment odds.
- →GMP caution: Grey Market Premium reflects sentiment, not allotment probability. In SME IPOs especially, small float makes GMP easy to manipulate — do not apply solely based on GMP.
Official References
- SEBI Circular (April 2022) — NII allotment & ASBA processing
- SEBI Master Circular — ASBA facility (PAN/bank verification)
- SEBI — Public Issue Documents (DRHP/RHP filings)
Allotment rules and category thresholds are subject to SEBI amendments. Verify current circulars before applying.
⚠️ This article is for informational and educational purposes only. It does not constitute tailored investment information. Always consult qualified professionals before making financial decisions.
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