Introduction: The Rise of Tech IPOs in India
Over the past few years, India’s tech sector has witnessed a major transformation—not just in innovation and scale, but also in capital market participation. Companies like Zomato, Nykaa, MapmyIndia, and Nazara Tech have made headlines with their public listings. As tech companies continue to ride the digital wave, IPOs (Initial Public Offerings) have become a popular route for them to raise capital.
But here’s the catch: Not every tech IPO is a golden opportunity.
For retail investors, the subscription phase of an IPO can feel overwhelming—should you subscribe, how much, when, and why?
This article offers a clear, structured guide on how to approach tech IPO subscriptions in India, especially if you're a retail or first-time investor looking to make smart decisions.
➤ What Is a Tech IPO?
A tech IPO is when a technology-driven company lists its shares on a stock exchange for the first time to raise capital from the public. These companies may operate in sectors like fintech, e-commerce, SaaS (software as a service), IT services, gaming, or AI.
Example:
When Zomato went public in 2021, it became India’s first major online food aggregator to list on the stock market. The IPO was oversubscribed more than 38 times.
➤ Why Tech IPOs Are Attracting Indian Investors
Here’s why there’s so much buzz around tech IPOs in India:
➤ High Growth Potential – Tech startups often scale faster than traditional businesses.
➤ Digital Economy Boom – India’s internet penetration and UPI ecosystem are fueling digital adoption.
➤ Youth-Centric Products – Many tech IPOs (e.g., Paytm, Nykaa) target younger audiences, aligning with investor sentiment.
➤ Media Hype & Brand Recognition – Well-known brand names generate excitement and FOMO (fear of missing out).
➤ How Does the IPO Subscription Process Work in India?
Before we dive into the tips, let’s briefly understand how IPO subscriptions work.
➤ Book Building Process – Most tech IPOs follow this route where a price band is announced, and investors bid within that range.
➤ Retail Quota – 35% of the IPO is usually reserved for retail investors (individuals investing up to ₹2 lakh).
➤ ASBA System – You apply via your bank account, and the money remains blocked until the allotment is done.
➤ Allotment Basis – If oversubscribed, shares are allotted via a lottery system.
➤ Tech IPO Subscription Tips India: What Smart Investors Must Know
1. ➤ Evaluate the Business Model
Don’t get swayed by brand popularity alone. Ask:
✔ What does the company do?
✔ Is the business model profitable or still in a cash-burn phase?
✔ Who are the competitors?
Case in Point:
Paytm had massive brand recall but had a loss-making model when it went public in 2021. Post-IPO, the stock fell over 50% in a few months.
2. ➤ Check the Financials – Even If It’s a Tech Startup
Yes, many tech startups are loss-making initially, but revenue growth, unit economics, and EBITDA margins still matter.
Tip: Look at the company’s DRHP (Draft Red Herring Prospectus) filed with SEBI. It includes financials, risks, business outlook, and promoter details.
Example:
MapmyIndia had consistent profits and a unique niche (digital maps and GIS tech) before its IPO, which contributed to its strong post-listing performance.
3. ➤ Scrutinize the Valuation
Just because the IPO is in demand doesn’t mean it’s fairly valued. Use these checks:
➤ Compare with global peers (if possible).
➤ Look at Price to Sales (P/S) ratio or EV/EBITDA for early-stage tech firms.
➤ Be cautious if the valuation looks stretched versus future profitability.
Warning Sign:
A company with ₹100 crore revenue but a ₹10,000 crore valuation may be overhyped.
4. ➤ Understand the Use of IPO Funds
Is the company raising funds to expand operations, invest in R&D, or simply offer an exit to existing investors (Offer for Sale or OFS)?
➤ A mix of fresh issue and OFS is fine.
➤ But if 100% is OFS, existing investors may be exiting fully—this can be a red flag.
5. ➤ Track Grey Market Premium (GMP)—But Don’t Rely on It Blindly
GMP is the premium at which IPO shares are trading unofficially before listing. It’s a good indicator of demand, but not a guarantee.
Tip:
Use GMP as one of several data points—not your only decision-making factor.
6. ➤ Follow Institutional and Anchor Investor Interest
When big players like mutual funds, insurance companies, or global investors show interest during the anchor round, it's usually a good sign.
➤ Check the QIB (Qualified Institutional Buyer) subscription numbers.
➤ Strong QIB demand indicates confidence in the business.
7. ➤ Apply in Multiple Retail Accounts for Better Allotment Odds
Due to high oversubscription in popular tech IPOs, allotment becomes a lottery.
Pro Tip:
You can apply via your family members' accounts (PAN-linked demat required) to improve your chances of getting at least one lot.
8. ➤ Avoid Blindly Investing in Every Tech IPO
Not every tech company is the next Infosys or TCS. Some may never become profitable or face regulatory/political hurdles.
➤ Research first, subscribe later.
➤ It's okay to skip an IPO and buy later from the secondary market after listing.
➤ List of Popular Tech IPOs in India (2021–2024)
| Company | Year | Oversubscription | Listing Gain/Loss | Profitability |
|---|---|---|---|---|
| Zomato | 2021 | 38x | +52% | Loss-making |
| Paytm | 2021 | 1.89x | -27% | Loss-making |
| MapmyIndia | 2021 | 154x | +53% | Profitable |
| Nykaa | 2021 | 81x | +78% | Profitable |
| ideaForge Tech | 2023 | 106x | +93% | Profitable |
Conclusion: Patience Pays in Tech IPO Investing
Subscribing to a tech IPO in India can be rewarding—but only if done with due diligence. Tech companies offer scale, growth, and digital disruption, but they also carry higher risk and volatility.
Final Thoughts:
➤ Don’t get influenced by media hype alone.
➤ Understand the business, check the valuation, and read the DRHP.
➤ Think long-term—even if you plan to sell on listing day.
➤ And most importantly, only invest what you’re willing to risk.
With the right mindset and research, tech IPOs can add a powerful dimension to your investment portfolio.
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