Mainboard IPO in India

A mainboard IPO is a public issue of equity shares by a company on the main trading segment of the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE), as distinguished from the SME platforms (NSE Emerge and BSE SME) that operate under a separate and lighter regulatory regime. Mainboard IPOs are governed by Chapters II through VIII of the SEBI (ICDR) Regulations, 2018 and apply to issuers whose post-issue paid-up equity capital will exceed ₹25 crore, or those below ₹25 crore who voluntarily choose the mainboard route and meet the mainboard eligibility criteria. The mainboard is the segment on which all large and most mid-sized Indian companies list; household names such as Zomato, LIC, Hyundai India, Tata Technologies, and Paytm are mainboard listings.

The mainboard Initial Public Offering (IPO) is the most widely discussed category of public issue in Indian financial media and retail investment discourse. The term “mainboard” is a regulatory and exchange category, not a measure of issuer quality; a company on the mainboard may have a smaller market capitalisation than some SME-listed companies, though in practice mainboard listings tend to dominate by size.

Regulatory eligibility

Standard eligibility routes

SEBI ICDR Regulation 6 defines two principal eligibility routes for mainboard issuers:

Route 1, profitability track record (Regulation 6(1)): the issuer must have net tangible assets of at least ₹3 crore in each of the preceding three full years (computed on a restated, consolidated basis), an average pre-tax operating profit of at least ₹15 crore during the most profitable three of the preceding five years, and a net worth of at least ₹1 crore in each of the preceding three full years.

Route 2, net tangible asset route (Regulation 6(2)): the issuer does not need to demonstrate the profitability track record of Route 1 but must have net tangible assets of at least ₹3 crore for each of the preceding three years.

Alternative route for technology and growth-stage issuers

For issuers that cannot meet Route 1 or Route 2, a category that includes many technology-sector, pre-profit, and high-growth companies, SEBI ICDR Regulation 6(4) provides an alternative route in which at least 75% of the net offer must be allocated to qualified institutional buyers (QIBs). This alternative is popularly called the “75% QIB route” or the “non-eligible issuer route”. The high QIB floor is SEBI’s way of ensuring that most of the allocation in these higher-risk issues is absorbed by institutional investors who are presumed to have better information-processing capacity than retail investors. The book running lead manager must certify in a due-diligence letter that the issuer is a genuine business with an appropriate use for the proceeds.

Most technology-sector IPOs of the 2020s, including Zomato (2021), Nykaa (2021), Delhivery (2022), and Ola Electric (2024), used Regulation 6(4) because they did not meet the profitability requirements of Regulation 6(1).

Post-issue paid-up capital

There is no explicit minimum paid-up capital for a mainboard issuer in the ICDR, but the practical lower bound is set by the minimum public shareholding requirement and market convention. The minimum public shareholding for a company listed after 2010 is 25% of the post-issue paid-up capital, which means that a fresh issue raising any meaningful amount for public markets makes sense only if the company already has a substantial capital base.

Disclosure standards

A mainboard issuer must prepare a full-length Draft Red Herring Prospectus (DRHP) complying with Schedule VI of the ICDR Regulations, covering:

• Audited financial statements for the preceding three financial years (under Ind AS for applicable companies).
• A reviewed stub financial statement if the most recent audit is more than six months old at the DRHP filing date.
• A mandatory industry report from an independent research firm, cited in the DRHP.
• Key Performance Indicators for the preceding three periods, alongside industry benchmarks, under the SEBI KPI circular of January 2022.
• Full risk-factor disclosure ordered by materiality.
• Related-party transaction disclosure for the preceding three years.
• Legal proceedings disclosure for all pending matters above materiality threshold.

The DRHP runs to 300-700 pages for a typical mainboard issue. SEBI’s observation letter on the DRHP typically takes thirty working days, after which the DRHP is converted to the Red Herring Prospectus (RHP) by inserting the price band, lot size, and subscription dates. The RHP is filed with the Registrar of Companies at least three days before the subscription window opens.

Investor categories and allocation

Under SEBI ICDR Regulation 6, the mainboard net offer is allocated as follows for issuers on the standard route (Route 1 or Route 2):

For issuers using the alternative Regulation 6(4) route:

An issuer may additionally reserve shares for eligible employees (up to 5% of post-issue paid-up capital at a discount of up to 10% to the issue price) and for shareholders of a listed parent or holding company (up to 10% of net offer). Anchor investors , a sub-category of QIBs who bid the day before the retail subscription opens, may receive up to 60% of the QIB allocation, with a minimum individual anchor allotment of ₹10 crore.

Book building on the mainboard

All mainboard IPOs of any commercial significance are conducted through book building . The issuer and BRLM set a price band (floor and ceiling with a maximum 20% spread permitted under ICDR Regulation 7; in practice 5-10% is common) and open a subscription window for a minimum of three working days. Retail investors apply at the cut-off price or at specific prices within the band; UPI ASBA is the dominant retail application channel. After the window closes, the BRLM presents the consolidated order book to the issuer, and a single final issue price is announced for all investor categories. Allotment follows the basis of allotment methodology on T+1, with demat credit on T+2 and listing on T+3.

Continuing obligations after mainboard listing

A mainboard-listed company becomes subject to the full SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), including:

• Quarterly and annual financial result disclosures.
• Continuous disclosure of material developments (regulation 30 of LODR).
• Corporate governance requirements including an audit committee, nomination and remuneration committee, and a defined independent-director quorum on the board.
• Related-party transaction approval requirements (LODR Regulation 23).
• Insider trading restrictions under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
• Promoter lock-in periods: 18 months for a minimum promoter contribution of 20% of post-issue paid-up capital, and six months for the portion of promoter holding above the minimum promoter contribution.

These obligations are substantially heavier than those applicable to SME-platform listed companies, which contributes to the decision by some growth-stage companies to prefer the SME platform or to defer their mainboard listing.

Historical evolution of mainboard IPO eligibility in India

The eligibility criteria for mainboard IPOs have evolved significantly since the early years of SEBI regulation, reflecting the changing composition of the Indian corporate sector and the policy priority of balancing investor protection with capital-market access.

Pre-SEBI era (before 1992)

Before the Securities and Exchange Board of India was established as a statutory body under the SEBI Act, 1992, the Indian primary market was regulated by the Capital Issues (Control) Act, 1947. Under this regime, the Controller of Capital Issues (CCI) approved each public issue and often set the issue price. This price-setting role meant that issues were frequently underpriced (from the issuer’s perspective) and oversubscribed, creating scope for allotment manipulation and secondary-market listing gains. The CCI regime was abolished simultaneously with the liberalisation of the Indian economy in 1991-92, making way for SEBI regulation.

SEBI DIP Guidelines era (2000-2009)

The SEBI (Disclosure and Investor Protection) Guidelines, 2000, were the first comprehensive codification of mainboard IPO eligibility criteria. The DIP Guidelines introduced the concept of eligibility routes: a standard track-record-based eligibility (five-year operations with three years of profitability) and a relaxed route for companies without the required track record (allowing listing if 60% of the net offer was allotted to QIBs). This relaxed route was the predecessor of the current Regulation 6(4) alternative route.

ICDR 2009 and ICDR 2018

The SEBI (ICDR) Regulations, 2009 replaced the DIP Guidelines and were themselves replaced by the SEBI (ICDR) Regulations, 2018. Each iteration refined the eligibility criteria: the track record requirements were adjusted, the QIB allocation percentage for the alternative route was tightened from 60% to 75%, and the disclosure requirements were progressively expanded to include KPI disclosures, enhanced related-party transaction disclosure, and the structured risk-factor ordering.

The promoter lock-in regime for mainboard IPOs

Promoter lock-in is a post-issue restriction on the sale of shares held by the issuer’s promoters, designed to prevent them from monetising their stake immediately after listing at the expense of public investors.

Under SEBI ICDR Regulations (as amended in 2021):

• Minimum promoter contribution (20% of post-issue paid-up capital): the shares constituting the minimum promoter contribution are locked in for 18 months from the date of allotment.
• Excess promoter shareholding (promoter holding above the 20% minimum): locked in for six months from allotment.

The promoter lock-in does not apply to pre-IPO shares held for more than one year before the IPO date that are offered in the OFS component (which by definition are being sold in the IPO). Lock-in applies only to shares that the promoter retains after the IPO.

SEBI relaxed the promoter lock-in rules in January 2022 (from the previous three-year and one-year periods) to align India with international practice and reduce the cost of using the IPO as an exit mechanism for private equity investors who had entered the company as pre-IPO shareholders rather than as promoters. This change has made it somewhat easier for late-stage growth companies to list on the mainboard.

Mainboard IPO versus QIP: capital-raising comparison

Companies already listed on the mainboard have an alternative to a fresh IPO for raising equity capital: the Qualified Institutions Placement (QIP), which allows listed companies to issue new shares to QIBs without the full RHP and SEBI-review cycle. The QIP is governed by SEBI ICDR Chapter VIII and requires only exchange approval (not SEBI approval), a board resolution, and a placement memorandum. The QIP can be completed in two to four weeks from board resolution to allotment, versus four to six months for a standard follow-on public offer (FPO).

The choice between an FPO (which includes retail investors through book building) and a QIP (which is restricted to QIBs) depends on the issuer’s priorities: a QIP is faster and cheaper but raises capital only from institutions; an FPO reaches a broader investor base but requires the full disclosure and regulatory review process.

References

1. Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, Regulations 6, 7, and Schedule VI.
2. SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2022/0002 dated 4 January 2022, Disclosure of Key Performance Indicators.
3. SEBI Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, T+3 Listing.
4. Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
5. SEBI ICDR Regulations, 2018, Schedule XIII, Anchor Investor Lock-in and Allocation.

See also

• Initial Public Offering , the broader IPO article
• SME IPO , the lighter-regulatory-burden variant
• Mainboard versus SME IPO , side-by-side comparison
• Book building , the price-discovery process
• Draft Red Herring Prospectus , the preliminary offer document
• Red Herring Prospectus , the binding offer document
• Anchor investor , the QIB sub-category in mainboard issues
• Qualified institutional buyer , the institutional category
• Non-institutional investor , the HNI category
• Retail individual investor , the retail category
• Basis of allotment , the SEBI allotment methodology
• IPO listing day , what happens on T+3
• National Stock Exchange , exchange operator
• Bombay Stock Exchange , exchange operator