In the busy streets of Mumbai, you might see a brand-new restaurant opening its doors for the very first time with a grand celebration. That is an IPO (Initial Public Offering). It’s the debut, the first time the public can get a taste of the business. Now, imagine a famous, well-established hotel chain that has been running for years decided to open ten new branches and needs more money to do so. They invite the public to buy more shares in their already successful business. That is an FPO (Follow-on Public Offering).

Both IPOs and FPOs are ways for companies to raise Equity Capital (money from the public) instead of taking a loan from a bank. However, for an investor, they represent very different stages of a company's life. While an IPO is about catching a rising star early, an FPO is about betting on a horse that has already proven it can run. In 2026, with Indian markets reaching new heights, understanding whether you are buying into a debut or a sequel is the first step to smart investing.

What is an IPO?

An Initial Public Offering is when a private company decides to go public by listing its shares on stock exchanges like the NSE or BSE for the first time.

The Goal: To raise massive capital for expansion or to give early investors (like founders) a way to sell their stake.
The Risk: Higher, because the company has no market history. You rely entirely on their DRHP (Draft Red Herring Prospectus).

What is an FPO?

A Follow-on Public Offering happens when a company that is already listed on the stock exchange issues additional shares to the public.

The Goal: Usually to pay off old debts or fund a specific new project.
The Risk: Lower, because you can already see how the stock has performed over the last few years on your trading app.

Key Differences: IPO vs. FPO (2026)

Feature

IPO (Initial Public Offering)

FPO (Follow-on Public Offering)

Status of Company

Unlisted (Private)

Already Listed (Public)

Timing

First-time share sale.

Subsequent share sale.

Objective

Expansion or Exit for Founders.

Debt reduction or New Projects.

Pricing

Fixed Price or Price Band.

Usually at a discount to Market Price.

Risk Level

High (Unknown market reaction).

Lower (Historical data available).

Information

Limited to Prospectus.

Full Public Disclosure history.

Two Types of FPOs you should know

Not all FPOs are the same. In the Indian market, they generally fall into two buckets:

Dilutive FPO: The company creates and issues new shares. This increases the total number of shares in the market, which dilutes (reduces) the value of existing shares.
Non-Dilutive FPO: Existing big players (like Promoters or Directors) sell their privately held shares to the public. No new shares are created, so the total count remains the same.

New SEBI Rules for 2026

The Securities and Exchange Board of India (SEBI) has introduced stricter norms to protect retail investors:

T+3 Listing: The time between the offer closing and the shares hitting your demat account has been reduced to just 3 days.
Anchor Investor Lock-in: 50% of the shares bought by big institutional Anchor investors are now locked for 90 days (up from 30) to prevent them from dumping shares immediately after listing.
SME IPO Profits: For smaller companies (SME IPOs), SEBI now mandates a minimum operating profit (EBITDA) of ₹1 Crore to ensure only quality businesses go public.

Frequently Asked Questions (FAQs)

Which is more profitable: IPO or FPO?

IPOs often offer listing gains (quick profits on the first day), but they are riskier. FPOs are usually more stable and often offered at a 3-5% discount to attract investors.

Can I apply for an FPO if I don't own the company's shares?

Yes. Any retail investor with a Demat account can apply for an FPO, just like an IPO.

Why would a company offer FPO shares at a discount?

Since the shares are already trading in the market, the company offers a small discount to encourage people to buy the new shares instead of just buying from the regular market.

What is a Book Building IPO?

It is where the company gives a price range (e.g., ₹500 - ₹510) and investors bid for the price they are willing to pay. The final price is decided based on demand.

Does an FPO always reduce the stock price?

Often, yes. Because an FPO increases the supply of shares in the market, the price might dip slightly when the FPO is announced.

What is the minimum investment for an IPO/FPO?

In India, you usually have to apply for 1 Lot, which typically costs between ₹14,000 to ₹15,000.

How do I check the allotment status?

You can check it on the website of the Registrar (like Link Intime or KFintech) using your PAN number or Application number.

Is an FPO safer for beginners?

Generally, yes. Beginners can look at the company’s past 3-5 years of balance sheets and stock charts before deciding, which is not possible in an IPO.

Can I cancel my IPO/FPO bid?

Yes, as long as the issue period is still open, you can modify or cancel your bid through your broker's app.

What is Oversubscription?

It means more people want to buy the shares than are available. In such cases, shares are allotted via a lottery system or on a pro-rata basis.

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