Every year, famous brands that we use in our daily lives like Zomato, Nykaa, or the upcoming 2026 giants like Reliance Jio and PhonePe decide to move from being Private to Public. But why would a successful business owner want to share their profits with thousands of strangers? Going public is a massive transformation that changes the DNA of a company.

It’s not just about a one-day celebration at the stock exchange; it's a strategic move to fuel the next 20 years of growth. While the most obvious reason is money, there are several other hidden benefits that help a company become a market leader. In 2026, with the Indian economy booming, companies are using IPOs as a powerful tool to scale up faster than ever before. Here is a simple breakdown of the real reasons why companies take this big leap.

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Raising Massive Capital for Growth

The most common reason for an IPO is the need for a huge amount of money (capital) that a single bank or a few private investors cannot provide.

Fresh Issue: In an IPO, when a company issues Fresh Shares, the money goes directly into the company’s bank account.
Usage: This cash is used to build new factories, expand into international markets, or invest in expensive Research & Development (R&D) for new products. It is essentially petrol for the company's growth engine.

The Exit Door for Early Investors

Before a company goes public, it is often funded by Venture Capitalists (VCs) or Angel Investors who took a risk when the company was just a small idea.

Cashing Out: These early investors don't want to stay forever; they want to see a profit. An IPO provides them with an exit route.
Offer for Sale (OFS): Through an OFS, these old investors can sell their shares to the public and walk away with their multi-bagger returns, while you get to take their place as a new partner.

Paying Off Old Debts

Many companies grow by taking heavy loans from banks. These loans come with high-interest rates that eat into the company’s profits every month.

Debt-Free Future: By launching an IPO, a company can use the public's money to pay off these expensive loans. This makes the company Debt-Free, allowing it to use its future profits for growth instead of paying interest.

Comparison: Why Public is Different from Private

Feature

Private Company

Public Company (After IPO)

Money Source

Founders or a few Banks.

Millions of Public Investors.

Visibility

Known only in its industry.

Household Name (Brand Awareness).

Compliance

Simple, private reporting.

Strict SEBI Rules (High Transparency).

Stock Value

Based on estimates.

Real-time Market Price (NSE/BSE).

Brand Building and Prestige

An IPO is the biggest marketing campaign a company can ever have. The news of an upcoming IPO is discussed on TV, in newspapers, and on social media for weeks.

Trust Factor: Being a Listed Company in 2026 acts as a badge of honor. Customers, suppliers, and even international partners trust a public company more because they know it follows strict SEBI regulations and shows its accounts to everyone.

Using Stock as Currency

Once a company’s shares are trading on the stock exchange, those shares become as good as cash.

Acquisitions: If a large public company wants to buy a smaller startup, it doesn't always need to pay cash. It can simply give its own shares to the startup's owners.
Talent (ESOPs): To hire the best engineers or managers, public companies offer ESOPs (Employee Stock Option Plans). Employees are more likely to join a public company where they can see the live value of their shares and sell them easily.

Transparency and Better Management

When a company goes public, it can no longer hide its mistakes. It must publish its profit and loss every 3 months.

Professionalism: This public pressure forces the management to be more disciplined and efficient. It ensures the company is run professionally by a board of directors, rather than just like a family business.

Frequently Asked Questions (FAQs)

Does the company founder lose control after an IPO?

Not necessarily. Most founders keep a Majority Stake (more than 50%) to ensure they still make the big decisions. However, they are now answerable to the shareholders.

Is every IPO launched to grow the business?

Not always, Sometimes, an IPO is 100% an Offer for Sale, where the company gets no new money, and only the old owners are selling their stake. Always check the Objects of the Issue in the RHP.

Why would a company not want to go public?

Because of the Cost and Compliance. Public companies have to spend crores every year on audits, legal fees, and reporting to SEBI. They also lose their privacy.

Can a company go back to being private?

Yes, this is called Delisting. The owners must buy back all the shares from the public at a fair price to take the company private again.

What is Market Capitalization?

Once a company goes public, its total value is calculated as: Total Shares × Current Market Price. This tells the world exactly what the company is worth every second.

Do companies launch IPOs when the market is Down?

Rarely. Most companies wait for a Bull Market (when prices are rising) because they can get a better price for their shares when investors are feeling optimistic.

Who decides the final date of the IPO?

The company, along with its Investment Bankers, chooses a window based on market conditions and SEBI approvals.

Can a company launch an IPO twice?

No. An Initial offering happens only once. If a public company needs more money later, it launches a Follow-on Public Offer (FPO) or a Rights Issue.

Does an IPO mean the company is successful?

Not always. It just means the company has met the minimum criteria to list. Some companies fail even after a big IPO if they don't manage their growth well.

Why is 2026 a big year for Indian IPOs?

Because many Unicorn startups (valued over ₹8,000 Crore) that started 10 years ago have now become profitable and are ready to give an exit to their early investors.

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