In recent years, the avenues for companies to go public in India have expanded beyond the traditional Initial Public Offering (IPO) to include the option of Direct Listing. Each method has its own set of advantages and disadvantages, catering to different business needs and market conditions. In this article, we’ll explore the pros and cons of both IPO and Direct Listings, as well as guide how Indian investors can participate in these offerings through their Demat accounts.

IPO: The Traditional Route


  1. Access to Capital: An IPO offers companies access to a large pool of capital from public investors, which can be used for expansion, debt repayment, or other corporate purposes.
  2. Brand Visibility: Going public through an IPO can enhance the company’s brand visibility and reputation, attracting more customers and business opportunities.
  3. Liquidity for Stakeholders: Existing shareholders, including founders, employees, and early investors, can monetize their investments through the sale of shares on the stock exchange.


  1. Regulatory Compliance: Companies going public through an IPO must comply with stringent regulatory requirements, including disclosure norms, which can be time-consuming and costly.
  2. Price Uncertainty: The price of shares in an IPO is determined through a complex process involving market demand and valuation, which may not always reflect the true value of the company.

Direct Listing: A New Alternative


  1. Price Discovery: Direct listings allow for greater price discovery as the shares are directly listed on the exchange without a predetermined price set by underwriters, potentially resulting in a more accurate valuation.
  2. Cost Savings: Companies can save on underwriting fees and other expenses associated with an IPO, making direct listings a more cost-effective option.
  3. Flexible Lock-up Periods: Unlike IPOs, which typically have lock-up periods for existing shareholders, direct listings offer more flexibility in terms of when shareholders can sell their shares.


  1. Limited Capital Raise: Direct listings do not involve the issuance of new shares, so companies cannot raise capital directly through this method.
  2. Lower Visibility: Compared to IPOs, direct listings may receive less media attention and investor scrutiny, potentially affecting the initial trading volume and liquidity of the shares.

Investing in IPOs: Opening a Demat Account

For Indian investors looking to participate in IPOs, the first step is to open a Demat account. A Demat account, short for a dematerialized account, is an electronic account that holds securities such as stocks and bonds in digital format. Here’s how you can open a Demat account and invest in IPOs:

  1. Choose a Broker: Select a reputable brokerage firm that offers Demat account services and facilitates IPO investments. Some of the top brokers in India include Zerodha, ICICI Direct, HDFC Securities, and m.Stock by Mirae Asset.
  2. Fill Out an Application: Complete the Demat account opening application form provided by your chosen broker. You’ll need to provide personal details, proof of identity, proof of address, and other required documents.
  3. Verification Process: Once you’ve submitted the application form and documents, the broker will verify your information as per regulatory requirements.
  4. Activate Your Account: Once your account is verified, you’ll receive your Demat account details along with login credentials. You can then activate your account and start trading.
  5. Investing in IPOs: Keep an eye out for the latest IPOs through market announcements or financial news sources. When a company announces its IPO, you can apply for shares through your Demat account using the broker’s online platform or mobile app.


Both IPOs and Direct Listings offer viable paths for Indian companies to access the public markets and raise capital. While IPOs provide access to a broader investor base and greater brand visibility, direct listings offer cost savings and greater price discovery. For investors, opening a Demat account with a reputable broker is the first step to participating in IPOs, with various brokerage firms offering competitive charges for IPO investments. Whether a company chooses an IPO or a direct listing depends on its specific goals, market conditions, and regulatory considerations.