IPO Glossary

A mechanism where your application money remains in your bank account but is blocked by the bank. It is only debited if shares are allotted. Mandatory for all IPO applications in India.

Digital authorization for IPO applications allowing banks to block application amount. Retail investors can apply via UPI (up to ₹5 lakhs) using their UPI ID. Funds are debited only on allotment.

Minimum number of shares you can apply for in an IPO. Retail investors must apply in multiples of lot size. The minimum application amount for retail is kept around ₹14,000–₹15,000.

Option to apply at any price within the band. Applying at cut-off (upper price) means you are willing to pay whatever price is discovered. Highly recommended for retail investors for better allotment chances.

Applying in an IPO using more than one demat account with the same PAN or bank account. Strictly prohibited by SEBI. All such applications are rejected.

Document showing how shares were allotted in oversubscribed IPOs. Details the lottery process and number of shares allocated to each category. Published on BSE/NSE after IPO closes.

Official document released after IPO closure showing how shares were allocated across categories. Available on BSE/NSE websites and registrar websites.

The date on which shares are officially allocated to successful applicants. Usually 6 business days after IPO closes. You can check allotment status on the registrar's website or BSE/NSE.

SEBI-registered entity that handles IPO applications, allotment process, and refunds. Examples include KFin Technologies, Link Intime, Bigshare Services. You check allotment status on registrar's website.

Preliminary prospectus filed with SEBI before IPO approval. Contains company financials, risks, and IPO details but does not include the price band or issue dates. SEBI reviews it and may suggest changes.

Final prospectus filed with SEBI and stock exchanges containing all IPO details including price band, issue dates, objects of the issue, and updated financials.

A formal legal document issued by the company providing details about the IPO. Includes business overview, risk factors, financials, and use of proceeds. Every investor should read before applying.

The unofficial price at which IPO shares are traded in the grey market before stock exchange listing. Example: If issue price is ₹100 and GMP is ₹50, the expected listing price is ₹150. GMP is unofficial and can change daily.

Fixed price at which entire IPO applications are traded in the grey market, regardless of allotment status. Example: Kostak of ₹800 means you receive ₹800 per lot applied, even if you get no shares allotted.

Conditional rate in grey market paid only if shares are actually allotted. Higher than Kostak rate as it depends on allotment. Example: Subject ₹2,500 means you get ₹2,500 per lot only if allotted.

An unofficial/unregulated market where IPO shares and applications are traded before listing. Not regulated by SEBI. GMP, Kostak, and Subject rates emerge from this market. Trading here carries counterparty risk.

Individual investors applying for up to ₹2 lakhs worth of shares in a mainboard IPO. Retail category has 35% reservation. In oversubscribed IPOs, allotment is done via computerised lottery ensuring at least 1 lot per applicant.

Investors applying for more than ₹2 lakhs in a mainboard IPO. Also called HNI (High Net Worth Individuals). Have 15% quota reservation. NII allotment is proportionate, not lottery-based.

Investors applying for more than ₹2 lakhs in an IPO. Same as NII. Often split into sNII (₹2L–₹10L) and bNII (above ₹10L) sub-categories.

Large institutional investors including mutual funds, FIIs/FPIs, insurance companies, scheduled commercial banks, and AIFs. Have 50% quota in mainboard IPOs. QIB bids are most closely watched as an indicator of IPO quality.

Institutional investors (subset of QIBs) who are allotted shares one day before the IPO opens at the upper price band. Helps signal confidence. Subject to a 30-day lock-in period on 50% of allotted shares.

Component of IPO where existing shareholders (promoters/early investors) sell their shares to the public. Proceeds go to the selling shareholders, NOT to the company. High OFS ratio may be seen negatively.

New shares created and sold by the company in an IPO. Proceeds go directly to the company for purposes like expansion, debt repayment, or working capital. Fresh issue increases total share count (dilution).

IPOs of smaller companies listed on BSE SME or NSE Emerge platforms. Minimum application is 1 lot (usually ₹1–2 lakhs). Less SEBI scrutiny than mainboard. Higher risk but potentially higher returns. GMP is very active for SME IPOs.

IPO of companies listed on BSE or NSE main platforms. More regulatory scrutiny than SME IPOs. Minimum retail application of 1 lot (around ₹14,000–₹15,000). Most large company IPOs are mainboard.

When demand for IPO shares exceeds the number of shares offered. Expressed as "X times subscribed." Example: 50x means 50 times more applications than available shares. High oversubscription usually means strong listing gains.

Real-time data showing how many times an IPO has been subscribed across QIB, NII, and Retail categories. Updated multiple times daily during IPO open period. Available on BSE and NSE websites.

Price range (floor to cap) within which investors can bid for IPO shares. Usually expressed as e.g. ₹140–₹148. Most retail investors apply at the upper end (cut-off price) to maximise allotment chances.

Final price at which IPO shares are allotted to investors. For book-built IPOs, it is typically the upper end of the price band. Listing gains or losses are calculated relative to the issue price.

The nominal or par value of a share as stated in the company's documents. Usually ₹1, ₹2, ₹5, or ₹10. The issue price can be many times higher than face value. Dividends are often declared as a percentage of face value.

The amount above face value at which shares are issued. Example: If face value is ₹10 and issue price is ₹200, the premium is ₹190. Reflected in the securities premium account of the company.

Profit made by selling IPO shares on listing day. Calculated as: (Listing Price − Issue Price) × Number of Shares. GMP is used to predict listing gains before the listing date.

The opening price of IPO shares on the stock exchange on listing day. Discovered through a pre-open session on BSE/NSE. Can be above (premium listing) or below (discount listing) the issue price.

The day the IPO shares begin trading on BSE/NSE. Typically 6 business days (T+6) after the IPO closes. After SEBI reforms in 2023, the timeline was reduced from T+6 to T+6 for mainboard.

Founders or original owners of the company going public. Promoter shareholding before and after IPO is closely watched. High promoter holding post-IPO is generally seen as confidence in the business.

Mandatory period during which promoters and certain investors cannot sell their shares after IPO. Promoters are typically locked in for 18 months (minimum 20% holding) and 6 months for the rest. Prevents immediate dumping of shares.

India's primary capital markets regulator. All IPOs must be approved by SEBI. SEBI sets rules for disclosures, pricing, allotment process, and investor protection in IPOs.

Investment bank or financial institution that manages the IPO process. Responsible for due diligence, pricing, marketing (roadshows), and ensuring the IPO is fully subscribed. Also called Book Running Lead Manager (BRLM).

Investment bank appointed to manage the IPO. Responsibilities include filing DRHP with SEBI, marketing the issue, building the order book, and allotment. Big names include Kotak, Axis Capital, ICICI Securities, JM Financial.

Electronic account that holds shares in digital form. Mandatory to apply in any IPO. Maintained by NSDL or CDSL depositories through Depository Participants (DPs) like brokers and banks.