IPO Glossary

Every important term, in plain language — from ASBA to the grey market.

The basics8

IPO (Initial Public Offering): A private company selling its shares to the public for the first time and listing them on a stock exchange.
Mainboard IPO: A full-size listing on NSE/BSE — larger companies, lot values usually around ₹15,000, stricter norms.
SME IPO: A small-and-medium-enterprise listing on NSE Emerge or BSE SME — smaller companies, much larger minimum lots (often ₹1–2 lakh), its own rules.
FPO (Follow-on Public Offer): An already-listed company issuing fresh shares to the public again.
Fresh issue: New shares created by the company — the money raised goes to the company itself.
Offer for sale (in an IPO): Existing shareholders (promoters/investors) selling their shares in the issue — money goes to the sellers, not the company.
DRHP / RHP: Draft and final offer documents filed with SEBI — the authoritative source for everything about the issue (financials, risks, objects).
Issue size: The total value of shares offered — fresh issue plus offer-for-sale.

Price band: The range (e.g. ₹95–100) within which investors bid in a book-built issue.
Book building: Price discovery by collecting bids at different prices within the band.
Cut-off price: The final issue price discovered after bidding. Retail investors may bid "at cut-off", accepting whatever it turns out to be.
Floor price / Cap price: The bottom and top of the price band.
Face value: The nominal value of a share (often ₹1, ₹2 or ₹10) — unrelated to the market price.
Premium: The difference between issue price and face value.
Fixed price issue: An issue sold at one pre-announced price instead of a band (common in SME IPOs).

ASBA: Application Supported by Blocked Amount — your bid money stays blocked in YOUR bank account and is debited only if shares are allotted.
UPI mandate: The UPI-app approval that creates the ASBA block for applications made through platforms like Investoyard. Capped (currently ₹5,00,000).
Lot size: The minimum number of shares per bid; you can bid in multiples of a lot.
Bid: Your application: number of lots plus a price (or cut-off). Up to 3 bids per application.
Self-PAN rule: Every applicant — including family — must use their OWN PAN, demat and bank/UPI. Third-party funding is not allowed.
Syndicate ASBA form: The physical bank form used for large bids (above ₹5,00,000) routed via a syndicate member.
Sponsor bank: The bank that routes UPI mandate requests between exchanges and investors.
Registrar: The agency (e.g. MUFG Intime, KFin) that processes applications, allotment and refunds for the issue.

Retail (RII): Individual investors bidding up to ₹2,00,000. Get the cut-off option and (usually) at least 35% of a mainboard issue.
NII / HNI: Non-institutional investors bidding above ₹2,00,000 — split into sHNI (₹2–10 lakh) and bHNI (above ₹10 lakh). No cut-off bids.
QIB: Qualified institutional buyers — mutual funds, insurers, FPIs. Usually up to 50% of a mainboard issue.
Anchor investor: Large institutions allotted shares the day before the issue opens, at the issue price, with lock-ins (50% for 30 days, rest 90 days).
Shareholder quota: A reserved portion for existing shareholders of the promoter/parent listed company (bid ≤ ₹2,00,000 alongside a regular application).
Employee quota: A reserved portion (sometimes discounted) for the company’s employees.
Market maker (SME): A member obliged to quote buy/sell prices in an SME stock after listing — a reserved portion of the issue goes to them.

Subscription (×): Demand versus supply: 5× means bids for five times the shares on offer.
Oversubscription: Bids exceeding the shares offered — allotment then happens by lottery (retail) or proportionately.
Undersubscription: Bids falling short. Below 90% overall, the issue fails and all money is released.
App-wise subscription: Demand measured in number of applications instead of shares — what actually drives retail lottery odds.
Bid book: The exchange’s live record of all bids, published category-wise through the day.

Basis of allotment: The registrar’s formula for distributing shares when oversubscribed — finalised a day or two after close.
Lottery: In an oversubscribed retail book, applicants are picked at random for ONE lot each.
Allotment status: Whether you got shares — check on Investoyard, the registrar or the exchange with your PAN.
Unblocking / refund: If not allotted, the ASBA block on your account is simply released — money never left.
Demat credit: Allotted shares landing in your demat account, typically a day before listing.
Listing day: The first trading day. Price discovery happens in a pre-open session; mainboard debuts have no circuit limit on day one (SME debuts do).
Listing gain: The difference between listing price and issue price, in %.
T+3 listing: Issues must now list within three working days of close.

GMP (Grey Market Premium): The unofficial premium at which an IPO reportedly changes hands before listing. Unregulated, unverifiable, and often wrong — information only, never advice.
Kostak: A fixed price for selling an entire IPO application in the grey market, regardless of allotment.
Subject to sauda: A grey-market deal paid only if the application is actually allotted.
Estimated listing price: Band ceiling + GMP — simple arithmetic, not a prediction.

Buyback: A company repurchasing its own shares — usually via a tender offer at a fixed (often premium) price.
Record date: The date on which you must hold shares to be eligible for a buyback/corporate action.
Entitlement ratio: How many shares you may tender per share held, per category.
Acceptance ratio: The share of tendered stock actually bought back — the number that decides your profit.
Small shareholder: Holdings worth ≤ ₹2,00,000 on record date — 15% of every buyback is reserved for them.
OFS (Offer for Sale): Promoters selling stakes through a special exchange window: institutions bid on day T, retail on T+1, at or above a floor price.
Floor price (OFS): The minimum bid price in an OFS; bids below are rejected.

SEBI: The securities regulator — approves offer documents and sets the rules for every public issue.
NSE e-IPO / BSE iBBS: The exchanges’ electronic IPO application platforms that members (like our merchant-banker rail) submit bids through.
SCORES: SEBI’s online complaint system for market grievances.
Depositories (NSDL / CDSL): Where demat accounts live. NSDL IDs: IN + 6 digits with an 8-digit client ID; CDSL: one 16-digit number.

Educational content only — not investment advice. Definitions simplify the rules; the offer documents and SEBI regulations are authoritative.