IPO Glossary

A complete glossary of IPO terms used in India - from ASBA to subscription times, explained simply.

Essential IPO Terms

New to the IPO world? Here are all the terms you'll encounter, explained in plain language.

A – D

  • ASBA – Application Supported by Blocked Amount. Your bank blocks the application amount instead of debiting it. Funds are only transferred if you receive an allotment.
  • Anchor Investor – Large institutional investor who subscribes before the IPO opens (1 day prior), lending credibility to the issue.
  • Book Building – A price discovery method where investors bid within a price band. Final price is set based on demand.
  • Cut-off Price – The final issue price determined after book building. Retail investors can apply at cut-off to accept any price within the band.
  • DRHP – Draft Red Herring Prospectus. The document filed with SEBI before an IPO, containing company financials, risks, and use of proceeds.

E – L

  • Face Value – The nominal value of a share (e.g., ₹1, ₹2, ₹10). Not the same as issue price.
  • Fixed Price Issue – An IPO where the price is fixed in advance (no bidding). Common for smaller SME IPOs.
  • Floor Price – The minimum price in a price band.
  • GMP – Grey Market Premium. See What is GMP?
  • HNI / NII – High Net-worth Individual / Non-Institutional Investor. Applies for more than ₹2 lakh.
  • IPO – Initial Public Offering. A private company offering shares to the public for the first time.
  • Kostak – Premium paid in the grey market for an IPO application form itself.
  • Listing Date – The day shares start trading on NSE/BSE.
  • Listing Gain / Loss – The profit or loss made on the listing day (listing price vs. issue price).
  • Lot Size – Minimum number of shares per application (e.g., 1 lot = 50 shares).

M – R

  • Market Maker – Required in SME IPOs to provide liquidity post-listing.
  • Offer for Sale (OFS) – Existing shareholders sell their stake in the IPO. Company receives no new funds from OFS shares.
  • Oversubscription – When demand exceeds shares available. E.g., “50x subscribed” means 50 times more applications than shares.
  • PAT – Profit After Tax. Key profitability metric.
  • Price Band – The range within which investors can bid (e.g., ₹420–₹440). Final price is set at or within this range.
  • Prospectus (RHP) – Red Herring Prospectus. Final version of DRHP filed after SEBI approval, includes the price band.
  • QIB – Qualified Institutional Buyer. Includes mutual funds, banks, insurance companies, and FIIs. Gets 50% of shares.

S – Z

  • SEBI – Securities and Exchange Board of India. The regulator that oversees IPOs.
  • SME IPO – Small and Medium Enterprise IPO, listed on NSE Emerge or BSE SME. Smaller companies, higher risk, higher potential reward.
  • Subscription Times – How many times an IPO was subscribed. 1x = fully subscribed. 10x = 10 times oversubscribed.
  • UPI Mandate – The payment approval you give via your UPI app when applying for an IPO. Must be approved before the cutoff time.
  • Valuation (P/E) – Price-to-Earnings ratio. Used to assess whether an IPO is priced fairly relative to earnings.
Missing a term? If you come across an IPO term not listed here, feel free to reach out and we'll add it to this glossary.