IPO Glossary: 35+ IPO Terms Explained in Simple Words

Plain-English meanings of the 35+ terms you meet in IPO documents, apps and news.

IPO documents, broker apps and news are full of jargon. Here are the terms you will meet most often, in plain English, from A to Z. For step-by-step help, start with how to apply for an IPO.

IPO terms A–Z

Allotment: The shares actually given to an applicant after the IPO closes. In oversubscribed issues it is decided by lottery for retail investors.
Anchor investor: A large institution that commits to buy shares one working day before the IPO opens. Anchor shares are locked in: half for 30 days and the rest for 90 days after allotment.
ASBA: Application Supported by Blocked Amount: the bid amount stays in your bank account, blocked, and is debited only if you get shares.
Basis of allotment: The document finalising how many shares each category and applicant gets, prepared by the registrar with the exchange on T+1.
Book building: The price discovery process in which investors bid within a price band and the final issue price is set based on demand.
bNII (big HNI): Non-institutional investors applying for more than ₹10 lakh. They get two-thirds of the NII portion.
Cut-off price: An option for retail, employee and shareholder bidders to accept the final issue price, whatever it is within the band. It keeps the bid valid.
DRHP: Draft Red Herring Prospectus: the first offer document a company files with SEBI (or the exchange, for SME IPOs) before the IPO.
Face value: The nominal value of a share (often ₹1, ₹2, ₹5 or ₹10), unrelated to the price at which the IPO is sold.
Fresh issue: New shares issued by the company. The money goes to the company for the stated objects of the issue.
GMP (grey market premium): The unofficial premium at which IPO shares trade before listing. Issue price plus GMP gives an indicative listing price.
Issue size: The total amount raised in the IPO: fresh issue plus offer for sale.
Kostak: A fixed amount an unofficial grey-market dealer pays for an IPO application, regardless of allotment.
Listing date: The day the shares start trading on the exchange, T+3 after the issue closes. Trading starts at 10 AM after a special pre-open session.
Listing gain: The difference between the listing price and the issue price, usually shown as a percentage.
Lock-in period: A period during which certain shareholders (promoters, anchor investors, pre-IPO investors) cannot sell their shares.
Lot size (market lot): The minimum number of shares you can bid for, and the multiple in which you bid. For mainboard IPOs one lot is worth ₹10,000–15,000.
Mainboard IPO: An IPO that lists on the main board of NSE and BSE, as opposed to the SME platforms.
Market maker: A broker who must quote buy and sell prices for an SME stock for three years after listing to provide liquidity.
NII (non-institutional investor): Individuals, HUFs, companies and others bidding above ₹2 lakh, also called HNIs. Split into sNII and bNII.
Objects of the issue: What the company plans to do with the money from the fresh issue, for example repaying debt or funding expansion.
OFS (offer for sale): Existing shareholders selling their shares in the IPO. This money goes to the sellers, not the company.
Oversubscription: When bids exceed the shares on offer. "Subscribed 40 times" means bids were 40 times the shares available in that category.
Price band: The range, such as ₹190–200, within which investors can bid in a book-built IPO. The upper end is the cap price.
Promoter: The person or group that controls the company. Promoter holding before and after the IPO is disclosed in the prospectus.
QIB (qualified institutional buyer): Mutual funds, insurers, banks, foreign portfolio investors and other institutions. They get up to half of a typical IPO.
Refund / unblocking: Release of the blocked money for bids that did not get shares, done on T+2.
Registrar (RTA): The agency (such as KFin Technologies, MUFG Intime or Bigshare) that processes applications and runs the allotment.
RHP (Red Herring Prospectus): The final offer document filed before the IPO opens, with the price band and issue details. Read it before investing.
RII (retail individual investor): An individual applying for up to ₹2 lakh. Retail gets at least 35% of a typical mainboard IPO.
SME IPO: An IPO by a small or medium enterprise that lists on NSE Emerge or BSE SME, with larger lots and different rules.
sNII (small HNI): Non-institutional investors applying between ₹2 lakh and ₹10 lakh. They get one-third of the NII portion.
Subject to Sauda: A grey-market deal where the dealer pays for an IPO application only if it gets an allotment.
Subscription status: How many times each category has been bid for, updated through the subscription period.
T+3 timeline: SEBI's schedule for listing within three working days of the issue closing (T): allotment on T+1, credit and refunds on T+2, listing on T+3.
UPI mandate: The request you approve in your UPI app to block the bid amount. Bids count only after approval, which must happen by 5 PM on the closing day.

This guide is for education only and is not investment or tax advice. Rules change; we review our guides regularly and note the last update date above.