IPO glossary — GMP, ASBA, DRHP, cut-off price and other terms explained

The issue itself

IPO: Initial Public Offering — the first sale of a company's shares to the public, after which the stock trades on an exchange.
Mainboard vs SME IPO: Mainboard issues list on the main NSE and BSE platforms and are typically large. SME issues list on NSE Emerge or BSE SME, have far larger lot sizes running into lakhs, and trade thinly afterwards.
Book building: The standard Indian IPO mechanism. Rather than a fixed price, the company sets a band and investors bid within it; the final price is discovered from the demand collected.
Price band: The floor and cap between which bids may be placed, for example ₹560–₹590. The final issue price is set at or below the cap.
Cut-off price: A retail-only option to accept whatever final price is discovered. Selecting it means your bid cannot fail because you guessed the price too low.
Lot size: The minimum number of shares you can apply for, and the unit for every larger application. Retail applications are capped at ₹2 lakh.
Fresh issue: New shares created by the company, where the proceeds go into the business. Generally the more constructive half of an offer.
Offer for sale (OFS): Existing shareholders selling their holdings. The company receives none of this money. A very high OFS share is a common retail complaint, which is why we flag it on each IPO page.
Face value: The nominal accounting value of a share, often ₹1, ₹2 or ₹10. It has no bearing on what the share is worth.

ASBA: Application Supported by Blocked Amount. Your money is blocked in your own bank account rather than transferred, and continues to earn interest until shares are allotted.
UPI mandate: The approval you accept in your payment app to authorise the block. It must be approved before the cut-off, usually 5pm on the closing day, or the bid is invalid.
Basis of allotment: The document confirming how shares were distributed across categories. Allotment status can only be checked once it is published.
Oversubscription: More bids than shares available. In the retail category this triggers a lottery in which each application competes as a single lot.
Registrar: The agency processing applications and allotment — Link Intime/MUFG Intime, KFin Technologies, Bigshare and others. Where you check allotment status.
Anchor investor: A large institution allotted shares one day before the public window opens, accepting a lock-in. Anchor participation is widely read as a confidence signal.

QIB: Qualified Institutional Buyers: mutual funds, insurers, banks and foreign institutional investors. Usually reserved 50% of a mainboard issue.
NII / HNI: Non-Institutional Investors bidding above ₹2 lakh, split into sNII (₹2–10 lakh) and bNII (above ₹10 lakh). Around 15% of the issue.
RII: Retail Individual Investors bidding up to ₹2 lakh, typically 35% of the issue.

GMP: Grey Market Premium — the price per share private dealers will pay for an allotment before listing. Unofficial, unregulated, and not recognised by SEBI.
Kostak: A flat price paid for your entire application regardless of whether you receive an allotment. You take the money, the buyer takes the risk.
Subject to Sauda (STS): A price paid only if your application is allotted. Higher than Kostak, because the buyer pays only when there is something to buy.

DRHP: Draft Red Herring Prospectus — the first filing with SEBI, months before an issue. Its appearance is the earliest public sign an IPO is coming.
RHP: Red Herring Prospectus — the near-final document filed before the issue opens, carrying the price band, dates and risk factors.
SEBI: The Securities and Exchange Board of India, which regulates the securities market and clears offer documents. SEBI does not recognise or regulate the grey market.

Listing gain: The difference between the issue price and the price at which the stock opens, in percent. What GMP tries to anticipate.
Listing at a discount: Opening below the issue price. Applicants are immediately underwater. It happens regularly, including to heavily subscribed issues.
Lock-in: A period during which certain holders — promoters and anchor investors — may not sell. Expiries can add selling pressure.
P/E ratio: Share price divided by earnings per share. Comparing the post-issue P/E against listed peers is the usual first check on whether an issue is richly priced.
ROE / RoNW: Return on equity, or return on net worth: profit as a percentage of shareholders' funds. Above roughly 15% is considered strong.