IPO Glossary: 40 IPO Terms Explained in Plain English

This IPO glossary explains the terms you see on IPO pages, in offer documents and in the news, in plain English. They're grouped by topic: the offer, the bid, investor categories, documents, people and allotment. Each entry links to a longer guide where there is one.

IPO glossary: terms about the offer

IPO (initial public offering). The first sale of a company's shares to the public, after which the shares list on a stock exchange.

Fresh issue. New shares created and sold by the company. The money goes to the company, for the uses stated in the objects of the issue.

Offer for sale (OFS). Existing shareholders (promoters, investors) selling some of their shares. The money goes to them, not the company.

Issue size. The total value of the offer: fresh issue plus OFS, at the issue price.

Face value. The nominal value of a share in the company's accounts (often ₹1, ₹2, ₹5 or ₹10). It's unrelated to the issue price.

Book building. The method used by most IPOs: investors bid within a price band, and the final price is fixed from the demand.

Fixed price issue. An issue sold at one price announced in advance, with no band.

Mainboard and SME IPO. Mainboard IPOs list on the main market of NSE or BSE. SME IPOs list on NSE Emerge or BSE SME. See mainboard vs SME IPO.

Terms about the bid

Price band. The range within which bids are accepted, such as ₹114–₹120. The lower end is the floor price and the upper end the cap price.

Issue price. The final price at which shares are allotted, fixed after bidding closes.

Lot size (market lot). The minimum number of shares in a bid. Bids are made in multiples of it.

Minimum investment. Lot size multiplied by the cap price: the smallest amount you can bid.

Cut-off price. An option for retail, employee and shareholder bidders to accept whatever issue price is fixed. The amount is blocked at the cap price.

ASBA (Application Supported by Blocked Amount). The bidding method where the bid amount is blocked in your bank account and only debited for the shares allotted.

UPI mandate. A request in your UPI app to block the bid amount. It must be approved before the cut-off on the closing day. See how to apply for an IPO.

Bid/offer period. The days the issue is open for bidding: at least three and at most ten working days.

Subscription. How many times the shares on offer were bid for, by category. "Retail subscribed 12 times" means retail bids were 12 times the retail portion.

Oversubscription and undersubscription. Demand above or below the shares on offer.

Terms about investor categories

Retail Individual Investor (RII). An individual bidding up to ₹2 lakh in an issue.

Non-Institutional Investor (NII), or HNI. Individuals and entities bidding above ₹2 lakh, split into small NII (up to ₹10 lakh) and big NII (above ₹10 lakh).

Qualified Institutional Buyer (QIB). Institutions such as mutual funds, banks, insurers, pension funds and registered foreign portfolio investors.

Anchor investor. A QIB bidding at least ₹10 crore one working day before the issue opens, for up to 60% of the QIB portion. Their shares are locked in for 30 and 90 days.

Reservation. The share of the issue set aside for each category, for example 35% retail, 15% NII and 50% QIB for issuers under Regulation 6(1).

Employee and shareholder quota. Portions some issues reserve for the company's employees or for shareholders of a listed parent.

Terms about documents

DRHP (draft red herring prospectus). The first offer document, filed with SEBI for review and public comment.

RHP (red herring prospectus). The offer document filed with the Registrar of Companies before bidding opens, usually without the final price.

Prospectus. The final offer document, with the issue price, filed after pricing. All three are compared in DRHP vs RHP vs prospectus.

Abridged prospectus. A short summary of the offer document, attached to the application form.

Objects of the issue. The section listing how the company will use the fresh-issue money, such as repaying debt, capital expenditure or general corporate purposes.

Risk factors. The section listing risks the company and its advisers consider material to the business and the offer.

Terms about people and firms

Promoter. The person or group that controls the company, as named in the offer document. Promoters' holdings are locked in after listing.

Book-running lead manager (BRLM). The merchant banker that manages the issue: due diligence, the offer document, marketing and pricing.

Registrar to the issue. The firm that processes applications, finalises the basis of allotment with the exchange, and publishes allotment results.

Market maker. In SME IPOs, a broker required to quote buy and sell prices for the shares for at least three years after listing.

Terms about allotment and listing

Basis of allotment. The document, finalised with the designated stock exchange on T+1, that records how shares are divided between categories and applicants. See how IPO allotment works.

Allotment status. The result of your bid, published by the registrar. See how to check IPO allotment status.

T+3. The listing timeline: allotment on T+1, demat credit and refunds on T+2, listing on T+3, where T is the closing day. See the IPO timeline in India.

Listing price. The price at which shares open on listing day, set in a special pre-open call auction.

Lock-in. A period after listing during which certain shareholders (promoters, anchor investors, pre-IPO investors) cannot sell their shares.

Unofficial grey market premium (GMP). An unregulated price at which IPO shares are said to change hands informally before listing. It is not published by any exchange or regulator, and Eyepio doesn't track the unofficial GMP.

Frequently asked questions

What is the difference between the price band and the issue price?

The price band is the range in which bids are accepted. The issue price is the single final price, fixed within the band after bidding closes, at which shares are allotted.

What does "subscribed 10 times" mean?

Bids received were ten times the number of shares on offer in that category. It is measured separately for retail, NII and QIB investors, and for the issue as a whole.

What is the difference between a fresh issue and an offer for sale?

In a fresh issue the company creates and sells new shares and receives the money. In an offer for sale, existing shareholders sell their own shares and receive the money.

Who are anchor investors?

Qualified institutional buyers who bid at least ₹10 crore one working day before an issue opens. They can take up to 60% of the QIB portion, and their shares are locked in for 30 days (half) and 90 days (the rest).

Is the unofficial grey market premium published by an exchange?

No. The grey market is informal and unregulated, and any unofficial GMP quoted is not published by SEBI or the stock exchanges.

To see these terms in use, open any issue from the upcoming IPOs list or browse by month on the IPO calendar. A full list of rules is published by SEBI.