Glossary · 33 terms
IPO
All ipo terms in the EquitiesIndia.com glossary — plain-English definitions written for Indian retail investors.
Allotment(Share Allotment)
Allotment is the process by which shares are formally distributed to successful IPO applicants after the subscription period closes, based on SEBI-prescribed rules for each investor category and the degree of oversubscription.
Anchor Investor(Anchor Allotment)
An anchor investor is a qualified institutional buyer (QIB) that is allotted shares in a book-built IPO on a discretionary basis one day before the subscription opens, providing a credibility signal to the market and locking in institutional demand before retail and other investors apply.
ASBA(Application Supported by Blocked Amount)
ASBA (Application Supported by Blocked Amount) is the mandatory payment mechanism for Indian IPO applications, where the applicant's bank account is blocked for the application amount during the subscription period instead of the funds being debited upfront, with the actual debit occurring only upon allotment.
Basis of Allotment(allotment basis)
The Basis of Allotment is the document published by the registrar to an IPO after the subscription window closes, detailing the methodology and final allotment ratios for each investor category — with retail investors receiving allotment through a computer-based lottery if oversubscribed, while NII (HNI) investors receive proportionate allotment and QIBs receive discretionary allotment by the issuer.
Book Building(Book Built IPO)
Book building is the price discovery process used in most Indian IPOs, where institutional and retail investors submit bids within a price band, and the final issue price (cut-off price) is determined by aggregating demand across all bids.
Draft Offer Document(DRHP)
The Draft Red Herring Prospectus (DRHP) is the initial offer document filed with SEBI by the lead merchant banker for a proposed mainboard IPO, initiating a review process in which SEBI issues observations within 30 days of receiving a complete filing, and those observations must be addressed before the final RHP is filed and the issue opens.
DRHP(Draft Red Herring Prospectus)
The Draft Red Herring Prospectus (DRHP) is the preliminary IPO registration document filed with SEBI by a company seeking to go public, containing detailed disclosures about the business, financials, risk factors, and intended use of proceeds, but without the final price or issue size.
Fixed Price Issue(fixed price IPO)
A Fixed Price Issue is a method of pricing a public offering in which the issuer and the merchant banker determine a single fixed offer price before the subscription period opens, requiring investors to apply at that predetermined price rather than bidding within a price band.
FPO (Follow-on Public Offer)(FPO)
A Follow-on Public Offer (FPO) is a public issuance of shares by a company that is already listed on a stock exchange, enabling the company to raise additional equity capital from the public through a fresh issue of shares or enabling existing shareholders to exit via an offer for sale within the FPO structure.
Grey Market Premium(GMP)
Grey Market Premium (GMP) is the unofficial premium at which IPO shares or applications trade in the informal, unregulated grey market before the company's official listing on a stock exchange.
IPO(Initial Public Offering)
An Initial Public Offering (IPO) is the process by which a privately held company offers its shares to the public for the first time on a recognised stock exchange, raising primary capital and/or providing an exit to existing shareholders, regulated by SEBI's Issue of Capital and Disclosure Requirements (ICDR) Regulations.
IPO Grading(IPO grade)
IPO grading was a SEBI-mandated process (operational from 2007 to 2014) by which SEBI-registered credit rating agencies such as CRISIL, ICRA, CARE, and Fitch India assigned a grade from 1 (poorest fundamentals) to 5 (strongest fundamentals) to every mainboard IPO, based on an assessment of the company's fundamentals relative to listed peers — SEBI subsequently made grading optional from 2014 and it gradually ceased to be used.
IPO Market Overview (India)
India's primary market has seen remarkable growth in IPO activity, with record years in 2021 and 2023-24 driven by new-age tech companies, consumer brands, and SMEs listing on BSE SME and NSE Emerge — with retail investor participation surging alongside ASBA, UPI-based applications, and digital brokers.
IPO Market Sentiment
IPO Market Sentiment refers to the use of primary market activity — specifically the number of IPOs filed, total IPO fundraising volume, average subscription levels, and listing day premiums — as a contrarian indicator of broader equity market cycle stage, with IPO boom periods historically associated with late-cycle market exuberance.
IPO Refund Timeline(IPO refund)
The IPO refund timeline refers to the mandated schedule by which unallotted application money is returned to unsuccessful IPO applicants — SEBI's ICDR Regulations require that listing occur within 6 trading days from the IPO closing date (T+6), within which ASBA-blocked funds are unblocked and refunds for non-ASBA applications are initiated.
IPO Subscription Data(IPO subscription)
IPO subscription data refers to the real-time and cumulative bid information published by BSE and NSE during the IPO subscription window, showing how many times each of the three investor categories — Retail Individual Investors (RII), Non-Institutional Investors (NII/HNI), and Qualified Institutional Buyers (QIB) — have subscribed to their respective portions of the issue.
IPO Valuation(IPO pricing)
IPO valuation is the process by which a company and its investment bankers determine the offering price range for a public issue, typically using a combination of price-to-earnings (P/E) multiples, EV/EBITDA multiples, and comparable company analysis benchmarked against listed peers, with the price band set in the Draft Red Herring Prospectus reflecting this assessment.
Listing Day(Listing Date)
Listing day is the first day on which a company's shares are traded on a stock exchange following an IPO, with the opening price determined through a special pre-open session that aggregates orders before regular trading begins.
Listing Gains(listing day gain)
Listing gains refer to the positive return earned by IPO allottees on the first day of trading (listing day), calculated as the percentage difference between the listing price (or the first traded price on a listed exchange) and the IPO allotment price — with Grey Market Premium (GMP) serving as an informal leading indicator of expected listing performance.
Lock-In Period (IPO)(lock-in period)
The lock-in period in an IPO context refers to the mandatory holding period during which certain categories of pre-issue shareholders — most importantly the promoters — cannot sell their shares after listing, with SEBI's ICDR Regulations 2018 specifying a lock-in of 18 months for the minimum promoter contribution and 6 months for the remaining promoter holding and certain non-promoter pre-IPO investors.
Lot Size(IPO Lot)
In the context of an IPO, lot size is the minimum number of shares an investor must apply for in a single application, with applications required to be in multiples of one lot, ensuring the minimum application value falls within SEBI's prescribed range.
Main Board IPO vs SME IPO(SME IPO)
A Main Board IPO is a public issue by companies meeting SEBI ICDR mainboard eligibility thresholds (minimum post-issue paid-up capital of Rs 10 crore and listing on NSE or BSE main board), while an SME IPO is a public issue by smaller companies listed on BSE SME or NSE Emerge platforms with a post-issue paid-up capital ceiling of Rs 25 crore, subject to lighter disclosure and financial track record requirements.
Merchant Banker(BRLM)
A merchant banker, also known as a lead manager or book running lead manager (BRLM), is a SEBI-registered financial intermediary that manages the entire process of a company's public offering, from due diligence and DRHP preparation to marketing, pricing, and post-issue compliance.
OFS vs IPO(OFS in IPO)
An Offer for Sale (OFS) within an IPO structure is the component through which existing shareholders (promoters or pre-IPO investors) sell their shares to the public, while the fresh issue (FI) component is the component through which the company raises new capital by issuing new shares; the two components may co-exist in an IPO, and their relative sizes determine whether the IPO primarily benefits the company or the selling shareholders.
Oversubscription(IPO Subscription)
Oversubscription refers to a situation where the total number of shares applied for in an IPO exceeds the number of shares available, with the ratio indicating how many times the issue was applied for relative to shares on offer.
Pre-IPO Investment(pre-IPO placement)
Pre-IPO investment refers to the acquisition of equity or convertible securities of a company before its public offering, typically through private placements at a discount to the expected IPO price, carrying significant illiquidity and valuation risk but offering the potential for listing-day gains if the IPO is priced above the pre-IPO entry.
Pre-IPO Placement(pre-IPO round)
A pre-IPO placement is an allocation of shares by a company to institutional investors or high-net-worth individuals at a negotiated price before the public offer opens, reducing the fresh issue size by the amount placed, subject to SEBI's ICDR Regulations which specify minimum pricing norms and lock-in periods for pre-IPO placees.
Price Band(IPO Price Band)
A price band is the range between a floor price and a cap price within which investors can bid for shares in a book-built IPO, with the final issue price (cut-off price) determined by demand aggregated across all bids.
Registrar to an Issue(RTI)
A Registrar to an Issue (RTI) is a SEBI-registered intermediary appointed by the issuing company to manage the administrative and operational processes of a public issue, including processing applications, maintaining application data, conducting the allotment, handling refunds, and crediting shares to successful allottees' demat accounts.
RHP (Red Herring Prospectus)(RHP)
A Red Herring Prospectus (RHP) is the final offer document filed by a company with SEBI and the Registrar of Companies (RoC) after receiving SEBI's observations on the Draft Red Herring Prospectus, containing all material disclosures about the company except the final issue price and the number of shares offered, which are determined through the book-building process.
Roadshow(roadshow)
An IPO roadshow is the series of pre-issue investor meetings and presentations conducted by a company's management and lead bankers to institutional investors in the days before the public offer opens, with the objective of gauging investor interest, building an order book for the book-building process, and allocating shares to anchor investors up to one day before the IPO opens.
SME IPO(SME IPO)
An SME IPO is a public offering of shares by a small or medium enterprise on the dedicated SME platforms of the Bombay Stock Exchange (BSE SME) or the National Stock Exchange (NSE Emerge), governed by a simplified regulatory framework designed to make equity capital more accessible to smaller businesses.
UPI-Based IPO Application(UPI IPO)
The UPI-based IPO application mechanism allows retail investors to apply for IPOs through their stockbroker or third-party platforms by authorising a payment block on their bank account using a UPI ID (Virtual Payment Address), eliminating the need to apply directly at a Self-Certified Syndicate Bank (SCSB) branch.