IPO terms explained: a plain-English glossary for investors
Updated 26 October 2026 · 6 min read
An IPO page throws a lot of words at you in a small space: price band, lot size, cut-off, QIB, anchor, OFS, GMP, basis of allotment, T+3. None of them is difficult once explained, and knowing them makes it much easier to judge an issue and avoid simple mistakes while applying.
This glossary groups the terms in the order you meet them: before the issue opens, while bidding is on, and after it closes. Each IPO page on this site shows most of these items in one place — the price band, lot size, dates timeline, live subscription by category, GMP and a direct link to the registrar — so you can read the definitions here and see them in action there.
Before the issue opens
These terms come from the offer documents and the announcement of the issue. They tell you what is being sold, by whom, at what price and in what quantity.
| Term | What it means |
|---|---|
| DRHP | Draft Red Herring Prospectus. The first offer document, filed with SEBI for review. It has the business, financials and risks, but no price. |
| RHP | Red Herring Prospectus. The updated document filed before the issue opens. The price band is announced alongside it, at least two working days before opening. |
| Prospectus | The final document filed after the price is fixed, with the final issue price and issue size. |
| Issue size | The total value of shares on offer, usually stated at the upper end of the price band. |
| Fresh issue | New shares created by the company. The money raised goes to the company. |
| Offer for sale (OFS) | Existing shareholders (promoters, investors) sell some of their shares. The money goes to them, not the company. |
| Price band | The range within which bids can be placed, for example ₹100–105. The lower end is the floor price and the upper end is the cap price. |
| Lot size | The minimum number of shares in a bid. You apply in whole multiples of it. |
| Minimum investment | Lot size multiplied by the upper end of the price band. This is the amount blocked for one lot. |
| Book running lead managers | The merchant bankers who manage the issue, market it and help fix the final price. |
| Registrar | The agency that processes applications, runs the allotment and publishes allotment status. |
| Anchor investors | Large institutions that bid one working day before the issue opens, for a part of the QIB portion, with a lock-in on their shares. |
| Mainboard / SME | Mainboard issues list on the main NSE and BSE markets; SME issues list on BSE SME or NSE Emerge and are smaller, with larger minimum applications. |
While the issue is open
Book-built issues stay open for at least three working days, with bidding usually from 10 am to 5 pm. These are the words you meet while applying and while watching demand build up.
| Term | What it means |
|---|---|
| Bid | Your application: number of lots, price and category. |
| Cut-off price | An option, available only to retail, employee and shareholder-quota bidders, to accept whatever final price is fixed within the band. |
| ASBA | Application Supported by Blocked Amount. Your money is blocked in your own bank account and debited only for allotted shares. |
| UPI mandate | The request that appears in your UPI app after you bid through a broker. The bid is valid only once you approve it, by 5 pm on the closing day. |
| Pre-apply | A bid placed with your broker before the issue opens; it is sent to the exchange on opening day. |
| Retail (RII) | Individuals bidding up to ₹2 lakh. |
| NII / HNI | Non-institutional investors bidding above ₹2 lakh; split into small NII (₹2–10 lakh) and big NII (above ₹10 lakh). |
| QIB | Qualified institutional buyers such as mutual funds, banks, insurers and foreign portfolio investors. |
| Employee / shareholder quota | Reserved portions for eligible employees of the company or shareholders of its listed parent. |
| Subscription (×) | Shares bid for divided by shares on offer in a category. 20× means demand for twenty times the shares available. |
| GMP | Grey market premium: an unofficial, unregulated price at which some dealers trade IPO shares before listing. It is sentiment, not a forecast. |
| Kostak / subject-to-sauda | Grey market deals on applications: kostak is a fixed price paid regardless of allotment; subject-to-sauda is paid only if the application is allotted. |
After the issue closes
Since 1 December 2023 the whole post-issue process follows a T+3 timeline, where T is the closing day and days are working days.
| Term | What it means |
|---|---|
| Basis of allotment | The formula, approved with the stock exchange, that decides how many shares each category and applicant gets. Finalised on T+1. |
| Allotment status | Whether you received shares. Shown on the registrar's website, usually on the evening of T+1, and also on BSE, NSE and broker apps. |
| Lottery | In an oversubscribed retail or NII category, a computerised draw decides who gets the minimum application size. |
| Unblocking | Release of the blocked amount for unallotted bids, by T+2. Not a refund, because the money never left your account. |
| Credit of shares | Allotted shares appear in your demat account on T+2. |
| Listing date | T+3: the first day the shares trade on the exchange. |
| Pre-open session | A special 9:00–10:00 am session on listing day that discovers the opening (equilibrium) price; normal trading starts at 10 am. |
| Listing gain or loss | The difference between the listing price and the issue price. |
| Lock-in | A period during which certain holders, such as anchors and promoters, cannot sell their shares. |
Terms that are often confused
- Issue price vs listing price: the issue price is what you paid; the listing price is set by the market in the pre-open session on listing day.
- Blocked vs debited: blocked money stays in your account and earns interest; it is debited only for shares you receive.
- Not allotted vs rejected: not allotted means a valid bid lost the lottery; rejected means the bid failed technical checks.
- Subscription vs GMP: subscription is official exchange data on demand; GMP is unofficial chatter.
- Floor price vs cut-off: the floor is the lowest price in the band; cut-off means accepting the final price, which is usually the cap.
How to use this glossary
Read an IPO page from top to bottom with these definitions in mind. The price band and lot size tell you the amount blocked; the categories tell you where you fit; subscription by category tells you how crowded your category is; and the dates timeline tells you when allotment, credit and listing will happen. Once you apply, the "＋ I applied" button adds the IPO to My IPOs so you can follow allotment and listing without searching again.
Frequently asked questions
What is the difference between DRHP and RHP?
The DRHP is the draft document filed with SEBI for review and has no price. The RHP is the updated version filed before the issue opens, with the price band announced alongside it. The final prospectus comes after the price is fixed.
What does 50× subscription mean?
It means investors in that category bid for fifty times the number of shares reserved for them. In retail, it roughly means only a small fraction of applicants will get a lot through the lottery.
Is minimum investment the same as lot size?
No. Lot size is a number of shares; minimum investment is the lot size multiplied by the upper end of the price band, which is the amount blocked for one lot.
What does T+3 mean for an IPO?
T is the issue closing day. Allotment is finalised on T+1, shares are credited and blocked money released on T+2, and the shares list on T+3, counting working days only.
Is GMP an official number?
No. It comes from the unofficial grey market, which is unregulated and not recognised by SEBI. It reflects sentiment and can be wrong or manipulated.