IPO Glossary

102 IPO and market terms, explained in simple words. Search or jump to a topic.

Basics

IPO (Initial Public Offering): The first time a private company sells its shares to the public and lists them on a stock exchange (NSE / BSE).
Mainboard IPO: An IPO that lists on the main NSE / BSE platforms. Usually bigger companies with stricter listing rules.
SME IPO: An IPO by a small or medium company that lists on NSE Emerge or BSE SME. Lot sizes are large and trading is thinner than mainboard.
Issuer: The company that is selling shares in the IPO.
Primary market: Where new shares are first sold by the company (the IPO). Trading after listing happens in the secondary market.
Secondary market: The normal stock market where shares are bought and sold between investors after listing.
Listing: The day the IPO shares start trading on the exchange.
Listing gain: The difference between the listing price and the issue price, usually shown as a %.
Listing price: The first traded (pre-open) price of the shares on the listing day.

Price

Issue price: The final price at which shares are allotted, usually the upper end of the price band.
Price band: The range (lower and upper price) within which investors can bid in a book-built IPO.
Cut-off price: Bidding at cut-off means you agree to pay whatever final issue price is fixed. Retail investors can tick this option.
Upper price band: The highest price in the band. Most retail investors bid here or at cut-off.
Fixed price issue: An IPO with one fixed price instead of a band. Common in SME IPOs.
Book building: The process of discovering the price by collecting bids within a price band.
Face value: The nominal value of one share (e.g. ₹1, ₹2, ₹10). It is not the market price.
Premium: The amount by which the issue price is above the face value.

Application

Lot size / Market lot: The minimum number of shares you must bid for. You apply in multiples of one lot.
Minimum investment: Lot size × upper price band — the money needed to apply for one lot.
Application: One bid made from one PAN. Allotment is counted per application, not per lot, for retail.
Bid: The number of shares and price you apply for.
UPI mandate: A request on your UPI app to block the IPO amount. You must approve it before the cut-off time.
ASBA: Application Supported by Blocked Amount — your bank blocks the money and debits it only if you get allotment.
Mandate cut-off: The last time to approve the UPI mandate, usually 5 PM on the closing day.
Pre-apply: Placing your IPO bid with a broker before the IPO opens; it is sent to the exchange on the opening day.
Demat account: The account that holds your shares electronically. You need one (with a trading account) to apply.
PAN: Permanent Account Number. Only one application per PAN is counted in a category.

Issue

Fresh issue: New shares created by the company. The money goes to the company.
Offer for Sale (OFS): Existing shareholders (promoters or investors) selling their shares. The money goes to them, not the company.
Issue size: Total value of the IPO = fresh issue + offer for sale.
Objects of the issue: What the company will do with the fresh-issue money (e.g. repay debt, build a plant, working capital).
Promoter: The founders or controlling shareholders of the company.
Promoter holding (pre / post): The % of the company owned by promoters before and after the IPO.
Lock-in: A period during which certain shareholders (promoters, anchors) cannot sell their shares.
Lead manager (BRLM): The investment bank that manages the IPO — pricing, documents and marketing.
Registrar: The agency that processes applications and does the allotment (e.g. KFin, MUFG Intime, Bigshare).
Underwriter: A party that agrees to buy unsold shares, if any, to make sure the issue is completed.

Documents

DRHP: Draft Red Herring Prospectus — the first IPO document filed with SEBI, without the price.
RHP: Red Herring Prospectus — the final offer document with dates and price band. Read its Risk Factors section.
Prospectus: The final document filed after pricing, with the issue price and number of shares.
SEBI: Securities and Exchange Board of India — the market regulator that reviews IPO documents.

Allotment

Basis of allotment: The official document showing how shares were allotted in each category.
Allotment: Shares given to investors after the IPO closes. Oversubscribed retail IPOs are allotted by lottery.
Allotment status: Check with your PAN on the registrar's site or NSE / BSE to see whether you got shares.
Lottery: When retail demand is much higher than shares available, a computerised draw picks which applications get one lot.
Refund / unblock: If you get no allotment, the blocked UPI / ASBA amount is released.
Demat credit: Allotted shares are credited to your demat account, usually the day before listing.
T+3 listing: SEBI's timeline: listing happens on the third working day after the IPO closes.

Demand

Subscription: How many times the shares on offer were bid for. 10× means bids were 10 times the shares available.
Oversubscribed: Bids are more than the shares on offer (subscription above 1×).
Undersubscribed: Bids are less than the shares on offer. The IPO can fail if minimum subscription is not reached.
Minimum subscription: At least 90% of the fresh issue must be subscribed, or the IPO is withdrawn and money refunded.
Day-wise subscription: Subscription numbers at the end of each bidding day. Big money usually comes on the last day.

Grey market

GMP (Grey Market Premium): The unofficial premium at which IPO shares are traded before listing. It is not regulated and can change quickly.
Grey market: An unofficial, unregulated market where IPO applications and shares are traded before listing.
Kostak: An unofficial fixed price paid for your whole IPO application, whether or not you get allotment.
Subject to Sauda: An unofficial price for your application that is paid only if you get allotment.
Estimated listing price: Upper price band + GMP. An indication only; the actual listing price can be very different.

IPOPulse

Pulse Score: IPOPulse's 0–100 sentiment gauge that blends GMP % with subscription demand. Not a rating.
IPOPulse Signal: Two rule-based scores (listing and long-term) from public numbers, showing which view the numbers support. Not advice.
GMP accuracy: How close the last GMP before listing was to the actual listing price, tracked for every listed IPO.

Financials

Revenue / Total income: All money the company earned in the year from its business and other income.
PAT (Profit After Tax): The profit left after all expenses and taxes — the bottom line.
EBITDA: Earnings before interest, tax, depreciation and amortisation — profit from operations.
Net worth: Shareholders' money in the company: share capital + reserves.
Reserves and surplus: Profits kept in the business over the years (not paid out as dividends).
Total borrowing: All loans and debt the company owes.
Restated financials: Past financial statements adjusted to one consistent accounting format for the IPO document.
CAGR: Compound annual growth rate — the average yearly growth over a period.

Valuation

EPS: Earnings per share = profit ÷ number of shares.
P/E ratio: Price ÷ EPS. Shows how many years of current profit you are paying for. Compare with listed peers.
Pre-IPO / Post-IPO P/E: P/E on shares before the IPO vs. after new shares are added (post-IPO is usually higher).
Market capitalisation: Total value of the company = share price × total shares.
Price to Book (P/B): Price ÷ book value per share. Useful for banks and asset-heavy companies.
RoE / RoNW: Return on equity / net worth — profit as a % of shareholders' money.
RoCE: Return on capital employed — profit before interest and tax as a % of all capital used.
Debt to equity: Total debt ÷ net worth. Lower is generally safer.
PAT margin: Profit after tax as a % of revenue.
Peer comparison: Comparing the IPO's valuation and ratios with similar listed companies (given in the RHP).

Buyback

Buyback: A company buying back its own shares from shareholders, usually at a premium to the market price.
Tender offer buyback: Shareholders on the record date can offer shares to the company at the fixed buyback price.
Open market buyback: The company buys its shares from the stock exchange over a period, up to a maximum price.
Record date: Shareholders holding shares on this date are eligible (for a buyback, dividend, bonus, etc.).
Acceptance ratio: In a tender buyback, how many of your offered shares the company actually accepts.

Corporate actions

Bonus issue: Free extra shares given to existing shareholders in a fixed ratio.
Stock split: Dividing one share into several smaller ones; the total value stays the same.

Trading

Pre-open session: A short session before normal trading on listing day when the listing price is discovered.
Special pre-open (IPO): On listing day, IPO shares trade in a special pre-open session from 9:00 to 10:00 AM to find the price.
Upper / lower circuit: The maximum % a share can move up or down in a day. SME stocks often hit circuits on listing.
T2T (Trade-to-Trade): A segment where every trade must be settled by delivery — no intraday. Some new listings start here.

Tax

Short-term capital gains (STCG): Profit on shares sold within 12 months; taxed at a flat rate (check the current rate).
Long-term capital gains (LTCG): Profit on shares held for more than 12 months; taxed above an exemption limit (check the current rules).

IPO Glossary

Basics

Price

Application

Categories

Issue

Documents

Allotment

Demand

Grey market

IPOPulse

Financials

Valuation

Buyback

Corporate actions

Trading

Tax