IPO basics, explained simply
Everything you need to read an IPO page with confidence — in about ten minutes.
1. Grey Market Premium (GMP)
Before an IPO lists, some traders informally agree prices for its shares. The GMP is how much above (or below) the issue price those deals are being quoted. If the upper band is ₹200 and GMP is ₹40, the grey market expects a listing near ₹240 — a 20% gain.
GMP is useful as a mood indicator, nothing more. It moves with subscription numbers and the broader market, and it can fall sharply just before listing. Our GMP accuracy tracker shows how often it was right.
2. Kostak and Subject to Sauda
Kostak is a fixed amount a grey-market buyer offers for your entire application, whether or not it gets allotment. Subject to Sauda is a (larger) amount paid only if your application is allotted. High Sauda rates usually mean dealers expect a strong listing. These deals are informal and not enforceable — IPOPulse only reports them.
3. Mainboard vs SME IPOs
| Mainboard | SME | |
|---|---|---|
| Exchange | NSE / BSE main board | NSE Emerge / BSE SME |
| Issue size | Usually ₹100 Cr+ | Usually under ₹100 Cr |
| Minimum investment | About ₹14,000–15,000 | Much larger (often ₹1–2 lakh+) |
| Liquidity | High | Lower; trades in lots |
4. Investor categories
- Retail (RII): individuals applying up to ₹2 lakh. Allotment is by lottery when oversubscribed — one minimum lot per winning PAN.
- sNII / small HNI: ₹2–10 lakh. Also a lottery for the minimum sNII application.
- bNII / big HNI: above ₹10 lakh.
- QIB: mutual funds, insurers, banks and foreign institutions.
- Employee / shareholder quotas: reserved portions some IPOs offer, often at a discount.
5. How to apply (UPI / ASBA)
- Open the IPO section in your broker app or net banking (ASBA).
- Enter the number of lots and bid at the cut-off price (retail) so you're never priced out.
- Approve the UPI mandate before 5 PM on the closing day. The money stays in your account, just blocked.
- Wait for allotment — check it on our allotment page.
6. The T+3 timeline
T is the closing day. Allotment is finalised on T+1, refunds/unblocking and demat credit happen on T+2, and the shares list on T+3. Every IPO page on IPOPulse shows these dates on a timeline you can add to your phone calendar.
7. What to check before applying
- What the company does and how its revenue and profit have grown (see Financials on each IPO page).
- Fresh issue vs offer for sale — is money going into the business or to selling shareholders?
- Valuation (P/E) compared with listed peers.
- QIB demand and anchor investors.
- Risks listed in the RHP.
Glossary
- RHP / DRHP
- Red Herring / Draft Red Herring Prospectus
- Anchor investor
- Large investor allotted shares a day before opening
- OFS
- Offer for sale by existing shareholders
- Cut-off price
- Bid at whatever final price is set
- Registrar
- Agency that processes applications & allotment
- Lot size
- Minimum shares per application