IPO Glossary: 100+ IPO Terms Every Investor Should Know

FPO (Follow-on Public Offering)

A Follow-on Public Offering is when a company that is already publicly listed issues additional shares to the public. Unlike an IPO, an FPO is not a company's first public share sale — it is a subsequent offering to raise more capital or allow existing shareholders to exit.

Example: If a company listed two years ago needs funds for a new factory, it may launch an FPO rather than taking a bank loan.

Issue Type

The structure of an IPO based on how shares are offered. An IPO can be a pure fresh issue (only new shares), a pure OFS (only existing shares being sold), or a combination of both. Only fresh issue proceeds go to the company; OFS proceeds go to selling shareholders.

Fresh Issue

The portion of an IPO through which the company issues entirely new shares to raise capital for itself. Proceeds from a fresh issue go directly into the company's accounts and are used for the purposes stated in the prospectus — such as capital expenditure, debt repayment, or working capital.

Related: OFS  ·  Objects of the Issue

Mainboard IPO

A Mainboard IPO refers to a company’s public issue listed on the main stock exchanges, such as BSE and NSE, unlike SME IPOs which are listed on dedicated SME platforms. Mainboard IPOs are governed by stricter SEBI eligibility requirements, generally involve larger and more established companies, and usually have lower minimum investment requirements, making them more accessible to retail investors.

Related: SME IPO  ·  Lot Size  ·  SEBI

Fixed Price IPO

A Fixed Price IPO is one where the company sets a single offer price upfront, rather than a price band. Investors apply at exactly that price. This method is less common for large Mainboard IPOs but is sometimes used for smaller offerings.

Pre-IPO Placement

A Pre-IPO Placement is the sale of shares to select institutional or strategic investors before the public IPO opens. These shares are sold at a negotiated price, typically at a discount to the expected IPO price. Pre-IPO placements are disclosed in the RHP and reduce the fresh issue size accordingly.

Objects of the Issue

Objects of the Issue is the section in the DRHP and RHP that explains exactly how the company plans to use the IPO proceeds. Common stated uses include debt repayment, capital expenditure, working capital, acquisitions, and general corporate purposes. Investors should review this section to understand whether the company is raising money for genuine growth or primarily for promoter exit via OFS.

Risk Factors

Risk Factors is a mandatory section in every IPO document that lists all material risks — business, financial, legal, industry, and regulatory — that could negatively impact the company. SEBI requires comprehensive disclosure of risk factors. Retail investors should always read this section before applying, as it reveals challenges the company itself acknowledges.

Basis for Issue Price

Basis for Issue Price is the section in the RHP where the company and its lead managers justify the IPO valuation. It typically includes key financial ratios such as EPS, P/E, RoNW, and NAV, along with a peer comparison showing how the IPO is priced relative to listed competitors. This is the primary section for evaluating whether an IPO is fairly priced.

Related: EPS  ·  P/E Ratio  ·  RoNW  ·  NAV  ·  Peer Comparison

Peer Comparison

Peer Comparison is a table in the RHP that compares the IPO company's financial metrics (P/E, EPS, RoNW, NAV) against its listed competitors. This helps investors assess whether the IPO's valuation is at a premium or discount to the sector. A company priced at a significant premium to peers requires stronger growth or differentiation to justify the valuation.

SEBI Observation Letter

After reviewing the DRHP, SEBI issues an observation letter that either approves the IPO to proceed (with or without changes) or raises queries. The company must address SEBI's observations before filing the RHP and opening the IPO. SEBI's observation letter confirms regulatory compliance — it is not an endorsement of the company's quality or IPO pricing.

IPO Opening Date

The IPO opening date is the first day on which investors can submit their bids. The subscription window for book-built IPOs typically remains open for 3 working days. Check IPO Ji's IPO calendar for current opening dates.

IPO Closing Date

The IPO closing date is the last day on which investors can submit, revise, or withdraw their bids. Applications submitted after the closing time are not accepted. For UPI-based applications, investors must also approve the mandate in their UPI app before the closing deadline — failing to do so results in an invalid application.

Anchor Investor Bidding Date

Anchor investors (QIBs) submit their bids one working day before the IPO opens to the public. Their participation and allotment details are publicly disclosed before the IPO subscription period begins, providing an early confidence signal to other investors.

IPO Allotment Date

The IPO allotment date is the day on which the registrar finalizes the allocation of shares to applicants after the IPO subscription closes. Under SEBI's T+3 listing framework, the basis of allotment is generally finalized within one working day after the issue closes and is published on the registrar's website before the listing date. Investors can check their IPO allotment status on IPO Ji using their PAN, application number, or Demat account details once the allotment is announced.

Refund Initiation / Mandate Release Date

The date on which blocked funds are released for unsuccessful applicants. Under ASBA and UPI-based applications, the blocked amount is unblocked — not separately transferred — making the release near-instantaneous once initiated. Investors who do not receive allotment typically see their funds unblocked within 1 working day of allotment finalization.

Credit of Shares to Demat

Credit of shares to demat is the step where allotted IPO shares are transferred to successful applicants' demat accounts. After this credit, investors can see the shares in their holdings. However, trading is only possible from the listing date onward — shares cannot be sold until the stock officially lists on the exchange.

Floor Price

The floor price is the minimum price in an IPO's price band. Investors cannot place bids below the floor price in a book-built IPO. The floor price represents the minimum valuation the company is willing to accept.

Cap Price

The cap price is the maximum price in an IPO's price band. Retail investors who apply at cut-off agree to pay up to this price. The final issue price is set at or below the cap price after the book-building process.

Issue Price

The final price at which IPO shares are allotted to investors after the book-building process is complete. Applications bid below the final issue price are rejected.

Face Value

The face value (also called par value) is the nominal value of a share — typically ₹1, ₹2, ₹5, or ₹10. The IPO issue price is almost always significantly higher. The difference is the share premium.
Example: Face value ₹10, issue price ₹500 → share premium ₹490.

Related: Share Premium

Share Premium

Share premium is the difference between the IPO issue price and the face value of a share. For example, face value ₹10 and issue price ₹500 → share premium ₹490 per share. This amount goes into the company's share premium reserve on its balance sheet.

Issue Size

The total amount a company aims to raise through its IPO, including both the fresh issue and OFS components, expressed in crore rupees.

Market Capitalisation at IPO

The total market value of a company at the time of its IPO: issue price × total post-IPO shares. Helps investors assess whether the company's valuation is reasonable relative to peers and earnings.

EPS (Earnings Per Share)

EPS is the company's net profit divided by its total shares outstanding. It is used to calculate the P/E ratio and is a key metric in the Basis for Issue Price section of the RHP.
Example: Net profit ₹50 crore ÷ 5 crore shares = EPS of ₹10.

Related: P/E Ratio  ·  Basis for Issue Price

P/E Ratio (Price-to-Earnings)

The P/E ratio compares the IPO issue price to the company's EPS. Compare against listed sector peers to judge whether pricing is reasonable.
Example: Issue price ₹300 ÷ EPS ₹10 = P/E of 30x. If peers trade at 20x, the IPO is priced at a premium.

Related: EPS  ·  Peer Comparison

EV/EBITDA

Enterprise Value to EBITDA is a valuation multiple used alongside P/E, especially for capital-intensive sectors. EV accounts for both equity and debt, making it useful for comparing companies with different debt levels.

RoNW (Return on Net Worth)

RoNW measures how efficiently a company generates profit from shareholders' equity: net profit ÷ net worth, expressed as a percentage. A consistent and improving RoNW signals operational efficiency. Standard metric in the Basis for Issue Price table.

NAV per Share (Net Asset Value)

NAV per share is the book value per share: net worth ÷ total shares outstanding. Comparing NAV per share to the IPO issue price shows how much premium investors are paying above the company's book value.

Market Lot

Market lot is another term for lot size — the fixed block of shares an investor must apply for. Used interchangeably with lot size. In SME IPOs, the market lot is significantly larger than Mainboard IPOs.

Minimum Bid Quantity

The minimum bid quantity is the same as the lot size — the minimum number of shares that must be in a single IPO application. You cannot apply for fewer shares than the minimum bid quantity.

Minimum Investment Amount

The total money required to apply for one lot: lot size × cap price. This is the amount blocked in your bank account when you submit an ASBA or UPI application.
Example: 87 × ₹171 = ₹14,877.

Mandate Pending

Mandate pending means your IPO application has been submitted but the UPI payment block has not yet been approved. Open your UPI app and look for the pending mandate request to approve. Applications with unapproved mandates are treated as invalid at the time of allotment processing.

Mandate Failed

Mandate failed means the UPI block request was not successfully processed. Common reasons: wrong UPI ID, insufficient balance, bank downtime, or the mandate expiring before approval. A failed mandate makes the IPO application invalid. Reapply before the IPO closes if time permits.

Mandate Expiry

Each UPI mandate request has a validity window. If not approved within this window, it expires and the IPO application becomes invalid. Always approve UPI mandates promptly after submission to avoid expiry.

Application Number

The unique reference ID assigned to your IPO application when submitted. Along with PAN and DP ID/Client ID, it is one of the three ways to check your allotment status on the registrar's website.

PAN (Permanent Account Number)

Your 10-character tax identifier, mandatory for all IPO applications. Each PAN can submit only one application per investor category (retail/HNI) per IPO. Multiple applications with the same PAN result in all applications being rejected.

Demat Account

A demat (dematerialized) account is the electronic account where your shares are held in digital form. It is mandatory to receive IPO allotment. Demat accounts are held through depositories (NSDL or CDSL) via a Depository Participant such as your stockbroker or bank.

Related: DP ID / Client ID  ·  Depository

DP ID / Client ID

Your DP ID identifies your Depository Participant (e.g. your broker), and your Client ID is your individual account number within that DP. Together they form your unique demat account reference — required when checking IPO allotment status on registrar websites.

Bid Revision / Bid Withdrawal

After submitting an application, investors can revise (change price or quantity) or withdraw it during the subscription window. Retail investors may fully withdraw; NII/HNI investors can revise but have restrictions on full withdrawal. All changes must be completed before the IPO closing time.

Shareholder Quota

Certain IPOs reserve shares for existing shareholders of the parent or promoter group company. Eligible shareholders can apply under this separate quota — which has its own allotment pool and often better allotment probability than the general retail category.

RII (Retail Individual Investor)

A retail investor is an individual resident investor applying for shares worth up to ₹2 lakh in an IPO. In most Mainboard IPOs, a separate quota is reserved for retail investors under SEBI regulations, although the exact reservation percentage may vary depending on the issue structure. In oversubscribed IPOs, allotment in the retail category is generally done through a computerized lottery system.

Key implication: Applying for more than 1 lot does not improve allotment chances in a heavily oversubscribed retail category.

NII (Non-Institutional Investor) / HNI

The NII category covers individual investors and corporate entities applying for more than ₹2 lakh. At least 15% of the net public offer is reserved for NIIs. Split into sHNI (₹2L–₹10L) and bHNI (above ₹10L). Allotment is on lottery basis.

sHNI (Small HNI)

The smaller NII sub-category covering applications between ₹2 lakh and ₹10 lakh. SEBI introduced this to give smaller HNI investors better allotment chances independent of very large bHNI applications. Minimum one-third of the NII quota is reserved for sHNI applicants.

bHNI (Big HNI)

The larger NII sub-category covering applications above ₹10 lakh with no upper limit. At least two-thirds of the NII quota is reserved for bHNI applicants. Allotment is proportional to application size.

Employee Reservation Portion

Some IPOs reserve shares for the company's employees at a discount of up to ₹500 per share below the issue price. The employee portion has its own allotment pool. Eligible employees can apply here in addition to any retail application they make as individual investors.

Oversubscription

When total bids received exceed the number of shares offered, the IPO is oversubscribed. In the retail category, oversubscription triggers the lottery allotment process. The higher the oversubscription, the lower the probability of any individual receiving allotment.

Undersubscription

When total bids received are fewer than the shares offered, the IPO is undersubscribed. If an IPO remains undersubscribed at close, it may be withdrawn or underwriters may step in to purchase the remaining shares.

Lottery System

In an oversubscribed retail category, IPO allotment is done through a computerized lottery. Each valid retail application — regardless of how many lots were applied for above the minimum — gets exactly one entry. Applying for more lots does not improve chances once the retail category is meaningfully oversubscribed. The lottery is conducted by the registrar under supervision of the stock exchanges.

Basis of Allotment

The official document published by the registrar after allotment is complete. It details total applications received, the oversubscription ratio in each category, and how many shares were allotted per valid application. Publicly available on the registrar's website and the stock exchanges.

Pro-Rata Allotment

Pro-rata allotment is a method of distributing shares proportionally among applicants based on their application size. This method is commonly used in certain issue structures such as REITs, InvITs, and debt offerings. In Mainboard IPOs, allotment procedures for investor categories like NII/HNI may vary depending on oversubscription levels and the basis of allotment finalized by the registrar.

Registrar (to the Issue)

The SEBI-registered entity responsible for processing IPO applications, managing allotment, and crediting shares to successful applicants' demat accounts. Major registrars: MUFG Intime India (formerly Link Intime India), KFin Technologies, Bigshare Services, Purva Sharegistry, Skyline Financial Services. IPO Ji's allotment status pages link directly to the correct registrar for each IPO.

Refund / Unblocking

If you do not receive allotment, the blocked amount is unblocked — not separately transferred — typically within 1 working day of allotment finalization. Partial allotment in the HNI category results in only the allotted share amount being debited; the rest is unblocked automatically.

Post-Issue Shareholding

The ownership structure of the company after the IPO — showing percentages held by promoters, public shareholders, and institutional investors. Disclosed in the RHP and important for assessing promoter commitment and public float.

Estimated Listing Price

An informal calculation derived as: issue price + GMP. It is an approximate expectation of where shares may open on listing day. Not an official figure — actual listing prices can deviate significantly from GMP-based estimates.

Kostak Rate

The fixed amount paid in the grey market to buy an IPO application before allotment is known. The buyer pays this amount regardless of whether the seller gets allotment. A way to lock in fixed profit from an application without bearing allotment or listing risk.
Example: Kostak rate ₹800 — seller receives ₹800 regardless of allotment outcome. Kostak transactions are informal, legally unrecognized, and carry counterparty risk.

Subject to Sauda

Subject to Sauda (abbreviated SS) is a grey market transaction where payment is conditional on allotment. Unlike Kostak, the buyer pays only if the seller receives shares.
Example: SS rate ₹1,200 — buyer pays ₹1,200 only if shares are allotted to the seller. No payment if the seller doesn't get allotment.

Listing Gain / Listing Premium

The percentage by which an IPO's listing price exceeds its issue price on the first day of trading.
Example: Issue price ₹150, listing price ₹195 → listing gain of 30%. Investor with allotment gains ₹45 per share before taxes and brokerage.

Listing at Discount

When an IPO's listing price falls below its issue price, it has listed at a discount. Investors with allotment face an immediate unrealized loss. More common in weak market conditions or for aggressively priced IPOs.

Listing Price

The price at which an IPO stock begins trading on its listing date, determined by the equilibrium of buy and sell orders in the pre-open session. Can be significantly above or below the issue price.

Pre-Open Session (Listing Day)

On IPO listing day, the stock enters a special pre-open session on BSE and NSE before regular trading begins. Orders are collected during the order-entry window and the equilibrium price discovered in this session becomes the listing/opening price. This is why listing prices are determined by real market demand — not by the company.

Lock-In Period

The period after an IPO during which certain shareholders — typically promoters and pre-IPO investors — cannot sell their shares. SEBI mandates lock-in periods to prevent large early exits that could destabilize the stock price. Anchor investors are subject to lock-in from the date of allotment: 50% of their shares for 30 days and the remaining 50% for 90 days. Large share unlocks at lock-in expiry can create selling pressure.

Upper Circuit

The upper circuit is the maximum price up to which a stock can rise in a single trading session. When a stock hits the upper circuit, trading may become difficult because there are usually many buyers but very few or no sellers willing to sell at that price. Investors should be cautious about assuming that an upper circuit stock can always be purchased easily.

Lower Circuit

The lower circuit is the maximum price by which a stock can fall in a single trading session. When a stock hits the lower circuit, trading may become difficult because there are usually many sellers but very few or no buyers at that price. Investors may not be able to exit immediately if the stock remains locked in lower circuit — this risk is particularly relevant for SME IPO stocks with limited liquidity.

Promoter Holding

The percentage of company shares held by its promoters (founders and controlling shareholders) before and after the IPO. A significant reduction in promoter holding due to a large OFS component may warrant closer scrutiny. Disclosed in the RHP and tracked in quarterly filings.

Dilution

Dilution occurs when a company issues new shares (via fresh issue), reducing the ownership percentage of existing shareholders. IPOs with a large fresh issue component dilute pre-IPO investor and promoter stakes. Pure OFS IPOs do not cause dilution — only ownership changes hands.

NSE Emerge

NSE Emerge is the SME listing platform of the National Stock Exchange. Companies that do not meet NSE's main board eligibility can list here. Shares are traded in a separate SME segment with different circuit limits and higher minimum lot sizes compared to the main board.

BSE SME

BSE SME is the SME listing platform of the Bombay Stock Exchange, functioning similarly to NSE Emerge. Many SME companies choose BSE SME for listing. Shares traded here are subject to higher minimum application requirements.

Market Maker (SME IPO)

In SME IPOs, a market maker is a SEBI-registered entity appointed to provide continuous buy and sell quotes after listing, ensuring minimum liquidity. A minimum of 5% of SME IPO shares are reserved for the market maker, who must maintain liquidity for at least 3 years post-listing — addressing the natural liquidity gap in thinly traded SME stocks.

Migration to Main Board

After meeting certain financial thresholds and SEBI eligibility criteria, SME-listed companies can migrate to the main board (NSE or BSE). Migration typically results in increased trading volumes, broader analyst coverage, and higher institutional interest. Generally viewed as a significant positive milestone.

SEBI (Securities and Exchange Board of India)

India's capital market regulator, responsible for regulating IPOs, protecting investor interests, and maintaining market integrity. All IPO filings and disclosures must comply with SEBI's ICDR Regulations. SEBI reviews DRHPs before IPOs proceed. SEBI's approval confirms regulatory compliance — it is not an endorsement of IPO quality or pricing.

BSE (Bombay Stock Exchange)

One of India's two national stock exchanges. Most large Mainboard IPOs list on both BSE and NSE. BSE also operates the BSE SME platform. BSE publishes IPO subscription data and allotment basis documents.

NSE (National Stock Exchange)

India's largest stock exchange by trading volume. The Nifty 50 benchmark index is listed on NSE. Most major IPOs list on both NSE and BSE. NSE operates the NSE Emerge platform for SME listings and publishes daily IPO subscription data.

BRLM / Lead Manager (Book Running Lead Manager)

The investment bank or merchant banker appointed to manage the IPO process — DRHP preparation, SEBI filings, marketing, pricing, and allotment coordination. Large IPOs may have multiple BRLMs. A BRLM's past IPO performance is one informal indicator of deal quality, though not definitive.

Depository / DP (Depository Participant)

Shares are held electronically through two depositories: NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited). A Depository Participant (DP) — typically your stockbroker or bank — is the intermediary through which you access depository services and hold your demat account.

RTA (Registrar and Transfer Agent)

The entity maintaining shareholder records, processing allotments, handling share transfers, and managing corporate actions. In the context of IPOs, the RTA is the registrar. Major RTAs: Link Intime and KFin Technologies.

Merchant Banker / Underwriter

A merchant banker (SEBI-registered investment bank) structures and manages the IPO. An underwriter guarantees to purchase any unsubscribed portion of the issue, ensuring the company raises the minimum required capital. In most Indian IPOs, the BRLM also acts as the underwriter.

Tender Offer Buyback

The company invites shareholders to submit their shares for repurchase at a fixed price within a specified period. The buyback price is set at a premium to market price. Whether all tendered shares are accepted depends on the total response relative to the buyback size.

Open Market Buyback

The company purchases its own shares through normal stock exchange transactions over time, at prevailing market prices. More flexible than a tender offer but offers less certainty to shareholders.

Buyback Record Date

The date on which shareholders must hold shares in their demat account to be eligible to participate in a buyback tender offer. Investors purchasing shares after the record date are generally not eligible to tender.

Buyback Entitlement Ratio

Defines the maximum shares a shareholder can tender per share held, based on total buyback size relative to total eligible shares. Entitlement ratio of 1:10 means a shareholder holding 100 shares can tender a maximum of 10 shares.

Acceptance Ratio

Shows what percentage of tendered shares the company actually accepts. If total shares tendered exceed the buyback size, acceptance is proportional — unaccepted shares are returned to the shareholder.