IPO Glossary: 100+ Important Terms Every Investor Should Know
IPO glossary includes all the key terms that are frequently used in RHP, DRHP, IPO review articles, and IPO analytics. This one-place IPO resource is designed to help investors at every level—whether you are a beginner, intermediate, or experienced investor. Each IPO term is explained in simple language, along with its meaning, real-world relevance, and why it matters in making better investment decisions.
Core IPO Concepts
1. Initial Public Offering (IPO)
Initial Public Offering (IPO) is an offer made by a company to raise money for the first time by selling its shares to the public through a stock exchange like NSE or BSE or both.
For example, Meesho launched its IPO in December 2025 to raise ₹5,421.20 crore by offering its shares to investors.
Companies usually launch IPOs to raise capital for expansion, repay debt, or allow existing investors to exit partially. For investors, it provides an opportunity to invest in a company at an early stage of its public journey. You can learn more about IPOs at our What Are Initial Public Offers In India?
2. Issue Size
Issue Size means how much money a company plans to raise from the public through its IPO.
For example, Meesho Limited launched its IPO to raise ₹5,421.20 crore. This amount represents the total issue size of the IPO.
Issue size is an important factor as it helps investors understand the scale of the IPO and how the company plans to use the funds, such as for expansion, debt repayment, or other business purposes.
3. Issue Price
Issue price of an IPO is the price at which a company offers its shares to investors.
For example, in the case of Meesho IPO, the price band was ₹105 to ₹111, and investors usually apply at the upper price (₹111), which becomes the effective issue price.
Issue price is an important factor as it helps investors evaluate the valuation of the IPO, including metrics like P/E ratio, and decide whether the IPO is fairly priced or not.
4. Price Band
Price band of an IPO is a range within which investors can bid for the shares. It consists of a lower price called the floor price and a higher price called the cap price.
For example, in the case of Meesho IPO, the price band was ₹105–₹110.
Price band is important because it gives investors an idea about the valuation range of the IPO and allows them to place bids within that range. Most retail investors apply at the cap price to increase their chances of allotment.
5. Floor Price
Floor price of an IPO is the lowest price at which investors can bid for the shares.
For example, in the case of Meesho IPO, the floor price was ₹105.
Floor price is important because bids cannot be placed below this price, and it also represents the minimum valuation at which the company is offering its shares.
6. Cap Price
Cap price is the highest price at which investors can bid for shares in an IPO.
For example, in the case of Meesho IPO, the cap price was ₹110.
Cap price is important because it represents the upper end of the IPO’s valuation and is the price at which most retail investors apply to increase their chances of allotment.
7. Listing Price
Listing price of an IPO is the price at which a company’s shares start trading on the stock exchange on the listing day.
For example, in the case of Meesho IPO, the stock listed at ₹161.2, which is the listing (opening) price.
Listing price is important because it determines whether the IPO has listed at a premium or a discount compared to its issue price.
8. Listing Gain
Listing gain of an IPO is the profit earned by investors, which is the difference between the listing price and the issue price.
For example, in the case of Meesho IPO, the issue price was ₹111 and the listing price was ₹161.2, the listing gain is ₹50.2 or around 45.2%.
Listing gain is important because it shows how much profit investors earned on the listing day and reflects the market demand for the IPO.
9. Listing Premium
Listing premium means the stock lists above its issue price on the listing day.
In the case of Meesho IPO, the listing premium was around 45.2%.
Listing premium is important because it reflects strong investor demand and positive market sentiment for the IPO.
10. Listing Discount
Listing discount occurs when a stock lists below its issue price on the listing day.
For example, Innovision Limited IPO had an issue price of ₹548, but the stock listed at ₹467.7, which is ₹80.3 lower than the issue price, or around a 14.7% discount.
Listing discount indicates weak investor demand and negative market sentiment towards the IPO.
2. IPO Structure
11. Fresh Issue
Fresh issue is when a company issues new shares to raise money from the public through an IPO.
For example, PNGS Reva Diamond Jewellery Limited IPO was a fresh issue of ₹380 crore, and the funds raised were planned to be used for the growth and expansion of the company.
Fresh issue is important because it indicates that the funds raised from the IPO will directly benefit the company, such as for expansion, debt repayment, or other business purposes, rather than going to existing shareholders.
12. Offer for Sale (OFS)
Offer for Sale (OFS) is when existing shareholders sell their shares to the public through an IPO.
For example, Sedemac Mechatronics Limited IPO was a 100% OFS, which means the entire ₹1,087.45 crore raised from the IPO went to the existing shareholders.
OFS is important because it indicates that the IPO proceeds will not be used for the company’s growth or operations, but will go to existing investors who are selling their stake.
13. Book Building Process
Book building process in an IPO is the method used to determine the final issue price based on investor demand within the price band.
For example, Central Mine Planning & Design Institute Limited IPO had a price band of ₹163 to ₹172 per share, where investors placed bids at different price levels. Based on the overall demand across these price levels, the final issue price was decided within the range.
In contrast, Elfin Agro India Limited IPO had a fixed price of ₹47 per share, where the price was pre-determined and did not involve the book building process.
This process helps in discovering the fair issue price of the IPO based on investor demand.
14. Fixed Price Issue
Fixed price issue is a type of IPO where the issue price is pre-determined and there is no price band for bidding.
For example, Elfin Agro India Limited IPO and Yashhtej Industries (India) Limited IPO were fixed price issues, where investors had to apply at a fixed price.
Fixed price issue is important because the valuation of the IPO is decided in advance, and investors do not have the option to bid at different price levels as in the book building process.
15. Share Premium
Share premium is the amount that investors pay above the face value of a share.
For example, in the case of Rajputana Stainless Limited IPO, the issue price was ₹122 and the face value was ₹10, so the share premium was ₹112.
Share premium is important because it shows how much investors are willing to pay above the base value of the share, reflecting the company’s valuation and growth expectations.
16. Face Value
Face value is the nominal value of a share as decided by the company.
For example, Rajputana Stainless Limited had a face value of ₹10 per share, while the issue price was ₹122. Face value is different from the issue price or market price of a share.
Face value is important for accounting purposes and is used in dividend calculations. For example, if a company declares a 50% dividend, it means 50% of the face value. So, if the face value is ₹10, the dividend would be ₹5 per share.
17. Market Capitalization
Market Capitalization is the total number of outstanding shares of a company multiplied by the current share price of the company.
For example, Billionbrains Garage Ventures (also known as Groww) had an estimated market capitalization of around ₹1,01,632.27 crore as on 27.03.2026, with a share price of ₹162.28 per share.
Market capitalization helps investors understand the size of a company, whether it is a small-cap, mid-cap, or large-cap company.
18. Dilution of Equity
Dilution of equity occurs when a company issues new shares to investors, reducing the ownership percentage of existing shareholders. In an IPO, dilution happens in the case of a fresh issue.
For example, PNGS Reva Diamond Jewellery IPO is a fresh issue, so there is dilution of equity because new shares are issued to the public.
19. Pre-IPO Placement
Pre-IPO placement is the sale of shares by a company to selected investors before the IPO subscription starts, through which the company raises funds privately.
For example, Billionbrains Garage Ventures was considering a pre-IPO placement of around ₹850 crore.
Companies go for pre-IPO placement to raise funds for business needs such as expansion, debt repayment, or strengthening their financial position before the IPO.
20. Follow-on Public Offering (FPO)
Follow-on Public Offering (FPO) is an issue of shares by a company to raise funds after the company is already listed.
Many companies use FPO to raise capital for their business activities instead of taking on additional debt.
FPO is one of the ways companies can raise funds for expansion, but it may lead to dilution of equity.
3. IPO Documents
21. Draft Red Herring Prospectus (DRHP)
As the name suggests, a “Draft” Red Herring Prospectus (DRHP) is a preliminary document submitted by a company to the Securities and Exchange Board of India for its observations before launching an IPO. It contains important details about the company, its promoters, financial information, and the proposed issue.
Companies planning to launch an IPO typically submit a DRHP to SEBI. For example this is a DRHP of Vivid Electromech Limited.
The DRHP is an important document that helps investors understand the company’s business, financial position, and overall fundamentals.
22. Red Herring Prospectus (RHP)
Red Herring Prospectus (RHP) is a document filed by a company with the Securities and Exchange Board of India before opening an IPO for subscription. It is an updated version of the DRHP that incorporates the observations made by SEBI. You can find RHP of the companies at BSE, NSE , SEBI. Here is the link to check RHP at BSE.
The RHP contains detailed information about the company, its financials, promoters, and the issue, except for the final price and the exact number of shares to be issued.
23. Prospectus
Prospectus is the final offer document of an IPO that contains complete details about the company, including the final issue price, total number of shares offered, and allocation for QIBs, NIIs, and RIIs.
It is an updated version of the RHP that includes the final price and other issue details.
The prospectus provides comprehensive information about the company for investors.
24. Abridged Prospectus
As the name suggests, an abridged prospectus is a brief and concise version of the prospectus that contains the key information about the company and the IPO.
It is much shorter than the DRHP, RHP, or the full prospectus and is designed to help investors quickly understand the important details of the issue.
25. Risk Factors
Risk factors are a section in IPO offer documents such as the RHP and DRHP where the company outlines the various risks that could impact its business, financial condition, or future prospects.
This section contains detailed disclosures of company-specific and industry-related risks.
Risk factors are often presented in a question-and-answer format to clearly highlight possible concerns.
Investors should carefully review this section before investing, as it helps in understanding the potential uncertainties and downsides of the investment.
26. Objects of the Issue
Objects of the Issue (or Offer) refer to the purpose for which a company is raising funds through an IPO and how the proceeds will be used.
This section explains whether the funds will be used for expansion, debt repayment, working capital, or general corporate purposes.
In the case of an Offer for Sale (OFS), the proceeds go to the existing shareholders selling their stake, and not to the company.
27. Capital Structure
Capital structure in an IPO document provides details of the company’s share capital, including the types of shares, their face value, and the shareholding pattern before and after the IPO.
It helps investors understand how ownership of the company will change after the issue.
4. IPO Participants
28. Promoters
Promoters are the individuals or entities who have founded the company or have control over its affairs. They usually hold a significant stake and are responsible for the company’s management and strategic decisions.
29. Anchor Investors
Anchor investors are institutional investors from the Qualified Institutional Buyers (QIB) category who are allotted shares in an IPO one day before it opens for public subscription.
Their participation helps build confidence in the IPO, and strong anchor investment can attract other investors. However, their participation does not guarantee the success of the IPO.
30. Qualified Institutional Buyers (QIB)
Qualified Institutional Buyers (QIBs) are a category of investors, as defined by Securities and Exchange Board of India, that include institutional entities such as mutual funds, banks, insurance companies, and foreign portfolio investors (FPIs).
QIBs are an important category of investors in an IPO, as a significant portion of shares is reserved for them. Healthy participation from QIBs is generally considered a positive sign for an IPO. In a book-built IPO, up to 50% of the net offer is reserved for QIBs, making them a key category of investors in the issue.
For example, the Central Mine Planning & Design Institute Limited IPO was subscribed only 0.57 times overall, but the QIB portion was fully subscribed at 1.72 times.
31. Non-Institutional Investors (NII) / High Net Worth Individuals (HNI)
Non-Institutional Investors (NIIs), also known as High Net Worth Individuals (HNIs), are investors who apply for shares in an IPO with an application size above ₹2 lakh and do not fall under the QIB or retail category.
In a book-built IPO, at least 15% of the net offer is reserved for NIIs.
For example, the Central Mine Planning & Design Institute Limited IPO was subscribed 0.57 times overall, while the NII portion was subscribed only 0.29 times.
Strong participation from NIIs can support overall subscription levels, but it does not guarantee IPO success.
32. Retail Individual Investors (RII)
Retail Individual Investors (RIIs) are individual investors who apply for shares in an IPO with an application size of up to ₹2 lakh.
In a book-built IPO, at least 35% of the net offer is reserved for retail investors.
For example, the Central Mine Planning & Design Institute Limited IPO was subscribed 0.57 times overall, while the RII portion was subscribed only 0.22 times.
Retail participation indicates interest from individual investors.
33. Book Running Lead Manager (BRLM)
Book Running Lead Manager (BRLM) is an institution or investment banker that manages and leads the IPO process of a company.
The important tasks of a BRLM are:
- Helps decide the price band and final issue price
- Markets the IPO to different investor categories to ensure adequate subscription
- Collects bids and facilitates the book building process
- Recommends allocation of shares based on demand from different investor categories
- Assists in preparing key documents like DRHP and RHP for regulatory compliance under Securities and Exchange Board of India
A company may hire more than one BRLMs for its IPO, for example, IDBI Capital Markets & Securities Limited and SBI Capital Markets Limited were the BRLMs of Central Mine Planning & Design Institute Limited IPO.
34. IPO Registrar
An IPO registrar is an agency that maintains the records of investors participating in an IPO and handles the processing of applications, share allotment, and refunds.
For example, MUFG Intime India Private Limited was the registrar of Om Power Transmission Limited IPO.
Similarly, KFin Technologies Limited was the registrar of Central Mine Planning & Design Institute Limited (CMPDIL), and Bigshare Services Private Limited was the registrar of PNGS Reva Diamond Jewellery Limited.
35. Underwriters
Underwriters in IPOs are institutions that agree to subscribe to the portion of shares that remain unsubscribed after the subscription period ends, thereby reducing the risk of undersubscription.
This obligation exists only if there is a formal underwriting agreement. In many cases, Book Running Lead Managers (BRLMs) may also act as underwriters, but this is not guaranteed.
36. Market Maker
Market makers are institutions that provide liquidity in a stock by continuously quoting both buy and sell prices on the stock exchange.
In the context of IPOs, they are mainly associated with SME IPOs and operate after the shares are listed. Their role is to ensure that investors can easily buy or sell shares, especially in newly listed stocks where trading activity may initially be low.
By providing two-way quotes, market makers help improve liquidity and facilitate smoother trading, but they do not guarantee price movement or returns.
5. IPO Application Process
37. Bid Price
Bid price in an IPO is the price at which an investor chooses to apply for shares within the given price band. In a book-building IPO, investors can select any price within this range while placing their application.
For example, in the IPO of Amir Chand Jagdish Kumar (Exports) Limited, the price band was ₹201–₹212, so investors could choose any price within this range as their bid price.
However, allotment is not guaranteed and shares are usually allotted at the final issue price decided by the company.
38. Bid Lot
Bid lot in an IPO refers to the number of lots an investor applies for in a single application, where each lot consists of a fixed number of shares (lot size). Applications must be made in multiples of the lot size.
For example, in the IPO of Amir Chand Jagdish Kumar (Exports) Limited, the lot size was 70 shares. If an investor applies for 140 shares, it means they are applying for 2 lots (i.e., 2 bid lots).
Investors cannot apply for arbitrary quantities like 100 or 120 shares; they must apply in multiples of the lot size.
39. Lot Size
Lot size in an IPO refers to the minimum number of shares an investor must apply for in a single application. For example, in the IPO of Amir Chand Jagdish Kumar (Exports) Limited, the lot size was 70 shares.
This means investors cannot apply for any random number of shares like 1, 2, or 10. Applications must be made in multiples of the lot size as specified in the IPO.
40. Minimum Investment
Minimum investment in an IPO refers to the minimum amount required to apply for one lot of shares in a single application. It is calculated as:
Lot Size × Issue Price (usually the upper price band or cut-off price).
Every investor must apply for at least one lot, and the investment amount increases with the number of lots applied.
For example, in the IPO of Amir Chand Jagdish Kumar (Exports) Limited, the lot size was 70 shares and the upper price band was ₹212, so the minimum investment was ₹14,840.
41. Maximum Retail Application
Maximum retail application in an IPO refers to the upper limit of ₹2 lakh up to which an investor can apply under the retail category (RII).
Investors applying within this limit are categorized as Retail Individual Investors.
Retail investors must apply for at least one lot and can apply for multiple lots, provided the total application value does not exceed ₹2 lakh.
42. Multiple Bids
Multiple bids in an IPO refer to placing more than one bid within a single application at different price and/or quantity levels within the price band.
In a book-building IPO, investors can submit up to three bids in one application, specifying different bid prices and/or quantities.
For example, in the IPO of Amir Chand Jagdish Kumar (Exports) Limited, with a price band of ₹201–₹212, an investor can place bids such as:
– 1 lot at ₹205
– 2 lots at ₹210
– 1 lot at ₹212
These are considered multiple bids within a single application.
43. Application Supported by Blocked Amount (ASBA)
This is a process to apply for the subscription of an IPO.
In this process, an amount equivalent to the IPO application amount is blocked in the investor’s bank account until the allotment process is completed.
This amount is not debited immediately but remains in the account with a lien marked by the bank.
Once the allotment is done, if the investor is allotted shares, the required amount is debited from his/her bank account. If no shares are allotted, the blocked amount is released (unblocked).
For example, if the total application cost of an IPO is ₹14,600, the same amount is blocked in the bank account, and the investor cannot use this amount until the allotment process is completed.
The good thing of ASBA is that the blocked amount continues to remain in the bank account and may earn interest as per bank terms.
44. UPI Mandate
Unified Payments Interface (UPI) mandate is a process to apply for an IPO through UPI.
In this process, the investor has to approve a mandate request to block the IPO application amount through a UPI app.
This is a manual step where the investor must approve the request via the UPI interface, unlike ASBA where there is no separate mandate approval step after submitting the application.
Once the approval is done, the amount is blocked in the bank account until the allotment process is completed. If shares are allotted, the equivalent amount is debited from the bank account; otherwise, the blocked amount is released (unblocked).
The amount remains in the bank account during this period and may continue to earn interest as per bank terms.
6. IPO Timeline
45. IPO Opening Date
IPO open date is the date on which an IPO opens for subscription to investors such as retail investors (RII), non-institutional investors (NII/HNI), and qualified institutional buyers (QIBs).
For example, the Central Mine Planning & Design Institute Limited IPO opened for subscription on 20th March 2026.
46. IPO Closing Date
IPO closing date is the date on which an IPO closes for subscription to investors.
For example, the Central Mine Planning & Design Institute Limited IPO closed for subscription on 24th March 2026.
47. Basis of Allotment
Basis of allotment in the IPO process refers to the method or process by which shares are allocated to investors after the subscription period ends.
It is finalized on a specific date, where the company determines how shares are distributed among investors based on different categories such as retail, NII, and QIB.
48. Allotment Date
This is the date on which the allotment of shares is finalized for investors in an IPO. It determines which investors are allotted shares based on the basis of allotment.
49. Refund Initiation
This is the process in an IPO that takes place after the basis of allotment is finalized, where funds are released to investors who did not receive shares.
During this stage, the blocked amount under ASBA is unblocked, and the UPI mandate for blocking the amount is also revoked.
In simple terms, this is when the application amount becomes available again to investors who were not allotted shares in the IPO.
50. Demat Credit
This is the process in an IPO where shares are credited to the demat accounts of investors who have been allotted shares.
51. Listing Date
This is the date on which the company’s shares are listed on stock exchanges like National Stock Exchange of India and Bombay Stock Exchange, or both.
On the listing date, investors can buy or sell the shares on the stock exchange. Both investors who received allotment and those who did not can trade the shares once the stock is listed.
7. IPO Demand Metrics
Subscription Status
Oversubscription
Undersubscription
Retail Subscription
QIB Subscription
HNI Subscription
Total Subscription
8. Grey Market Terms
Grey Market Premium (GMP)
Kostak Rate
Subject to Sauda
GMP Trend
9. Post-Listing Terms
Lock-In Period
Promoter Holding
Shareholding Pattern
Price Discovery
Circuit Limits (Upper Circuit / Lower Circuit)
Free Float Market Capitalization
10. SME IPO Specific Terms
SME IPO
SME Platform
Market Maker Portion
Migration to Mainboard
11. Valuation & Financial Metrics
Price-to-Earnings Ratio (P/E Ratio)
Earnings Per Share (EPS)
Return on Net Worth (RoNW)
Net Asset Value (NAV)
Debt-to-Equity Ratio
EBITDA
Revenue Growth
Profit After Tax (PAT)
Peer Comparison (Comparable Companies)
- Fair Valuation
- Margin of Safety
- Risk-Reward Ratio
13. Allotment & Probability Terms
IPO Allotment Probability
Retail Quota
HNI Funding
Lottery System
Proportionate Allotment
14. Costs & Charges
Brokerage Charges
Securities Transaction Tax (STT)
Capital Gains Tax (Short-Term / Long-Term)
Listing Charges
15. Post-Listing Behavior & Market Dynamics
Listing Day Volatility
Profit Booking
Price Stabilization
Anchor Lock-in Expiry Impact
16. Advanced Institutional Terms
Anchor Book
Institutional Allocation
Retail Quota Percentage
Greenshoe Option
17. Risk-Related Terms
Business Risk
Market Risk
Valuation Risk
Liquidity Risk
Frequently Asked Questions On: IPO Glossary
1. What is IPO in simple words?
IPO means Initial Public Offerings.
2. What is GMP in IPO?
3. What is issue size in IPO?
4. How IPO allotment works?
5. What is DRHP in IPO?
6. What is price band in IPO?
7. How to check IPO subscription status?
Conclusion
Important IPO Resources:
2. GMP Updates on Latest IPOs.
3. Daywise IPO Subscription Details.
4. IPO allotment Details of Live and Closed IPOs.
5. IPO Research & Market Analytics
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