IPO coverage in India is written as though everyone already knows the jargon. A single paragraph can contain DRHP, book building, anchor book, OFS and QIB with no explanation, and the effect is that many retail investors decide with only a rough sense of what they are reading.
This is a working glossary rather than a dictionary — grouped by where each term appears in the process, with a note on why it matters to you rather than just what it stands for. The terms carrying the most investment significance get the most space, because DRHP and OFS are not definitions to memorise; they are where the useful information hides.
The documents
DRHP (Draft Red Herring Prospectus)
The first full public disclosure document, filed with SEBI and the exchanges when a company sets out to go public. It contains the business description, the audited financial history, the objects of the issue, the risk factors, promoter and shareholder details, related-party transactions, litigation, and management compensation — everything except the price and the dates.
SEBI reviews the DRHP and issues observations that the company must address. The document is public throughout, which means a genuinely interested investor has weeks or months to read it before an issue ever opens. Almost nobody does. It is, by a wide margin, the highest-value reading available on any IPO.
RHP (Red Herring Prospectus)
The final offer document, filed after SEBI's observations are addressed, containing the price band and the issue dates. It is called red herring because it still omits the final issue price, which only emerges after the book closes. This is the document that governs the offering you are actually applying to, and it is where you should verify category reservations, lot size, and the objects of the issue for the specific issue in front of you.
Prospectus and objects of the issue
The prospectus is the completed document filed after the price is determined. The objects of the issue is the section stating what the money raised will be used for — capital expenditure, debt repayment, working capital, acquisitions or general corporate purposes. Read it. A company raising money to build capacity tells a different story from one raising money to repay borrowings, and a large unspecified 'general corporate purposes' allocation tells you the least of all.
The structure of the offer
Fresh issue versus offer for sale (OFS)
This is the single most under-appreciated distinction in IPO analysis. In a fresh issue, new shares are created and the money raised goes into the company to fund its business — existing shareholders are diluted, and the company is better capitalised afterwards. In an offer for sale, no new shares are created: existing shareholders sell some of their holding, and the money goes to them. The company receives nothing.
Most Indian IPOs are a mix, and the mix is disclosed. A predominantly OFS issue is not automatically bad — early investors and founders are entitled to liquidity, and a public listing is the normal route to it — but it changes what you are participating in. You are buying shares from someone who has decided this is a good moment to reduce their stake, and none of your money is going to work inside the business. That deserves to affect the price you are willing to pay.
Book building versus fixed price
In a book-built issue, the company publishes a price band and investors bid within it; the final price is discovered from where demand actually sits. Almost all significant Indian IPOs work this way. In a fixed price issue, the price is stated up front and you either apply at it or you do not. Fixed price issues are now largely confined to smaller offerings.
Price band, floor price and cap price
The band is the range within which bids may be placed — floor at the bottom, cap at the top. Retail funds are blocked at the cap, with the difference released if the discovered price is lower. The band is set by the issuer and its bankers, informed by pre-marketing and anchor demand, which is worth remembering: it is a negotiated seller's price, not a market-determined one.
Lot size and minimum application
Bids must be for a whole number of lots. The lot size is set so that the value of one lot falls inside a prescribed minimum-application range, which is why the entry ticket for mainboard issues is broadly similar whatever the share price. On the SME platforms the minimum is set far higher — see SME IPO vs mainboard IPO.
Cut-off price
An option available to retail investors and eligible reserved categories: instead of naming a price, you agree to pay whatever price the book discovers. It removes the risk of bidding below the final price and being excluded from allotment entirely, which is why most retail applications use it.
Greenshoe or over-allotment option
A mechanism that allows a stabilising agent to allot a limited number of additional shares and then support the price in the market shortly after listing, within defined rules. It exists to dampen early volatility. Not every issue has one.
The participants
| Term | What it is | Why it matters to you |
|---|---|---|
| BRLM | Book-running lead manager — the merchant bank running the issue | Sets the price band with the issuer; the seller's advisor, not yours |
| Registrar | The agency processing applications and allotment | Where you check allotment status and raise allotment grievances |
| QIB | Qualified institutional buyer — funds, insurers, banks, FPIs | Institutional demand shapes pricing and is the most-watched subscription figure |
| Anchor investor | A QIB allocated shares ahead of the issue opening | The published anchor book is an early read on institutional appetite |
| NII / HNI | Non-institutional investor, applying above the retail ceiling | A separate reserved bucket, allotted proportionately |
| RII | Retail individual investor, within the retail value ceiling | Your category — its subscription number governs your odds |
| Market maker | An entity obliged to provide two-way quotes | Mandatory on SME issues for a defined period; a liquidity crutch, not a guarantee |
Anchor investors, in a little more detail
Anchor investors are institutional buyers allocated a portion of the institutional book at a price they accept, a working day before the issue opens to everyone else. The purpose is signalling: a credible anchor book of long-term funds is intended to give the wider market confidence in the pricing. Anchor shares carry a short lock-in, released in tranches rather than all at once, which is a partial answer to the obvious objection that anchors could otherwise sell into the listing pop.
Read the anchor list rather than just its size. A book dominated by long-only domestic and global funds is a different signal from one padded with participants who have no obvious reason to hold. And notice the calendar: the point at which anchor lock-ins expire is a genuine supply event on the stock, and it is knowable in advance.
Demand and allotment
Subscription and oversubscription
Subscription is the ratio of bids received to shares available. Two times subscribed means twice as many shares were bid for as exist in the offering. The headline figure is nearly useless on its own, because it aggregates categories whose allotment rules are completely different. Read the category-wise figures the exchanges publish: an issue at ten times overall, driven by institutional demand while the retail portion is barely covered, is an easy allotment for a retail applicant.
Basis of allotment
The document the registrar publishes after allotment is finalised, setting out valid applications received, shares available and the exact allotment logic applied for each category — including the ratio used in the draw of lots for retail. It is short, it is public, and it is the best available calibration of what to expect from future applications.
ASBA and the UPI mandate
Application Supported by Blocked Amount: your funds are blocked in your own bank account rather than debited, and only the value of shares allotted is ever taken. The UPI mandate is the retail authorisation mechanism for that block when you apply through a broker. The full application mechanics are here.
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Listing and afterwards
Listing gain
The difference between the issue price and the price on listing day, usually quoted as a percentage. It is a real number and a poor objective: a listing gain is a one-day trading outcome, and treating it as the purpose of an IPO application quietly converts you from an investor into a participant in a short-dated event. The honest framework is here.
Special pre-open session
Newly listed shares do not simply start trading at a price. The exchanges run a call-auction pre-open session on listing day that collects orders and discovers an equilibrium opening price. This is why the opening print can differ sharply from any pre-listing expectation — the first real price is set by the whole market at once, not by the crowd that was talking loudest beforehand.
Lock-in
A period during which specified shareholders cannot sell. Several different lock-ins operate around an IPO: a portion of promoter holding is locked in for a longer period to keep founders economically committed, other pre-issue shareholders face a shorter one, and anchor investors have their own staged release. Lock-in expiry matters because it is a scheduled increase in the free float — a known future supply of shares that can weigh on price when it arrives.
Free float
The proportion of shares actually available to trade, excluding locked-in and closely held stakes. A very small free float means thin liquidity and exaggerated price moves in both directions, and it is one reason a newly listed stock can behave far more violently than its market capitalisation suggests.
Grey market premium
An unofficial premium quoted in an unregulated off-exchange market before listing. It is included here only because you will encounter it constantly — it is not part of the regulated process and carries no valuation content. Why it misleads.
The terms worth actually reading, not just knowing
If you take one thing from this glossary, make it this: three of these terms are doing real analytical work and the rest are plumbing. Objects of the issue tells you what your money funds. Fresh issue versus OFS tells you whether any of it reaches the company. And the peer-comparison table in the offer document tells you what the market already pays for similar businesses. Knowing what DRHP stands for is trivia; reading one is analysis.
For the broader vocabulary of investing beyond public issues, our glossary covers metrics like beta, volatility and market capitalisation. AIVITTA is an analytics and education platform, not an advisor — nothing here is a recommendation about any issue.