Primary Market Glossary
Clear, institutional-grade breakdowns of capital market jargon, valuation metrics, SEBI regulatory mandates, and IPO mechanics.
Anchor Investor
A Qualified Institutional Buyer (QIB) that bids for an IPO allocation worth at least ₹10 Crore at a fixed price one day prior to public issue opening.
ASBA (Application Supported by Blocked Amount)
An application mechanism where the applicant's bid money remains blocked in their self-certified bank account until shares are allotted.
Book Building
A dynamic price discovery mechanism where the issuer offers shares within a 20% price band, allowing market bids to determine demand and the cut-off price.
BRLM (Book Running Lead Manager)
A SEBI-registered merchant banker who spearheads the IPO lifecycle, manages roadshows, drafts prospectuses, and oversees allocation.
Cut-off Price
The final price at which shares are issued to successful applicants in a book-built IPO, determined at the close of the bidding period.
Cap Price
The maximum price per equity share within the advertised price band at which an investor can submit a bid.
DRHP (Draft Red Herring Prospectus)
The preliminary offering document submitted to SEBI and stock exchanges for regulatory review and public comment before an IPO can launch.
Dilution
The reduction in existing shareholders' proportional equity ownership resulting from the issuance of new common shares in a fresh issue.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization, measuring operating profitability independent of financing structure.
EPS (Earnings Per Share)
A company's net profit divided by the total number of common shares outstanding, indicating how much money a company makes per share.
Floor Price
The minimum price per equity share at or above which an applicant can submit a valid bid in a book-built issue.
Fresh Issue
The issuance of entirely new equity shares by a company, with net proceeds injected directly into the corporate treasury.
Green Shoe Option
An over-allotment provision enabling lead managers to stabilize secondary market share prices during post-listing trading.
Grey Market Premium (GMP)
The unofficial, over-the-counter premium or discount at which IPO shares and applications are traded prior to exchange listing.
HNI (High Net-Worth Individual / NII)
Individual retail investors, NRIs, and corporate bodies bidding for more than ₹2 Lakh in an IPO, categorized as Non-Institutional Investors.
Issue Size (₹ Cr)
The total monetary value of equity shares offered to the public in an IPO, computed at the upper price band.
Kostak Rate
The fixed rupee amount paid in the unofficial grey market to purchase an investor's entire IPO application, irrespective of allotment status.
Lot Size
The minimum fixed number of shares an investor must bid for in an IPO, with all additional bids made in exact multiples of this quantity.
Merchant Banker
A SEBI-registered financial institution responsible for due diligence, prospectus preparation, underwriting, and coordinating the IPO process.
Minimum Investment (₹)
The smallest monetary commitment required to submit a valid retail application in an IPO.
NII (Non-Institutional Investor)
Investors bidding for aggregate value exceeding ₹2 Lakh who are neither Qualified Institutional Buyers nor retail individual investors.
Offer for Sale (OFS)
A transaction where existing promoters or early venture investors offload their equity stakes to the public without new shares being minted.
Price Band
The statutory price range (comprising Floor Price and Cap Price) within which investors are invited to submit bids.
P/E Ratio (Price to Earnings)
A valuation metric comparing a company's stock price or upper band price to its diluted per-share net earnings (EPS).
QIB (Qualified Institutional Buyer)
Institutional entities recognized by SEBI as possessing financial expertise to evaluate capital market risks, including mutual funds, FPIs, banks, and insurance firms.
RHP (Red Herring Prospectus)
The statutory offering document filed with the Registrar of Companies (ROC) containing complete business details and official issue dates.
Registrar to the Issue
A SEBI-registered entity tasked with processing applications, validating bids, finalizing allotment basis, and coordinating Demat share credit.
Retail Individual Investor (RII)
An individual investor who applies or bids for IPO shares worth an aggregate value of no more than ₹2 Lakh.
SEBI (Securities and Exchange Board of India)
The statutory apex regulatory body overseeing the securities and commodities markets in India, protecting investor interests.
T+3 Listing Timeline
The statutory settlement framework requiring shares to list on stock exchanges within three working days of IPO issue closure.
Underwriting
An agreement whereby financial intermediaries guarantee to subscribe to unsubscribed shares if public demand falls short of the statutory 90% threshold.
UPI Mandate
An electronic auto-debit authorization mechanism used by retail investors to block funds for IPO applications via approved UPI handles.
Valuation Multiple
A financial ratio comparing equity value or enterprise value to a core operating metric like revenue, EBITDA, book value, or net profit.
Weighted Average Cost of Capital (WACC)
A calculation of a firm's cost of capital in which each category of capital (equity and debt) is proportionately weighted.