The IPO Glossary.
Every term that actually matters.

A condensed version of the prospectus containing the salient features of the offer, distributed with application forms. From March 2026, abridged prospectuses must carry a QR code linking to the full DRHP hosted on issuer and SEBI sites.

The process of distributing shares to applicants after the issue closes. For book-built issues, allotment must be completed within T+3 working days of the issue closing date.

A Qualified Institutional Buyer (QIB) who is allocated shares one working day before the issue opens to retail and other investors. Anchor allocation can be up to 60% of the QIB portion and helps signal institutional confidence in the issue.

An application mechanism where the bid amount is blocked in the investor's bank account rather than debited upfront. Only debited if shares are allotted; the block is released for any unallotted portion. Mandatory for all retail and HNI applications.

A board committee with majority independent directors that oversees the financial reporting process, internal controls, statutory auditors and related-party transactions. Mandatory for listed entities under LODR.

The methodology used to allot shares when an issue is oversubscribed, typically following SEBI's prescribed proportionate allotment formula within each investor category. Published by the registrar after the issue closes.

A price-discovery mechanism in which investors bid for shares within a price band specified by the issuer. The final price is determined based on the demand at various bid levels. Most Mainboard IPOs use book-building rather than fixed pricing.

The SEBI-registered merchant banker that leads the IPO process — managing the book, coordinating syndicate members, drafting the offer document and interfacing with SEBI. A Mainboard issue typically has one or more BRLMs.

The Bombay Stock Exchange's dedicated platform for listing small and medium enterprises with post-issue paid-up capital up to ₹25 crore. Launched in March 2012 to provide capital-market access to smaller issuers.

A statement included in the DRHP showing the company's debt and equity capital structure both pre-issue and post-issue, including a reconciliation of share capital movements over the past three years.

The time taken to convert investments in inventory and other resources into cash flows from sales. Calculated as Days Sales Outstanding plus Days Inventory Outstanding minus Days Payable Outstanding. A key working-capital health indicator.

A senior officer designated by the listed entity, responsible for ensuring compliance with all SEBI and exchange requirements, and acting as the principal contact for the regulator. Mandatory under LODR.

A quarterly disclosure (for Mainboard listed entities) detailing board composition, committee meetings, attendance, related-party transactions, code of conduct compliance and other governance matters.

An option available to retail individual investors to bid at the final issue price discovered through the book-building process, without specifying a particular price.

An electronic account held with a depository participant (NSDL or CDSL) used to hold securities in dematerialised form. Mandatory for participating in any IPO.

The preliminary offer document filed with SEBI containing all material information about the company and the proposed issue, except the final issue price and size. Subject to a 21-day public comment period.

The structured investigation of an issuer's business, financial, legal and operational position conducted by various advisors before filing the DRHP. Streams include financial, legal and secretarial due diligence.

A measure of operating profitability that excludes the effects of financing decisions, tax treatment and accounting policies on depreciation. SME IPO eligibility now requires EBITDA ≥ ₹1 crore in 2 of the last 3 years.

Conditions an issuer must satisfy under SEBI ICDR Regulations to be permitted to make a public issue — including net tangible assets, profitability, net worth, and corporate-history requirements.

A scheme granting employees the right to acquire shares of the company at a predetermined price. ESOP schemes need to be rationalised and disclosed in the DRHP, with grant pricing aligned to listing-related valuation norms.

The nominal value assigned to a share, typically ₹10 for SME issues and ₹1, ₹2, ₹5 or ₹10 for Mainboard issues. The premium component is the issue price minus the face value.

An independent professional opinion that a proposed transaction price is fair from a financial point of view to the shareholders of the company. Typically required for related-party deals and certain corporate actions.

The lower end of the price band in a book-built issue. Bids below the floor price are not considered. The upper end of the band cannot exceed the floor price by more than 20%.

An overseas investor registered with SEBI to invest in Indian securities. FPIs participate in IPOs primarily through the QIB portion and are subject to FEMA and SEBI FPI Regulations.

The component of an IPO where new shares are issued by the company and the proceeds flow to the company itself, in contrast to an Offer for Sale. Used to fund growth, retire debt, working capital or general corporate purposes.

A category of use-of-proceeds in the DRHP for purposes not specifically identified. Capped at up to 25% of issue size for Mainboard and the lower of ₹10 crore or 15% for SME (reduced from 25% in 2025).

An over-allotment option allowing the issuer to issue up to 15% additional shares beyond the original issue size if there is excess demand, to stabilise the share price post-listing.

A non-institutional investor applying for more than ₹2 lakh in an IPO. Under the 2022 amendments, the HNI/NII category is split into small NIIs (₹2–10 lakh) and large NIIs (above ₹10 lakh) with separate allocations.

SEBI's principal regulations governing public issues of capital, including IPOs, FPOs, rights issues, preferential issues and QIPs. The current framework is the SEBI ICDR Regulations 2018, amended multiple times since.

Initial clearance from the stock exchange(s) confirming that the proposed listing meets the exchange's listing criteria. A prerequisite for filing the DRHP with SEBI.

Accounting standards converged with IFRS, applicable to listed companies and certain larger unlisted companies in India. Restated financial statements in DRHPs must conform to Ind AS where applicable.

A non-executive director who satisfies the independence criteria under the Companies Act and LODR — including no material pecuniary relationship with the company, promoters or KMPs in the preceding two years.

The first sale of a company's shares to the public on a stock exchange, transitioning the company from privately-held to publicly-listed status. May involve a fresh issue, offer for sale, or both.

A 12-character alphanumeric code uniquely identifying a specific security. Issued by NSDL/CDSL and required before shares can be held in dematerialised form.

The price at which shares are allotted to successful applicants — determined either through the book-building process (book-built issues) or fixed in advance (fixed-price issues).

The total monetary value of the IPO, calculated as the issue price multiplied by the number of shares offered. The total issue size cannot exceed 5 times the pre-issue net worth.

As defined in the Companies Act — includes the CEO, MD, Whole-Time Director, CFO, Company Secretary and any other officer not more than one level below directors. KMPs have specific disclosure and trading obligations.

A SEBI-registered merchant banker appointed to manage the public issue. For Mainboard issues, called a Book Running Lead Manager (BRLM); for SME issues, simply a Merchant Banker.

The admission of an issuer's securities to trading on a recognised stock exchange. Triggers the entire LODR compliance framework from listing day onwards.

The Uniform Listing Agreement executed between an issuer and the stock exchange(s), incorporating the obligations under SEBI LODR Regulations.

A period during which specified shareholders cannot transfer their shares. Minimum Promoter Contribution is locked in for 3 years; promoter holdings in excess are locked in 50% for 1 year and 50% for 2 years (post-2025 amendments).

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 — the comprehensive framework governing ongoing obligations of listed entities, including financial reporting, governance, material event disclosure and trading restrictions.

The minimum number of shares an investor can apply for in an IPO. For SME IPOs, the lot size is calibrated so that the minimum application value is at least ₹2 lakh (doubled from ₹1 lakh in 2025).

An IPO listed on the main platforms of NSE and BSE, subject to the full ICDR eligibility criteria — minimum net tangible assets of ₹3 crore, average operating profit of ₹15 crore, post-issue paid-up capital of ₹10 crore, and other requirements.

A SEBI-registered intermediary that provides two-way (buy and sell) quotes for an SME-listed security to ensure liquidity. Mandatory for SME issues for a minimum of 3 years post-listing.

An event that a reasonable person would consider important in making an investment decision. Listed entities must disclose material events to the stock exchanges within 30 minutes, 12 hours or 24 hours depending on the event category.

The quantitative threshold above which an item must be specifically disclosed. For SME-listed entities, related-party materiality is now 10% of annual consolidated turnover or ₹50 crore, whichever is lower.

A section of the DRHP and annual report where management discusses the company's financial condition, results of operations, key drivers and risks — providing context that the raw financial statements alone don't convey.

A SEBI-registered Category I intermediary that arranges, advises and manages public issues, private placements and corporate restructuring. The lead manager role in any IPO is played by a merchant banker.

The minimum 20% of post-issue capital that must be held by the promoters, locked in for 3 years from the date of allotment. Designed to ensure skin-in-the-game from controlling shareholders.

The minimum percentage of the issue that must be subscribed for the offering to proceed — 90% of fresh issue. Mainboard issues additionally require at least 1,000 subscribers; SME issues require at least 50.

Total assets minus intangible assets and total liabilities. Mainboard ICDR Regulation 6 requires NTA of at least ₹3 crore in each of the preceding three financial years, with not more than 50% held as monetary assets (subject to exceptions).

Paid-up share capital plus reserves and surplus minus accumulated losses, deferred expenditure and intangible assets. For Mainboard IPO eligibility, net worth must be at least ₹1 crore in each of the preceding three full financial years.

An investor applying for shares worth more than ₹2 lakh in an IPO who is not a retail individual investor or a QIB. The NII category is split into small NIIs (₹2–10 lakh) and large NIIs (above ₹10 lakh) with separate sub-allocations.

The National Stock Exchange's platform for small and medium enterprises with post-issue paid-up capital up to ₹25 crore. Launched in 2012 and a key venue for SME listings alongside BSE SME.

The section in the DRHP detailing the specific purposes for which the IPO proceeds will be used — typically including financing growth, repaying debt, working capital, acquisitions and general corporate purposes.

The component of an IPO where existing shareholders (typically promoters and pre-IPO investors) sell their shares — proceeds flow to the selling shareholders, not the company. SME OFS is capped at 20% of total issue size post-2025.

The amount of share capital that has been paid by shareholders. Post-issue paid-up capital determines platform eligibility: Mainboard requires ≥ ₹10 crore, SME caps at ₹25 crore (with the ₹10–25 crore band as a transition zone).

A certification of the audit firm's quality control system by ICAI's Peer Review Board. Mandatory for the statutory auditor of any IPO-bound company — financial statements in the DRHP must be audited by a peer-reviewed firm.

SEBI (Prohibition of Insider Trading) Regulations 2015 — the framework prohibiting trading on Unpublished Price Sensitive Information (UPSI) and requiring designated persons to comply with trading window restrictions, pre-clearance and disclosure norms.

A private placement of shares to investors (typically institutional) shortly before the IPO. Used to validate valuation, bring credible names onto the register and reduce the quantum to be raised at listing.

The range within which bids are accepted in a book-built issue, comprising a floor price and a cap. The cap cannot exceed the floor by more than 20%. The final issue price is discovered within this band based on demand.

A person or entity in control of the issuer, named as such in the offer document. Promoters carry specific obligations including Minimum Promoter Contribution, lock-in, and post-listing governance responsibilities.

An extended definition that includes the promoter, immediate relatives, and entities in which the promoter or relatives hold significant interest. Disclosure obligations and lock-in requirements extend to the entire promoter group.

The final offer document containing all material information about the issuer and the offering, including the final price and issue size. Distributed at or before the issue opens after SEBI approval.

An institutional investor recognised by SEBI — includes mutual funds, insurance companies, banks, foreign portfolio investors, alternative investment funds and pension funds. Mainboard allocation to QIBs is 50% of the issue.

An alternative IPO eligibility path under ICDR Regulation 6(2) for companies that don't meet the standard profitability requirements. The issue must be 75% subscribed by QIBs to qualify. Used by several new-age listings.

A private placement of securities by a listed company to QIBs only, without going through the full public-issue process. A post-listing fundraising tool, not an IPO mechanism.

The final offer document filed with the Registrar of Companies before the issue opens, containing all information from the DRHP plus the final price band and updated financials. The 'red herring' refers to the cautionary statement printed in red.

Return of the application amount to investors who don't receive allotment or receive partial allotment. With ASBA and UPI mandate flows, the blocked amount is simply unblocked rather than physically refunded.

A SEBI-registered intermediary that handles the operational aspects of the issue — processing applications, allotment basis, share allotment in demat accounts, refunds and post-listing share-transfer functions.

A transaction between the company and a related party — promoters, directors, KMPs, their relatives or entities they control. RPTs above materiality thresholds require audit committee approval, shareholder approval and disclosure.

Historical financial statements re-presented in a consistent format, with corrections and reclassifications, to reflect the current accounting policies — required for the three years preceding the IPO and any stub period.

An individual investor applying for shares worth up to ₹2 lakh in an IPO. The retail allocation for Mainboard issues is 35% of the issue. From 2025, SME IPOs use the term 'Individual Investor' for similar applicants.

A series of presentations by the issuer's management to potential institutional investors before the IPO opens, designed to build understanding of the business and gauge demand. Typically conducted across financial centres.

The statutory authority under the MCA that maintains the registry of companies and receives statutory filings under the Companies Act. The RHP is filed with the ROC before the issue opens.

The principal regulator of India's securities markets, established under the SEBI Act 1992. Approves DRHPs, frames the ICDR and LODR Regulations, and supervises listed entities and market intermediaries.

Queries and comments raised by SEBI on a filed DRHP, requiring the issuer to respond, clarify or amend the document. Routine in nature; the observation cycle typically adds 4–8 weeks to the filing timeline.

An annual report by a practising Company Secretary certifying the listed entity's compliance with applicable securities laws, filed with the stock exchange within 60 days of the end of the financial year.

An existing shareholder offering shares through the Offer for Sale component of an IPO. Post-2025 amendments, an SME selling shareholder may not offload more than 50% of their existing holding.

The form (physical or electronic) through which investors apply for shares in an IPO. Now substantially replaced by digital ASBA and UPI mandate flows.

A disclosure showing the breakup of shareholders by category (promoter, public, institutional, employees) — required in the DRHP both pre-issue and post-issue, and filed quarterly post-listing.

The transfer of an undertaking as a going concern for a lump-sum consideration, without assigning values to individual assets and liabilities. A common pre-IPO restructuring tool to isolate the listing entity.

An IPO listed on NSE Emerge or BSE SME, designed for smaller issuers with post-issue paid-up capital up to ₹25 crore. Subject to relaxed but distinct ICDR norms under Chapter IX.

A period of less than a full financial year for which financial statements are presented in the DRHP — typically from the end of the most recent audited financial year to a recent date.

The aggregate of applications received in an IPO. Subscription is expressed as a multiple of the offer (e.g. '12x subscribed' means demand was 12 times the shares offered). Tracked separately by investor category.

The collection of merchant bankers, brokers and intermediaries managing an IPO — typically including BRLMs, co-managers, syndicate members and sub-syndicate brokers who collect applications.

The timeline by which shares are credited to allottees' demat accounts and listed for trading — three working days from the issue closing date, accelerated from T+6 in recent years.

A period during which designated persons (directors, KMPs, employees with access to UPSI) are permitted to trade in the company's securities. The window is closed around financial-result announcements and other UPSI events.

A commitment by merchant bankers to subscribe to any portion of the issue that is not taken up by the public. Provides certainty of fund-raising; the underwriters charge a commission for this commitment.

A payment authorisation mechanism allowing retail investors to apply for IPOs using the UPI infrastructure — the bid amount is blocked via a UPI mandate similar to ASBA, debited only on allotment.

Information relating to a company that is not generally available and which, when it does become available, is likely to materially affect the share price. Trading on UPSI is prohibited under PIT Regulations.

The estimated economic value of the company, determined using methods such as DCF, comparable companies and precedent transactions. Critical for IPO price-band determination, fairness opinions and ESOP grant pricing.

A whistle-blower mechanism allowing directors and employees to report genuine concerns about unethical behaviour, fraud or violations — with safeguards against victimisation. Direct access to the Audit Committee chair is mandatory.

A borrower classified as such by lenders for deliberately not repaying despite capacity to do so. Promoters or directors classified as wilful defaulters are debarred from making a public issue.

A disclosure in the DRHP detailing the company's working-capital requirements, sources of funding, and projections — including debtor ageing, inventory turnover and cash conversion cycle analysis.