Price Band, Cut-off Price and Lot Size Explained

Two numbers appear at the top of every IPO page: the price band and the lot size. Together they decide the minimum you can apply for, the maximum you can apply for as a retail investor, and how much money is blocked in your account while the issue is open.

Price band

In a book-built issue — the method used by almost all mainboard IPOs — the company does not fix one price in advance. It announces a range, for example ₹140–₹148 per share:

• the lower end is the floor price;
• the upper end is the cap price.

SEBI's rules require the cap to be no more than 120% of the floor, and at least 105% of it, so the band is a real range. The band must be announced at least two working days before the issue opens. After bidding closes, the company and lead managers set the final issue price within the band based on demand — in practice, most issues are priced at the cap.

In a fixed-price issue, used by some SME IPOs, a single price is set in advance and there is no band.

Cut-off price

Retail investors can tick “cut-off” instead of entering a price. This means “I will pay whatever final price is set”. Your application is then valid whatever the final price, and the amount blocked is calculated at the cap price. If the final price is lower, the difference is released.

QIBs and non-institutional investors cannot bid at cut-off; they bid at a specific price, and a bid below the final price is not allotted. See investor categories.

Lot size

You cannot apply for any number of shares. Bids are made in multiples of a lot (also called the market lot or minimum bid lot). If the lot is 100 shares, you can bid for 100, 200, 300 and so on.

For mainboard IPOs, the lot is sized so that one lot costs roughly ₹10,000–₹15,000 at the cap price. That is why a high-priced share has a small lot (for example 8 shares at ₹1,785) and a low-priced share a large one (for example 450 shares at ₹32).

SME IPOs have much larger minimum applications; see Mainboard vs SME.

Working out your application

Most broker apps calculate these for you, but checking by hand avoids an application slipping into the wrong category.

Does applying for more lots help?

For retail investors in an oversubscribed issue, no — the lottery decides who gets the minimum lot, and every valid application has the same chance regardless of how many lots it asked for. Applying for more lots mainly means more money blocked. It matters only when retail demand is below or close to the shares available. See how allotment works.

Where the numbers come from

The price band is announced by the company through the exchanges and newspaper advertisements; the lot size is in the RHP and the price-band announcement. Our IPO pages show both, along with the minimum investment at the cap price, and mark them as unavailable if they have not been published yet.

Next: How to apply for an IPO using UPI or ASBA