IPO lot size, price band and cut-off price explained

The price band and the lot size decide how much money you need to apply. Both are announced before the IPO opens.

Price band

The price band is the range, from a floor price to a cap price, in which you may bid for each share. The final issue price is decided after bidding and falls inside the band.

Retail applicants can choose the cut-off price option, which means they accept whatever the final price turns out to be. The amount blocked is worked out at the top of the band, so that enough money is set aside whatever the final price is.

Lot size

You cannot buy single shares in an IPO. You bid for a lot, the minimum number of shares, or for whole multiples of it.

A worked example

Suppose the price band is ₹95 to ₹100 and the lot size is 150 shares. One lot at the top of the band is 150 × ₹100 = ₹15,000. That is the minimum amount blocked in your account for one lot.

The money is blocked, not paid out. It stays in your bank account, through UPI or ASBA, until the allotment is done. If you are not allotted anything it is simply unblocked.

The ₹2 lakh retail limit

An application counts as retail when its value is up to ₹2 lakh at the cut-off price. Bigger applications fall in the non-institutional (NII or HNI) category, which is allotted differently. See the guide on categories for the difference.

SME IPOs have bigger lots

SME IPOs typically have a much larger lot, with a minimum application often above ₹1 lakh, which is part of why they are riskier. The guide on SME and mainboard IPOs covers the differences.

Information, not investment advice. GMP is an unofficial grey-market indicator; figures come from public sources (InvestorGain) and may be late or wrong. Not registered with or affiliated to SEBI, the exchanges, the registrars or InvestorGain.