10.6What is the IPO price band?
1What is it?
The price band is the range within which you can bid, e.g. ₹285–₹300. The top is the cap price; the bottom is the floor price.
2Why does it exist?
In a book-built issue, the final price is discovered from bids. Retail investors usually bid at the cut-off (the final price), which is nearly always the top of the band.
3Calculation
Application amount = Lot size × Price
- Band ₹285–₹300, lot 50 shares.
- At cut-off: 50 × ₹300 = ₹15,000 per lot.
One lot ≈ ₹15,000.
4Quick revision
- Range for bids.
- Final price usually at the top.
- Retail can bid at cut-off.
5Knowledge check
Q1. What is the cap price?Show answer
The top of the price band.
Q2. What does "bid at cut-off" mean?Show answer
You agree to pay whatever final price is set.
Q3. Band ₹100–₹110, lot 130. Application amount at cut-off?Show answer
₹14,300.
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