Every book-building IPO in India comes with a price band — a range within which investors must place their bids. If you have ever seen "₹95–₹100" next to an IPO name, that is the price band. This guide explains exactly what an IPO price band is, what floor and cap prices mean, what cut-off price is and why retail investors should always bid at it, and how the price band determines lot size and your minimum investment.
What is IPO Price Band?
The price band is the range of prices within which investors can bid for shares during a book-building IPO. Every price band has two limits: the floor price (the minimum acceptable bid) and the cap price (the maximum acceptable bid). Investors place bids anywhere within this range, and the final issue price is discovered through the book-building process based on aggregate demand.
SEBI rules cap the price band spread: the cap price cannot exceed 120 percent of the floor price. So if the floor is set at ₹100, the cap cannot exceed ₹120. This rule prevents excessively wide bands that would obscure the true price discovery process.
The price band is announced in the Red Herring Prospectus (RHP) filed shortly before the IPO opens for subscription. The DRHP — the earlier draft version — leaves the price field as [●] because the band is finalised only after anchor investor feedback and pre-IPO road shows.
Floor Price, Cap Price and Cut-Off Price Explained
Floor price is the minimum acceptable bid price. Bids placed below the floor price are automatically rejected by the registrar. The floor price represents the lowest valuation the company is willing to accept for its shares.
Cap price is the maximum bid price within the band. The cap price is typically the price at which retail investors should bid to maximise allotment probability — bidding at the cap protects you from your bid being rejected if the final issue price ends up at the upper end of the band.
Cut-off price is a special bidding option, available only to retail individual investors and employees, where the investor agrees to pay whatever price is finally discovered through the book-building process — even if it ends up at the cap. Bidding at cut-off is the safest and most-recommended approach for retail investors because it eliminates the risk of bid rejection.
If you bid at a specific price below the cap and the final issue price is set above your bid, your application is rejected. Bidding at cut-off avoids this entirely.
How is IPO Price Band Determined?
Investment bankers — known as Book Running Lead Managers (BRLMs) — determine the price band based on a combination of valuation methods, peer comparison, and pre-IPO market sentiment.
The typical inputs include: discounted cash flow (DCF) and price-to-earnings (P/E) valuation models, peer multiples from comparable listed companies in the same sector, current market conditions and broader index levels, anchor investor feedback during the pre-IPO marketing phase, and demand signals from institutional road shows in major financial centres.
The band is announced in the RHP filed with SEBI typically 3–5 days before subscription opens. Once announced, the price band cannot be changed during the subscription window except in exceptional circumstances and only before bidding actually begins.
How Price Band Affects Lot Size and Minimum Investment
SEBI mandates that the minimum retail application — exactly one lot — must fall within the ₹13,000 to ₹15,000 range. The lot size is calculated backward from this requirement based on the cap price of the band.
Approximate formula: Lot size = ₹14,000 ÷ cap price (rounded to a standard lot multiple).
Example calculations:
- Price band ₹95–₹100: lot size ≈ 140 shares, minimum investment at cap = ₹14,000
- Price band ₹450–₹475: lot size ≈ 30 shares, minimum investment at cap = ₹14,250
- Price band ₹1,200–₹1,260: lot size ≈ 11 shares, minimum investment at cap = ₹13,860
Use our lot size calculator to compute the exact minimum investment for any price band, or visit the upcoming IPOs page to see live price bands for issues currently in the market.
Fixed Price IPOs vs Book Building IPOs
Not every IPO has a price band. Indian IPOs follow one of two pricing methods.
Fixed price IPO: A single price is announced upfront in the offer document. Investors apply at exactly that price. This format is most common in SME IPOs and rare for mainboard issues. Fixed-price IPOs do not require book building because there is no price to discover.
Book building IPO: The price band is announced and the final issue price is discovered through aggregated demand from QIBs, NIIs and retail investors. Most mainboard IPOs in India use the book-building method. The final price is typically set at or near the cap, particularly when the issue is heavily oversubscribed.
Real 2026 Indian IPO Price Band Examples
| IPO | Price Band | Lot Size | Min Investment at Cap |
|---|---|---|---|
| Bagmane Prime REIT | ₹95–₹100 | 150 | ₹15,000 |
| Recode Studios | ₹150–₹158 | 800 | ₹1,26,400 (SME) |
| Value 360 Communications | ₹95–₹98 | 1,200 | ₹1,17,600 (SME) |
Notice the dramatic difference between mainboard and SME minimum investments. SME IPOs require ~₹1 lakh+ as minimum application — a SEBI rule designed to limit retail participation in higher-risk SME issues.
Why You Should Always Bid at Cut-Off Price
Bidding at a specific price below the cap risks your application being rejected if the final issue price is set above your bid. In a heavily oversubscribed mainboard IPO where the price is almost certain to be set at the cap, bidding below the cap effectively guarantees rejection.
Bidding at cut-off eliminates this risk entirely — your application is valid at any price within the band, including the final discovered price. For retail investors, the recommendation is consistent: always select "Cut-Off Price" when filling the IPO application form, regardless of the broker you use. This single click can be the difference between a valid application and an automatic rejection.
FAQ
What is IPO price band in simple terms?
The price band is the range of prices within which you can bid for IPO shares. For example, ₹95–₹100 means you can bid anywhere between ₹95 and ₹100, or you can choose cut-off price to accept whatever the final discovered price is.
What is cut-off price in IPO?
Cut-off price means you agree to pay whatever price is finally decided after the book-building process completes. It is the safest way to bid and is recommended for all retail investors because it prevents your application from being rejected if the final price ends up above your specific bid.
What is floor price in IPO?
The floor price is the minimum price in the IPO price band. Bids placed below the floor price are automatically rejected. In a ₹95–₹100 price band, ₹95 is the floor price.
Does IPO price band change after announcement?
No. Once the price band is announced in the RHP, it cannot be changed during the subscription period. SEBI allows revision in exceptional circumstances, but this must happen before bidding opens — never after.
How is lot size related to the price band?
SEBI mandates that the minimum retail application falls between ₹13,000 and ₹15,000. The lot size is calculated as approximately ₹14,000 divided by the cap price. A higher cap price therefore produces a smaller lot size, and a lower cap price produces a larger lot size.
Why do IPO prices usually settle at the cap?
When an IPO is oversubscribed, the book-building process naturally pushes the final issue price toward the cap because aggregated demand from QIBs and HNIs supports the upper end of the band. Issues that are weakly subscribed sometimes settle at the floor or in the middle of the band.
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