What is cut off in IPO application?

The use of the cut-off price in an IPO means that the investor is willing to pay the price that the company sets at the end of the book building process.

In book building IPOs where there is a price range to choose from, the IPO cut-off price is the final share price set by the company based on demand for the IPO shares.

Note:

• The IPO cut-off price option is only offered to retail investors.
• Most retail investors use the IPO cut-off price option.

Example:

A company has planned an IPO with a price between Rs 95 and 100. Investors have the option to apply at any price within the specified range. If the cut-off price is chosen, the retail investor will receive an allocation based on the price set by the company, taking into account the demand of QIB, HNI and retail investors who applied at the set price. If QIB and NII have subscribed at a price of Rs 100, the cut-off price will be set at Rs 100.