IPO Basics

What is cut off price?

Cut-off price is the offer price, finalized by a company in consultation with the book running lead managers (BRLMs), which could be any price within the price band. Applying on Cut-off price means the investor is ready to pay whatever price is decided by the company at the end of the book-building process.
When applying at a cut-off price, an investor has to pay the highest price while placing the bid. If a company decides the final price lower than the highest price asked for IPO, the remaining amount is returned to the retail investor.
For eg: if the price band of an IPO is between Rs.345 – Rs.350 and the investor opts to bid at the cut off price, then the application would be done at the cap price i.e. Rs.350. However, if the determined issue price is less than Rs.350, then price difference between the issue price and the cap price would be refunded to the investor after allotment