Essential IPO Abbreviations
IPO investing involves numerous abbreviations that can be confusing for newcomers. This quick reference guide decodes the most commonly used abbreviations.
Application & Process Related
ASBA - Applications Supported by Blocked Amount
The mandatory application method where your bank blocks (not debits) the application amount until allotment.
UPI - Unified Payments Interface
Digital payment system used for retail IPO applications. Requires mandate approval through UPI app.
CAN - Confirmation of Allocation Note
Document confirming your IPO allotment details.
Documents & Regulatory
DRHP - Draft Red Herring Prospectus
Initial prospectus filed with SEBI. Contains everything except final price.
RHP - Red Herring Prospectus
Updated prospectus after SEBI approval with price band, but before final pricing.
SEBI - Securities and Exchange Board of India
The regulatory authority governing IPOs and capital markets in India.
ICDR - Issue of Capital and Disclosure Requirements
SEBI regulations that govern IPO process and disclosure norms.
Investor Categories
QIB - Qualified Institutional Buyer
Large institutional investors (mutual funds, banks, FPIs). Get 50% IPO allocation.
NII - Non-Institutional Investor
Investors applying for more than ₹2 lakhs. Also called HNI category. Get 15% allocation.
HNI - High Net Worth Individual
Another term for NII category investors.
RII - Retail Individual Investor
Individual investors applying for up to ₹2 lakhs. Get 35% allocation.
FPI - Foreign Portfolio Investor
Foreign institutional investors who can invest in Indian markets, including IPOs.
Issue Structure
OFS - Offer for Sale
Existing shareholders selling shares in IPO. Money goes to sellers, not company.
FPO - Follow-on Public Offer
Additional share offering by already-listed company.
IPO - Initial Public Offering
Company's first offering of shares to public for trading on stock exchanges.
Market Terms
GMP - Grey Market Premium
Premium at which IPO shares trade in unofficial market before listing.
NSE - National Stock Exchange
India's largest stock exchange by trading volume.
BSE - Bombay Stock Exchange
India's oldest stock exchange, also known as BSE Limited.
SME - Small and Medium Enterprise
Smaller companies that list on dedicated SME platforms of exchanges.
Intermediaries
BRLM - Book Running Lead Manager
Investment bank managing the IPO. Also called Lead Manager or Merchant Banker.
RTA - Registrar and Transfer Agent
Entity handling share transfers, allotment, and investor services.
Financial Metrics
EPS - Earnings Per Share
Net profit divided by number of shares. Used for P/E calculation.
P/E - Price to Earnings Ratio
Share price divided by EPS. Key valuation metric.
ROE - Return on Equity
Net profit as percentage of shareholders' equity. Measures profitability.
ROCE - Return on Capital Employed
Measures how efficiently company uses capital to generate profits.
PAT - Profit After Tax
Company's net profit after all expenses and taxes.
EBITDA - Earnings Before Interest, Tax, Depreciation, and Amortization
Operating profitability metric, removes non-operational items.
Taxation
STCG - Short-Term Capital Gains
Gains from selling shares held less than 12 months. Taxed at 15%.
LTCG - Long-Term Capital Gains
Gains from selling shares held more than 12 months. Taxed at 10% above ₹1 lakh.
STT - Securities Transaction Tax
Tax on securities transactions, paid to government through broker.
Quick Reference Table
| Category | Abbreviations |
|---|---|
| Application | ASBA, UPI, CAN |
| Documents | DRHP, RHP |
| Regulators | SEBI, ICDR |
| Investors | QIB, NII, HNI, RII, FPI |
| Issue Types | IPO, OFS, FPO |
| Market | GMP, NSE, BSE, SME |
| Metrics | EPS, P/E, ROE, ROCE, PAT, EBITDA |
| Tax | STCG, LTCG, STT |
Conclusion
Keep this quick reference handy when reading about IPOs. Understanding these abbreviations will help you navigate prospectuses, news articles, and investment discussions with confidence.