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IPO where the company does not fix a single price. Instead, it provides a price band and investors place bids within that range. The final IPO price called the cut-off price is decided based on investor demand.
Issuer sets price band i.e lower price (floor price) and upper price (cap price), Investors bid anywhere within this band. After all bids are collected, If demand is high than price moves toward the upper band and if demand is moderate than price may settle near the floor price. This process helps find the fair market value of the shares.
Investors can track category-wise demand (QIB, NII, Retail), number of times the IPO is subscribed. This transparency helps investors decide whether to apply. Most large IPOs use book-building because it ensures efficient price discovery, attracts institutional investors and supports larger fund-raising.
