What is IPO pricing?

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IPO pricing is the process of determining the offer price or the price for an IPO.

A company needs to consider various factors while deriving the right price for the IPO. IPO pricing is a crucial step in an IPO as a rightly priced IPO can perform well. The company undertakes IPO pricing in consultation with professional merchant bankers.

The IPO price determination gets done using either of the two IPO methods - Book building or Fixed price.

In the book building method, the price of the shares gets decided based on the demand for the shares at the end of the bidding process. The issuer announces a price band (e.g. Rs 75 to Rs 80) for the issue.

In the fixed price method, the offer price gets decided before the IPO opens for the subscription (e.g. Rs 75).


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