Cut-off price is the final price at which an IPO's shares are actually issued, discovered through book building once bidding closes. Ticking Cut-off Price on the application form means you agree to pay that final price, whatever it turns out to be within the issue's price band — instead of naming your own bid.
How is the cut-off price decided?
Book-built IPOs open with a price band (a floor and a cap) instead of one fixed price. Through the bidding window, investors bid at different prices within that band. Once bidding closes, the exchange/registrar totals up demand at every price point and sets the cut-off price at the lowest price where cumulative demand covers the shares on offer. It isn't announced in advance — it only exists once the book closes, which is why "cut-off" is a bidding choice, not a number you can look up beforehand.
Cut-off price vs. a custom bid
On Rupeezy's IPO application form, the Price field gives you two ways to bid:
- Cut-off Price (ticked) — you're bidding to pay the final issue price, whatever it's discovered to be. You don't enter a number yourself.
- Custom bid (cleared) — you enter your own price within the band. If the final cut-off price ends up higher than your bid, your application isn't considered.
Ticking Cut-off Price is the simpler, safer choice if your goal is just to be in the running at whatever price the issue settles at, rather than trying to bid at exactly the right price yourself.
Who can bid at the cut-off price?
Under SEBI's book-building rules, only Retail Individual Investors and Employee/Shareholder-reservation bidders are meant to use the cut-off option — HNI/Non-Institutional Investors (NII) are meant to enter a specific bid price within the band, since NII bids are part of what sets the cut-off price in the first place. See the review note at the end of this article — Rupeezy's own app doesn't currently gate the Cut-off Price checkbox by investor category, which is being checked with the product team.
Does cut-off price apply to every IPO?
No — only book-built issues, which is how almost every mainboard IPO is priced today. Fixed-price issues are priced upfront by the issuer, so there's no price band, no book building, and no cut-off option to choose.
Things to keep in mind
- Cut-off price only exists for book-built IPOs with a price band — there's nothing to tick on a fixed-price issue.
- A custom bid below the eventual cut-off price makes your application invalid for that IPO; ticking Cut-off Price avoids that risk entirely.
- Choosing cut-off price doesn't affect your odds in an oversubscribed IPO's allotment lottery — see "Can I improve my IPO allotment chances?" for how allotment actually works.