How to apply at the cut-off price in an IPO on Zerodha
A cut-off price bid in a book-built Initial Public Offering instructs the registrar to accept your application at whatever price the issue is finally priced at, as long as that price falls within the disclosed price band. It is the default and recommended strategy for Retail Individual Investors (RIIs) because it eliminates the risk of exclusion if the issue is priced at the upper end of the band.
This guide explains what the cut-off price is, who can use it, how to tick it in Zerodha Kite, and how the UPI ASBA mandate block is calculated when you bid at cut-off.
For the full Kite web procedure see the Kite web IPO guide. For background on the book-building process see the book building wiki article. For the cut-off price concept see the dedicated wiki article.
What cut-off price means
In a book-built IPO, the issuer announces a price band (for example, Rs 180 to Rs 200 per share). During the three-to-five day bid window, investors submit bids at various prices within this band. After the bid window closes, the book running lead manager and the issuer analyse the demand at each price point and determine the final issue price, also called the cut-off price.
A retail investor who bids at a specific price (say, Rs 190) risks exclusion if the issue is finally priced at Rs 200, because their bid falls below the final price. A retail investor who ticks the Cut-off option instructs the registrar: “I accept any price within the band.” If the issue is priced at Rs 200, the cut-off bidder is included at Rs 200. If the issue is priced at Rs 190, the cut-off bidder is included at Rs 190.
Under SEBI ICDR Regulations 2018, only RIIs and eligible employees are permitted to bid at cut-off. Non-institutional investors (NIIs) and qualified institutional buyers (QIBs) must bid at a specific price.
How the mandate block is calculated for a cut-off bid
Because the final price is unknown at the time of bid submission, the UPI mandate for a cut-off bid blocks funds at the upper end of the price band. For example:
- Price band: Rs 180 to Rs 200.
- Lot size: 75 shares.
- Application: 1 lot.
- Mandate block: 75 shares times Rs 200 = Rs 15,000.
If the issue is priced at Rs 195 (below the upper end), the actual allotment consideration is 75 times Rs 195 = Rs 14,625. The remaining Rs 375 is released from the lien on allotment day (T+1). If you are not allotted, the entire Rs 15,000 block is released.
Step-by-step procedure
Sign in to Kite and navigate to Bids, then IPO
Go to kite.zerodha.com and sign in with your client ID, password, and TOTP two-factor authentication. Click Bids in the top navigation, then IPO in the sub-navigation. The landing page lists all open issues.
Click Apply on the desired issue
Locate the issue and click its Apply button. The bid entry modal opens. The investor type defaults to Individual (retail). Leave it as Individual unless you are applying under the employee or shareholder category.
Enter lot quantity
Enter the number of lots in the quantity field. For retail applicants in most mainboard issues, one lot is the common choice for the following reason: the basis of allotment for oversubscribed mainboard retail portions is draw-of-lots at one lot per allottee. Applying for more lots does not increase the probability of receiving an allotment, though the probability of receiving exactly one lot is the same for all eligible retail applicants regardless of how many lots they applied for.
For SME issues, where allotment is proportionate, applying for the maximum permissible lots does increase expected allotment quantity.
Tick the Cut-off checkbox
In the bid price field, tick the Cut-off checkbox (or select Cut-off from the price-type dropdown, depending on how the Kite interface labels it). When this option is selected, the price field becomes inactive. You do not enter a rupee amount.
If you add additional bids by clicking Add bid, all bids in a cut-off application default to cut-off. You cannot mix a cut-off bid with a specific-price bid in the same application.
Enter your UPI ID and submit
Enter your UPI Virtual Payment Address in username@bank format. Tick the SEBI undertaking checkbox confirming the bid is not a duplicate and you are eligible for the retail category. Click Submit.
Zerodha routes the bid to the exchange and triggers the UPI mandate request. The mandate block amount is set at the upper end of the price band times your bid quantity. The bid status changes to Pending Mandate.
Approve the UPI mandate
Within thirty seconds of submission, your UPI app receives a Block Funds for IPO push notification. Open the app, review the block amount (confirm it equals lot size times upper price band times number of lots), and enter your UPI PIN to approve. The mandate must be authorised by 5 PM IST on the bid closing day.
For per-app instructions, see:
Receive refund if priced below upper band
After the bid window closes, the final issue price (the cut-off price) is announced by the lead manager, typically on T+1 morning or on the evening of the closing day. If the final price is lower than the upper end of the price band:
- Your mandate block was at the upper-band price. The actual allotment consideration is at the final price.
- The difference (upper-band price minus final price, times your allotted quantity) is released from the lien on allotment day.
- If you receive no allotment, the entire block is released.
The refund does not require any action from you; the release is processed by the sponsor bank and the registrar automatically.
Specific-price bid vs cut-off: when to use each
| Strategy | When to use |
|---|---|
| Cut-off bid | Standard retail strategy for all book-built IPOs; eliminates price mismatch risk |
| Specific price within the band | Only if you have a strong view that the issue will price below the upper band; if it prices above your bid, your application is excluded |
In practice, the cut-off option is used by the large majority of retail applicants in mainboard IPOs. Specific-price bids are more common in NII-category applications where cut-off is not allowed.
What can go wrong
- Issue is a fixed-price IPO. Cut-off bidding does not apply to fixed-price issues because there is no price band. The issue price is fixed and disclosed in the prospectus; you simply apply at that price.
- Mandate block depletes available balance. The block is at the upper-band price, which is the maximum possible. Ensure you have sufficient balance before applying. The block is a lien, not a debit, and interest continues to accrue.
- Multiple cut-off bids under the same PAN for the same issue. The registrar’s deduplication rejects one or both bids.
- Mandate not approved by 5 PM IST on closing day. Bid is rejected even if placed and acknowledged by Kite.
Related guides
- How to apply for a Mainboard IPO on Zerodha
- How to apply for an SME IPO on Zerodha
- How to apply for an IPO on Kite web
- How to modify or withdraw an IPO bid on Zerodha
- How to approve a UPI IPO mandate
- How to check IPO allotment status on Zerodha
References
- SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018, Regulation 49 (Cut-off price option for retail investors), https://www.sebi.gov.in/legal/regulations/aug-2018/sebi-issue-of-capital-and-disclosure-requirements-regulations-2018_39971.html.
- SEBI Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, T+3 listing timeline.
- NPCI Circular dated 8 September 2025, Enhancement of UPI Per-Transaction Limits for Capital Markets.
- How to apply for IPOs, Zerodha Support Portal.