What does cut-off price mean?
The offer price at which shares are issued to investors in an IPO is known as the cut-off price, which can be any price within the specified price band. For this particular IPO displayed in the below image, the issue price range is 72-76. If an investor applies for the IPO at the cut-off price, they cannot enter a separate price.
An IPO book-building issue typically begins with a specified price range, within which an investor can place bids for their desired quantity in multiples of the lot size. If an investor chooses the cut-off option while applying for the issue, it indicates their willingness to subscribe to shares at any price discovered within the price band through the book-building process. This increases the possibility of an allotment, allowing the investor to participate in the entire price-discovery process.
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