Why is the cut-off price higher for retail OFS orders?
During an Offer For Sale (OFS) issue, orders are collected over two days. Institutional and HNI orders (bids above ₹2 lacs) are accepted on the first day, while all retail bids are taken on the second day. A cut-off price is determined for the second day based on the bids received on the first day, and this becomes the floor price for retail bids. To learn more about OFS, see What is an Offer For Sale (OFS)?
The cut-off price for retail bids may be the same as the institutional bids if there is a low demand for the OFS, but if there is strong institutional demand, the cut-off price for retail bids may be significantly higher. Bids from individuals and HUFs worth less than ₹2 lacs are considered retail bids. To learn more, see Can retail investors apply for an OFS below the cut-off price?
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