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Issue Price

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Key Highlights

  • Issue price refers to the price at which securities are offered to investors during their initial issuance in the primary market.

  • Issue Price in different market offerings includes initial public offering (IPO), follow-on public offer (FPO), rights issue and debt issuances.

What is Issue Price?

Issue Price refers to the price at which securities are offered to investors during their initial issuance in the primary market. This price is determined by the issuer in consultation with investment bankers, based on factors such as company fundamentals, market conditions, investor demand, and valuation benchmarks.

How Issue Price Is Determined?

The issue price is influenced by:

  • Company financial performance and growth prospects
  • Comparable company valuations
  • Prevailing market sentiment and liquidity
  • Demand from institutional and retail investors
  • Pricing mechanism, such as fixed price or book building

In book-built offerings, the final issue price is discovered after assessing bids received within the price band.

Issue Price in Different Market Offerings

  • Initial Public Offering (IPO): Price at which shares are first offered to the public

  • Follow-on Public Offer (FPO): Price set for additional shares issued by a listed company

  • Rights Issue: Discounted price offered to existing shareholders

  • Debt Issuances: Face value or discounted price at which bonds or debentures are issued

Issue Price vs Market Price

  • Issue Price: Set during the primary issuance of securities

  • Market Price: Price at which securities trade post listing in the secondary market

Market prices may trade above or below the issue price based on demand and performance.

Why Issue Price Matters to Investors

Understanding the issue price helps investors:

  • Assess valuation at the time of entry

  • Compare pricing with listed peers

  • Evaluate potential upside or downside post listing

  • Make informed allocation decisions in primary offerings

FAQs

1. Is the issue price the same as the listing price?

No. The listing price is determined by market demand on the day of listing and may differ from the issue price.

2. Can the issue price change after bidding starts?

In book-built issues, the final issue price is fixed after the bidding process closes.

3. Who decides the issue price?

The issuer sets the price in consultation with investment bankers and bookrunners, based on valuation and demand.

4. Is a lower issue price always better for investors?

Not necessarily. The quality of the business, growth prospects, and valuation sustainability matter more than the price alone.

5. Does issue price apply only to equity issues?

No. It also applies to debt instruments, preference shares, and other securities issued in the primary market.