Price Band Advertisement: What the Pre-Issue IPO Ad Must Disclose and How to Read It

Every mainboard IPO in India has one page that does more work than its size suggests: the price band advertisement. It is the newspaper ad that tells you the floor and cap price, the minimum bid, the dates, and a set of valuation ratios worked out at both ends of the band. Most retail investors skim it for the price and the lot size and move on. That is a waste, because SEBI has packed a surprising amount into this one ad.

We went through the format laid down in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, the ICDR rules, as last amended on March 21, 2026. This guide walks through what the ad must contain, when it has to appear, and how to actually use it before you put in a bid.

What a price band advertisement is

Under the ICDR rules, the issuer has to announce the floor price or the price band at least two working days before the issue opens. It does this in a “pre-issue and price band advertisement”, in the format set out in Part A of Schedule X of the regulations (Regulation 29(4)). Since an amendment that took effect on March 8, 2025, the pre-issue ad and the price band ad are one combined document. Before that, the rules treated the price band announcement as something an issuer could make along with the pre-issue ad or separately.

Where does it get printed? In the same newspapers that carried the company’s earlier public announcement about filing its draft offer document. That earlier announcement has to go into one English national daily, one Hindi national daily and one regional language newspaper with wide circulation where the company’s registered office is (Regulation 26(2)). So if you followed a company from its DRHP stage, the price band ad will show up in the same papers.

It doesn’t stay in print only. The announcement and its financial ratios must also be put up on the stock exchange websites and pre-filled in the application forms available there (Regulation 29(6)). If you bid through your broker’s app, the same numbers sit one or two taps away.

Where it fits in the IPO timeline

The ad comes late in the process. The company first files a draft offer document with SEBI, then gets SEBI’s observations, then files the red herring prospectus (RHP) with the Registrar of Companies. Only after the RHP is filed does the pre-issue and price band advertisement go out (Regulation 43(1)). The issue itself can open only after at least three working days from the RHP filing (Regulation 44(2)).

Once bidding starts, an IPO has to stay open for at least three and not more than ten working days (Regulation 46(1)). If the company revises the band midway, it must extend bidding by at least three working days, still within that ten-day ceiling (Regulation 46(2)). We have covered that scenario in more detail in our guide to the price band in an IPO.

The rules the price band itself must follow

Before reading the ad, it helps to know the limits the band has to sit inside. Regulation 29 sets three:

• The cap of the band must be less than or equal to 120% of the floor price.
• The cap must also be at least 105% of the floor price. This proviso was added in 2022, and it stops companies from announcing a band so narrow that it is effectively a fixed price.
• The floor price, and the final price, cannot be lower than the face value of the shares.

Worked example 1 (hypothetical). Suppose a company sets a floor of ₹500. The cap has to be at least ₹525 (105% of 500) and no more than ₹600 (120% of 500). A band of ₹500 to ₹510 would breach the 105% rule, and ₹500 to ₹620 would breach the 120% rule. The outer limits are worth knowing when a band looks unusually wide or unusually narrow.

What the ad must disclose, section by section

Schedule X, Part A, reads almost like a checklist. Here is what it covers, in roughly the order you will see it on the page.

The issue basics

The top carries the company’s name, registered and corporate office, contact person, website and corporate identity number, along with the promoters’ names. There is also a QR code that should take you to the webpage of the left lead book running lead manager, where the offer documents and the price band ad are hosted. Then come the nature and size of the issue, the price band, the minimum bid and the multiples after that, the anchor investor bidding date where applicable, and the bid opening and closing dates.

Price as a multiple of face value

The format requires a line stating that the floor price is a certain number of times the face value and that the cap price is a certain number of times the face value. It looks like a formality. It isn’t useless, though. It lets you compare a ₹10 face value share and a ₹2 face value share on the same footing, and it ties back to the rule that the price can’t go below face value.

P/E at the floor and at the cap

The ad must state the price-to-earnings ratio based on diluted EPS for the relevant fiscal year, both at the floor price and at the cap price. Regulation 29(5) adds that the announcement must contain relevant financial ratios computed for both the upper and lower end of the band, plus a statement pointing investors to the “basis of issue price” section of the offer document.

Worked example 2 (hypothetical). A company with a face value of ₹10 announces a band of ₹300 to ₹318. Its diluted EPS for the last fiscal is ₹12.50.

• Floor price as a multiple of face value: 300 ÷ 10 = 30 times. Cap: 318 ÷ 10 = 31.8 times.
• P/E at the floor: 300 ÷ 12.50 = 24 times. P/E at the cap: 318 ÷ 12.50 = 25.44 times.
• Band width check: 318 ÷ 300 = 1.06, so the cap is 106% of the floor, inside the 105% to 120% range.
• If the minimum bid is 47 shares, one lot at the cap costs 47 × 318 = ₹14,946.

Retail investors in a book-built issue can bid at the “cut-off” price instead of naming a specific price. A cut-off bid means you accept whatever final price is fixed, and that can be anywhere up to the cap. So the safer number to judge valuation on is the higher one, 25.44 times here, not the 24 times at the floor.

If you bid at the cut-off, you could end up paying the cap. Judge the valuation printed at the cap, not the friendlier number at the floor.

Selling shareholders and their cost

Where the IPO includes an offer for sale, the ad must list each selling shareholder in a table: their name and type (promoter, investor and so on), the number of shares offered, the aggregate proceeds and the weighted average cost of acquisition per share.

Worked example 3 (hypothetical). Using the same ₹300 to ₹318 band, say a private equity investor selling in the offer has a weighted average cost of acquisition of ₹42 per share. At the cap, it sells at 318 ÷ 42 = about 7.6 times its average cost. That is not a red flag by itself. Early investors are supposed to make money. But if several sellers are cashing out at large multiples while the company itself raises very little fresh capital, you know the IPO is mainly an exit, and you should judge it on that basis.

Pre-IPO placements and promoter deals

If the company did pre-IPO placements, the ad mentions the price range and gives a table of placements made since the DRHP was filed: date, allottee, number of shares, percentage of pre-offer capital, price per share and total consideration. If the DRHP provided for a pre-IPO placement that never happened, the ad has to say so.

It also discloses any transaction by promoters and the promoter group, since the DRHP filing, that adds up to 1% or more of the paid-up equity capital. The ad has to state whether the buyers or allottees are connected to the company, its promoters, directors or key managerial staff, and if they aren’t, it must say that in a negative statement. This is one of the more useful sections. A large block bought shortly before the IPO at a price well below the band tells you something about how insiders valued the company only months earlier.

Shareholding before and after, at both ends of the band

The format includes a table of the shareholding of promoters, the promoter group and the additional top 10 shareholders: pre-issue as at the date of the ad, and post-issue at allotment, shown at both the lower and the upper end of the band. The notes say the post-issue figures assume full subscription and all vested ESOPs being exercised.

Worked example 4 (hypothetical). A promoter holds 6 crore shares out of 8 crore shares outstanding, which is 75% before the issue. The company raises ₹600 crore through a fresh issue, and the promoter sells nothing.

• At ₹300, the company issues 600 ÷ 300 = 2 crore new shares. Total shares become 10 crore, and the promoter holds 6 ÷ 10 = 60%.
• At ₹318, it issues 600 ÷ 318 = about 1.887 crore new shares. Total shares become about 9.887 crore, and the promoter holds about 60.69%.

A higher issue price means fewer new shares for the same amount raised, so dilution is a little lower at the cap. That is exactly why SEBI wants both columns printed.

Allocation between investor categories

For book-built issues, the ad shows how the issue is split, as a percentage of issue size or net offer, between qualified institutional buyers, retail investors, non-institutional investors and any reserved categories. A small retail quota relative to the overall issue changes your allotment odds well before any subscription numbers come out.

Risks to investors

This box is the part many people skip, and it is probably the most useful. The format requires a summary of key risk factors chosen by materiality, ratios such as price to revenue, price to earnings, EV to EBITDA, EPS, net asset value per share, return on equity and return on capital employed for the company and its peer group for the latest full year, and the weighted average return on net worth for the last three financial years. A note at the end of the format says the “Risks to Investors” section has to be adequately highlighted in the ad.

Put those peer ratios next to the P/E at the cap and you have a rough first valuation check before you open the full RHP. Our IPO investing guide explains how to take that comparison further.

The risk box is where the ad lines up the company’s ratios against its listed peers. Read that next to the P/E at the cap and you already have half of a valuation view.

Everything else

The rest of the format covers a recommendation by the independent directors on why the price band is justified, a note that the “basis for issue price” chapter has been updated with the band, indicative timelines (bid submission and upload timings, and the expected listing date), the objects clause reference, share capital and capital structure, SEBI’s and the exchanges’ disclaimer clauses, credit rating or IPO grading if applicable, contact details of the lead managers, registrar and company secretary, and where to get the offer document, abridged prospectus and application forms. There is also a bold line telling investors to rely only on the red herring prospectus and the terms of the offer, not on outside sources.

What the rules do not allow in IPO advertising

While the issue is open, no advertisement can be released that gives the impression the issue has been fully subscribed or oversubscribed, or that otherwise indicates investors’ response (Regulation 43(4)). The company may put out issue opening and issue closing ads in the formats in Parts B and C of Schedule X, but those can’t be used as a scoreboard. Category-wise bid data is displayed by the stock exchanges on their websites, in a uniform format set by the same regulations.

The SEBI disclaimer printed in the ad also deserves a plain reading. It says SEBI only gives its observations on the draft offer document, and that this does not amount to approval of the issue or the securities. SEBI clearing an IPO is not SEBI recommending it.

How to read a price band advertisement in five minutes

1. Note the P/E at the cap, because that is most likely your entry price.
2. Compare it with the peer ratios in the risks section. If the company is priced well above peers, look for a reason in growth or return ratios.
3. Check the offer for sale table. How much of the issue is fresh capital, and at what multiple of their cost are existing holders selling?
4. Scan pre-IPO placements and promoter transactions since the DRHP for prices well below the band.
5. Look at the shareholding table to see how much control the promoters keep after the issue.
6. Work out your own lot cost at the cap and confirm the dates and listing timeline.

None of this replaces the RHP. The ad itself says as much. But it does give you a fast, standardised summary, written to one format across all issues, which makes it a good filter for deciding which IPOs deserve a closer read.

Disclaimer: This article is for education only and is not investment advice. All prices, ratios, share counts and outcomes in the worked examples are hypothetical. IPO investments carry risk, including loss of capital. Please read the offer documents and consult a SEBI-registered investment adviser before making any investment decision.