Price Band in IPO: How the Floor, Cap and SEBI’s 5–20% Rule Work

Every IPO ad you see in the business papers leads with two numbers joined by a dash. Jio Platforms, for instance, is ₹1,065–1,119. That range is the issue’s price band, and the price band in IPO bidding does more work than most first-time applicants realise. It tells you the lowest and highest price the company is willing to sell at, it fixes the valuation range you’re being asked to accept, and it decides whether your bid stays valid once the final price is set.

Here we go through what the band is, the SEBI rules that box it in, how a revision works, and what a retail applicant should actually do with those two numbers. The rules come from SEBI’s own FAQ on the ICDR Regulations and the text of Regulation 29 of the SEBI (ICDR) Regulations, 2018. If you’re new to public issues, our guide to IPO investing in India covers the wider process first.

What the price band in IPO bidding actually is

There are two ways to price a public issue in India. In a fixed price issue, the company decides the price at the outset and prints it in the offer document. In a book built issue, the price is discovered from the demand that comes in at different levels. SEBI’s FAQ describes both. Jio Platforms, which we look at below, is a book built issue, which is why it has a band at all.

For a book built issue, the company announces either a floor price or a price band. The floor is the bottom. The top of the band is called the cap. Investors bid anywhere inside that range, and once bidding closes, the issuer and the book running lead managers settle on one final price. Regulation 29(1) says the prospectus finally filed with the Registrar of Companies can carry only one price. So the band is a temporary thing. It lives for the bidding window and then collapses into a single number.

One point people often get wrong: SEBI does not set the price. Its FAQ is blunt about this. India moved to free pricing in 1992, and the issuer decides the price in consultation with the merchant banker, on the basis of market demand. What SEBI controls is the shape of the band and how it must be disclosed, not where it sits.

The SEBI rules on floor, cap and spread

The rules are short, which makes them easy to check against any issue you’re looking at.

• The cap can’t be more than 120% of the floor. That’s Regulation 29(2). A floor of ₹200 means the cap can go no higher than ₹240.
• The cap must be at least 105% of the floor. This minimum came in through the ICDR amendment of 2022 and applies to issues opening on or after January 14, 2022, as AZB & Partners’ summary of the amendment sets out. Before that, the rules set only the upper limit. SEBI’s FAQ now puts the two limits together: the spread between floor and cap has to be at least 5% and no more than 20%.
• Neither the floor nor the final price can be below face value. Regulation 29(3).
• Timing. If the band isn’t printed in the red herring prospectus, the company must announce it at least two working days before an IPO opens (one working day for a further public offer), in the same newspapers that carried the pre-issue advertisement.
• Ratios at both ends. Under Regulation 29(5), that announcement has to show the relevant financial ratios at both the lower and upper end of the band, plus a line pointing investors to the “basis of issue price” section of the offer document. Regulation 29(6) adds that it must go up on the stock exchange websites and be pre-filled in the application forms available there.

That two-day gap isn’t an accident. SEBI’s FAQ explains it as giving the market enough time to absorb the price before money is committed. For you, it’s the window to run your own sums before the issue opens.

The band isn’t just a price range. It is a valuation range, and the ratios printed at both ends tell you what you’re paying for each rupee of earnings.

Reading a live band: Jio Platforms

The cleanest way to see the rules working is a real issue. According to Livemint’s report on the Jio Platforms price band, the company’s IPO committee approved a band of ₹1,065 to ₹1,119 per share on Wednesday, October 14, 2026. The issue opens on October 21 and closes on October 23, with anchor bidding scheduled for October 19. It is entirely a fresh issue of up to 27 crore shares, with no offer for sale, and the minimum bid is 12 shares.

Now run it through the rules.

• The spread. ₹1,119 divided by ₹1,065 is about 1.0507, so the cap sits roughly 5.07% above the floor. The legal minimum cap for a ₹1,065 floor works out to ₹1,118.25. Jio’s cap is just 75 paise above that. The band is about as narrow as the rules allow.
• The ceiling it didn’t use. At 120%, the cap could have gone as high as ₹1,278. It didn’t come close.
• Issue size at each end. Livemint puts the raise at around ₹30,213 crore at the upper end, which matches 27 crore shares multiplied by ₹1,119. At the floor, the same 27 crore shares would raise ₹28,755 crore. The gap of ₹1,458 crore is purely about where in the band the final price lands.
• Your ticket size. One lot of 12 shares costs ₹13,428 at the cap and ₹12,780 at the floor.

A narrow band like this tells you something. The company and its bankers have a fairly firm view of where demand is, and they aren’t leaving much room for the book to move. A wider band, closer to the 20% limit, leaves the book more room to decide the price.

There’s also a small detail in the Jio numbers that’s easy to miss. Livemint reports a discount of ₹54 per share for eligible employees. Take ₹54 off the ₹1,119 cap and you get ₹1,065, which is exactly the floor. So an employee bidding in that reserved portion pays no more than the floor price even if the issue prices at the top.

How the final price is picked from the band

Bids come in at different prices and quantities. Once the issue closes, the book running lead manager, in consultation with the issuer, arrives at the price at which the shares will be issued, based on the demand received at each level. SEBI’s FAQ calls this the cut-off price. The final prospectus with the issue price and size is then filed with the Registrar of Companies, and allotment and refunds follow.

The logic is simple supply and demand. If there’s more than enough money bid at the top price, an issuer has little reason to sell lower. We go into how the cut-off number itself gets settled in our post on the IPO cut-off price.

Why the price you bid inside the band matters

This is where retail applicants trip up. You have two choices on the form: bid at a specific price, or tick “cut-off”.

SEBI’s FAQ is clear about the difference. A cut-off bid tells the issuer you’ll take the shares at whatever price is finally discovered within the band, and cut-off bids always remain valid for allotment. A price bid is different. If the price you entered turns out to be lower than the discovered price, that bid can be invalid.

Let’s take a made-up example to see it. Company ABC has a band of ₹200–212. You bid for one lot at ₹205 because you think that’s fair. The book is strong and the issue prices at ₹212. Your bid at ₹205 is below the final price, so it drops out. Someone who ticked cut-off on the same day is still in the allotment pool.

The cut-off option isn’t open to everyone, though. SEBI’s FAQ says it’s available only to retail individual investors, which means people applying for securities worth up to ₹2,00,000. In Jio’s case, that limit at the cap allows 14 lots: 168 shares for ₹1,87,992. A 15th lot would push the application past ₹2 lakh. For the mechanics of lots and the retail limit, see our walkthrough on IPO lot size calculation.

A price bid below the final price doesn’t get a partial allotment. It simply drops out, and that’s why most retail applicants just tick cut-off.

You can still change your mind. The FAQ says a retail investor can revise the quantity or price in a bid, but the process must be finished before the issue closes. A bid can also be cancelled until the closing date.

When the price band gets revised

A band isn’t locked once it’s announced. SEBI’s FAQ confirms it can be revised. If that happens, the bidding period has to be extended by a further three days, and the total bidding period can’t run past ten working days.

Picture a three-day issue that revises its band at the end of day two, perhaps because demand is weaker than expected. Investors now get three more days, so the issue runs six days in total, well inside the ten-day ceiling. The extension is there for a reason. Everyone who bid against the old band gets time to look at the new one and decide again.

When you do see a revision, read it as information. A cut in the band is one sign the original pricing didn’t find enough takers, and a raise points the other way.

Turning the band into a valuation check

This is the part we’d actually spend time on. Since the price announcement has to show financial ratios at both ends of the band, you can see straight away what the valuation range is.

Back to Company ABC, with hypothetical numbers. Say its earnings per share for the last full year is ₹8 and the band is ₹200–212.

A 6% band means a valuation range of 25 to 26.5 times earnings. If listed peers trade at 20 times, the question isn’t really floor or cap. It’s whether you want to pay a premium at all. The band gives you the starting number for that comparison, and the “basis of issue price” section of the offer document shows how the company itself justifies it against its peer group.

A few habits that help when you’re reading a band:

• Work out the spread yourself. A 5% band and a 20% band send very different signals about how sure the bankers are.
• Judge the valuation at the cap, not the floor. If demand is strong, the top of the band is where the price is likely to be set, so that’s the number you should be comfortable with.
• Check the issue size at both ends. For a fresh issue, the money raised changes with the price, so the use of proceeds is easier to judge at the cap figure.
• Watch for revisions and extensions. Both tell you something about demand before allotment does.

The band is the first hard number a company gives the market. Read it as a valuation statement and not just as a price range, and most of the IPO math gets easier from there.

Disclaimer: This article is for information and education only and is not investment advice or a recommendation to apply for any IPO or buy or sell any security. Regulatory details are summarised from SEBI’s FAQ on the ICDR Regulations, the text of ICDR Regulation 29 as reproduced by Law on Tips, and AZB & Partners’ summary of the 2022 ICDR amendment. Jio Platforms issue details are from Livemint’s report of October 14, 2026, and the spread, issue size and lot calculations are our own arithmetic on those figures. Company ABC and its numbers are hypothetical example data. Rules change, so check the current SEBI text and the offer document before applying, and consult a SEBI-registered investment adviser before making investment decisions.