Offer Price refers to the price at which shares are made available to investors during an Initial Public Offering (IPO) or Follow-on Public Offering (FPO). It represents the price determined by the issuing company and its merchant bankers after assessing factors such as market demand, financial performance, and prevailing economic conditions. Investors consider the offer price as a key indicator to evaluate whether the IPO is attractively valued.

In a book-building issue, the offer price is determined through bids received from institutional and retail investors within a specified price band. The final offer priceóalso known as the cut-off priceóis set based on the demand and subscription levels during the bidding process. In contrast, a fixed price issue offers shares at a predetermined value, where investors know the price before subscribing.

Determining the right offer price is critical for both the company and investors. If priced too high, the issue may see lower subscription, whereas an undervalued issue can lead to heavy oversubscription and short-term price surges post-listing. The offer price directly influences listing gainsóthe difference between the offer price and the market price on the day of listing.

From an investorís perspective, understanding the basis of the offer price helps in making informed decisions. Reviewing the companyís financial statements, industry outlook, and peer valuation can offer deeper insights into whether the price is justified. Itís also important to note that SEBI mandates complete transparency in the IPO pricing process, ensuring fair access to information for all categories of investors.

In summary, the offer price plays a vital role in the IPO ecosystem, influencing both investor participation and the companyís capital-raising success.