Updated 5 November 2026. IPO grey-market discussions sometimes show GMP, Kostak rate and Subject to Sauda together. They describe different things. GMP is usually a per-share premium; the other two refer to informal IPO application arrangements. They are not official exchange quotations or guarantees.
What is a Kostak rate?
Kostak is an unofficial amount quoted for an entire IPO application rather than for each share. It is commonly described as a fixed sum agreed for an application regardless of whether shares are ultimately allotted. For example, a hypothetical Kostak quote of ₹700 refers to the application, not ₹700 per share. It should not be mistaken for a fee paid by an IPO registrar or a guaranteed investment return.
Kostak versus GMP
GMP usually describes an unofficial rupee premium per share over the issue price. Suppose a hypothetical IPO has a ₹100 issue price, a ₹20 GMP and a lot of 150 shares. The implied price is ₹120 and the arithmetic difference for a fully allotted lot is ₹3,000. In contrast, a ₹700 Kostak quote would refer to an application-level figure and cannot be multiplied by the lot size. Neither quoted number assures an actual gain.
What is Subject to Sauda?
Subject to Sauda describes an informal application-level arrangement whose payment is contingent on IPO share allotment. If allotment does not occur, the conditional arrangement generally produces no payout. Kostak is typically described as a fixed application quote, while Subject to Sauda depends on allotment. Exact practices may differ across participants, and none of these expressions makes an off-exchange arrangement protected by normal exchange settlement rules.
Are there risks in unofficial IPO deals?
Yes. The informal grey market has no centralized NSE or BSE tape for prices, and informal application arrangements bring counterparty, payment, identity and settlement risks. A quoted rate does not prove a legitimate or enforceable transaction is available. This article explains the terminology only; it does not recommend transferring applications or entering grey-market deals.
What should investors check instead?
For an actual IPO decision, rely on the issuer prospectus, official offer dates, permitted application categories, company financial statements, valuation, cash generation and risk factors. Check allotment only through the registrar or exchange channels. A high quoted premium or application rate cannot replace research into the company or guarantee a profitable listing.
Further reading
Explore the IPO GMP tracker and the IPO profit calculator. For additional terminology see Kotak Neo’s grey-market explainer; for investor education visit SEBI Investor. The examples here are hypothetical and this article is not investment advice.