Book building is the SEBI-prescribed price discovery mechanism for the vast majority of mainboard IPOs in India. The issuer and BRLM announce a price band — for example ₹290-310 — and applicants bid for shares at any price within the band, in multiples of the lot size, during the open subscription window.
At the end of the bidding window, the BRLM consolidates all bids into a 'book' showing demand at each price point. The final issue price is set at the highest price at which the entire offering can be sold to QIB, NII, and Retail categories — this is also called the 'cut-off price' for that issue. All allotted shares are priced at this final cut-off, regardless of what individual applicants actually bid.
Book-built issues are distinct from fixed-price issues (uncommon today for mainboard IPOs). Most SME issues are also book-built. The book-building approach lets the market signal demand strength through the bidding pattern, with strong oversubscription at the upper price band confirming pricing power.