Subject to Sauda is a conditional grey market transaction. The applicant agrees to transfer or sell allotted shares to a grey market buyer at a pre-agreed rate, but only if allotment actually happens. If the applicant receives no allotment, no money changes hands — both sides walk away.
Subject to Sauda rates are typically higher than Kostak rates because the seller is taking on the no-allotment risk. The buyer is willing to pay more because the deal only crystallises with delivery. The rate is quoted per share — for example, '₹120 Subject to Sauda' means the buyer pays the seller ₹120 per allotted share above the issue price, if allotment happens.
Subject to Sauda is particularly appealing to applicants with high-probability allotment accounts — such as HNI category bidders on lightly-oversubscribed issues, or shareholder-quota applicants where allotment chances are better than retail lottery odds. As with all grey market transactions, Subject to Sauda is informal, unregulated, and carries counterparty risk.