what is kostak in ipo

In the IPO grey market, Kostak (or price of application) is the premium amount at which IPO applications are being traded before the IPO shares get listed in the stock market. It is the amount where an individual pays for the IPO application before the IPO listing. One can buy and sell their full IPO application on Kostak rates outside the market and fix their profit. The Kostak rates apply in every condition you get the allotment. For instance, if one did 5 applications for one IPO and sold the same at Rs.2500 per application, it means that the individual secured the IPO profit at Rs 12500. However, if the individual gets the allotment in 2 applications, the profit will still be the same.