Subject to Sauda is a kind of deal in IPO Grey Market in India.
Unofficially, an investor can sell an IPO Application to a buyer at an agreed price (Kostak Rate) before IPO Shares are listed in the stock market.
In case of 'Subject to Sauda' deal, while selling IPO application in the grey market, buyer and seller agree that deal is only valid if the seller will get the allotment. If the seller doesn't get any shares in IPO process, the deal gets void.
For example; a company XYZ is coming up with an IPO at the prices of Rs 100 per share. IPO Shares are expected to list in 15 days. A seller can sell his Retail IPO allocation of Rs 2 lakhs for Rs 5000 on 'Subject to Sauda'.
If the seller gets an allotment, he will get Rs 5000.
If the seller doesn't get an allotment, he won't get anything.