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How IPO allotment works in India
Applying for an IPO does not guarantee you the shares. When more people apply than there are shares to go around, a set of rules decides who gets what. Here is how those rules work, in plain English, so the process feels a lot less mysterious.
Lots: the unit you apply in
You do not apply for a single share in an IPO. The company sets a lot size, the smallest bundle of shares you can bid for, and you apply in whole lots. The minimum you can invest is the lot size multiplied by the upper end of the price band. Retail applications are also capped by the rules, which limits how many lots a retail investor can put in.
Categories: the issue is split up
An IPO is divided into reserved portions for different kinds of investor:
- Retail individual investors. Applications up to the retail limit. This is where most first-time applicants sit.
- Non-institutional investors (HNI). Larger applications above the retail limit, with their own reserved share and allotment method.
- Qualified institutional buyers. Large institutions such as funds, with a separate reserved portion.
Because each category has its own slice of the issue, subscription levels and the odds of allotment can differ a lot from one category to another.
Oversubscription and the lottery
When investors apply for more shares than are on offer, the issue is oversubscribed. If the retail category is oversubscribed, the shares cannot go to everyone, so allotment is decided by a computerised lottery run through the issue's registrar. Every valid one-lot application has the same chance, which means applying early does not help, and once demand passes the shares available, applying for extra lots does not improve your odds in the retail category.
Follow issues without the hype
Our IPO calendar lists mainboard and SME issues that are upcoming, open, closed or listed, with the price band, lot size and dates, all as neutral facts with nothing ranked. If a charge or term is unfamiliar, the charges glossary and our myths versus facts page can help.
Facts, not a call to apply
This page explains the mechanics of allotment. It is not a view on whether any IPO is worth applying for. BrokerWisely does not predict listing gains or recommend any issue, and an allotment is never a promise that a share will rise.
Common questions
What is a lot in an IPO?
A lot is the smallest number of shares you can apply for in an IPO, fixed by the company for that issue. You apply in whole lots, so the minimum investment is the lot size multiplied by the upper price in the band. Retail applications are capped at an amount set by the rules, which limits how many lots a retail investor can apply for.
What does oversubscription mean?
Oversubscription means investors applied for more shares than the IPO is offering. If an issue is subscribed three times in a category, applicants in that category collectively asked for three times the shares available. The more an issue is oversubscribed, the harder allotment becomes in that category.
How are retail shares allotted when an IPO is oversubscribed?
When the retail category is oversubscribed, allotment is done by a computerised lottery run through the registrar, so every valid application of one lot has the same chance. Applying early does not help, and beyond the point where demand exceeds supply, applying for more lots does not raise your odds in the retail category.
What are the different IPO categories?
An IPO is split into reserved portions, mainly retail individual investors, non-institutional investors (often called HNI), and qualified institutional buyers. Each category has its own share of the issue and its own allotment method, so subscription levels and chances differ from one category to another.
Does applying for more lots improve my chances?
Not in the retail category once an issue is oversubscribed. Because allotment there is a lottery on applications, one lot and several lots can carry a similar chance of receiving a single lot. In other categories the method can differ. This is a factual description, not a suggestion to apply.
Educational · Not investment advice. This page is education only and describes how allotment works, not whether to apply for any issue. IPO rules can change, so confirm the current process and limits in the issue documents. BrokerWisely does not recommend any IPO or predict its listing.