IPO Subscription

The IPO (Initial Public Offering) subscription phase is one of the most closely watched aspects of the public issue process. It gives insights into investor sentiment, demand for a company’s shares, and overall market conditions. When a company goes public, it offers a specific number of shares to various investor categories. The response from investors which is tracked through the IPO subscription status not only helps determine allotment but also reflects broader market enthusiasm for the stock.

In this guide, we explain what IPO subscription means, how it works, how to track it live, and what it indicates to retail and institutional investors alike.

IPO subscription refers to the process through which investors apply for shares during the offering period of a public issue. The company, through its merchant banker and registrar, opens a bidding window where investors can submit their applications. The total number of applications received versus the number of shares on offer is used to compute the subscription status.

A company may be said to be “oversubscribed” or “undersubscribed” based on investor interest during the bidding period.

1. DRHP Filing – The company files a Draft Red Herring Prospectus with SEBI for regulatory review.
   

2. Fixing Price Band and Lot Size – The issuer and merchant bankers determine a price range and minimum lot size for applications.
   

3. Opening of Bidding Window – Usually open for 3 working days.
   

4. Collection of Bids – Through broker terminals, UPI-linked apps, and ASBA-based systems.
   

5. Closing and Subscription Tally – Final data is collated to compute the demand per investor category.
   

Price Discovery via Book Building

In most IPOs in India, the book building process is used. Here’s how:

• The issuer sets a price band (e.g., ₹95–₹100).
  

• Investors bid at a price within this range.
  

• The final price is discovered based on demand concentration.

Formula:

Subscription Ratio = Total Bids Received / Total Shares Offered

Example: If a company offers 1 Crore shares and receives bids for 5 Crore shares, the issue is subscribed 5x.

IPO subscription status reflects how much demand an IPO has received. It shows how many times the offering has been subscribed and is updated on a real-time basis during the bidding window.

Components of Subscription Status

• Total shares available per category
  

• Cumulative bids received across investor types
  

• Day-wise cumulative subscription data
  

Subscription status gives you insights into whether an IPO is under- or over-subscribed. A 1x subscription means all shares are bid for. Anything above that indicates excess demand.

Interpreting Subscription Ratios

• <1x: Undersubscribed – Weak investor interest.
  

• 1x – 2x: Moderate demand – Possible full allotment for retail.
  

• >10x: Very strong demand – Allotment via lottery in most cases.
  

Caution: High subscription doesn’t always equate to post-listing gains. It may reflect short-term buzz.

You can monitor live IPO subscription status through various platforms:

Through NSE/BSE Websites

• Visit: https://www.nseindia.com/ or https://www.bseindia.com/
  

• Navigate to ‘Market Data > Public Issues’
  

• View category-wise real-time subscription data
  

Merchant Banker Websites

• Some merchant bankers (e.g., Axis Capital, ICICI Securities) offer status dashboards
  

Stock Market Portals

• Platforms like Moneycontrol, Groww, and AngelOne display live data
  

Data Refresh Timings

• Live data is typically updated hourly on Days 1 and 2
  

• Final tallies are published at 5 PM on the closing day
  

As a Sentiment Gauge

• Reflects investor trust in the issuer company
  

• Offers insights into peer and sector interest
  

For Allotment Probability

• Retail investors can use subscription ratios to assess how likely they are to receive shares
  

For Secondary Market Planning

Heavy oversubscription can signal possible strong listing (though not guaranteed)

Example 1: LIC IPO (2022)

• Subscription status: ~3x overall
  

• Retail category: ~1.99x
  

• Demonstrated strong national interest
  

Example 2: Nykaa IPO (2021)

• Subscription status: ~82x overall
  

• QIB: 91x | NII: 112x | Retail: 12x
  

• Saw strong listing gains
  

Example 3: Paytm IPO (2021)

• Subscription status: ~1.9x
  

Despite full subscription, listed at discount due to valuation concerns

While useful, IPO subscription data has limits:

• Doesn’t indicate fair value of shares
  

• May be driven by short-term market buzz
  

• Listing performance depends on many other variables: financials, promoter reputation, industry trends
  

Hence, always combine subscription status with DRHP review, peer analysis, and industry outlook.

IPO subscription status is a critical indicator during the primary market phase. It helps investors gauge demand and prepare for allotment scenarios. By understanding how to interpret subscription data, investors can make better-informed decisions. However, it’s important to remember that demand during the IPO does not guarantee listing success. Proper due diligence, combined with an understanding of market trends, is essential.

This content is for educational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

1. SEBI – Public Issues
   

2. NSE – IPO Status Tracker
   

3. BSE – New Public Issues
   

4. Moneycontrol IPO Centre
   

5. Groww – IPO Subscription Status Explained