Everything you need to understand how IPO allotment works and what factors impact it.
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Investing in an Initial Public Offering (IPO) can be an exciting opportunity, especially when there's a chance for listing gains. However, one of the most critical steps in the IPO journey is the allotment process. Understanding how shares are allotted, what rules apply, and why some applicants receive shares while others don’t, is essential for all IPO investors.
IPO allotment refers to the process by which shares are distributed among investors who apply during the subscription period. Since demand often exceeds supply, allotment is governed by specific guidelines set by SEBI (Securities and Exchange Board of India) to ensure fairness and transparency.
Investors applying for shares worth up to ₹2 lakh. Minimum one lot is guaranteed in case of oversubscription, subject to lottery.
Includes HNIs who apply for shares above ₹2 lakh. Allotment is proportionate.
Institutional investors like mutual funds and insurance companies. Shares are allotted proportionately.
Minimum 35% of the IPO is reserved for retail investors.
Allotment is done in lots, where each lot has a fixed number of shares.
In case of oversubscription in retail, one lot is allotted to as many applicants as possible via a lottery system.
Refunds or unblocking of funds (for UPI payments) occur if allotment is not received.
Investors apply for IPO shares using ASBA (Application Supported by Blocked Amount) or UPI-linked applications through their brokers or banks.
Once the subscription period ends, the registrar assesses the total demand for shares, including retail, institutional, and non-institutional categories.
A basis of allotment is prepared, and the shares are distributed according to the subscription ratios, which may include a lottery system in case of oversubscription.
Successful applicants receive their allotted shares in their demat accounts, typically 2–3 days before the listing date.
If you don’t get an allotment, your application amount is either refunded or unblocked automatically, typically within a few business days.
On the listing day, the company’s shares begin trading on the stock exchange, and investors can buy or sell them in the secondary market.
Apply Early: Submitting your application early reduces technical issues, especially with UPI.
Avoid Mistakes: Ensure all application details (PAN, demat number) are accurate.
Apply for Minimum Lot Size: Especially in hot IPOs, smaller applications often have better odds of getting allotted.
Monitor Registrar Announcements: Keep an eye on the registrar’s site for status and refund updates.
In a popular IPO where the retail portion was subscribed 15 times, applicants who applied for just one lot had a fair chance via the lottery. Those who applied for larger amounts did not necessarily receive more shares, due to the proportional allocation structure.
IPO allotment might seem random at times, especially during oversubscription. But it follows a well-defined, regulated process to ensure transparency. By understanding how allotment works, investors can plan better, avoid common pitfalls, and enhance their chances of participating successfully in IPOs.
This content is for informational 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.
Visit the IPO registrar’s website once the allotment is announced, and check using your PAN, application number, or DP ID.
No. In oversubscribed issues, allotment is done via a computerized lottery, and not all applicants may receive shares.
Your application amount is refunded or unblocked automatically within a few business days—no charges are deducted.
You can apply through multiple demat accounts with unique PANs within your family, but avoid duplicate applications under one PAN.
As per SEBI’s T+3 schedule, shares are typically credited to your demat account within 2–3 days after allotment, before the listing date.
IPO allotment is based on SEBI regulations and depends on factors like subscription levels and investor categories. In the retail segment, allotment is typically done through a lottery system if demand exceeds the number of available shares.
The 3-day rule refers to the timeline where investors receive IPO allotment status, refunds, and listing updates within three working days after the IPO closes. This process is part of SEBI’s streamlined T+3 allotment cycle.
An IPO application may be rejected due to incorrect details, mismatched PAN or bank information, insufficient funds in the bank account, or technical errors during submission. Verifying application details and ensuring compliance with IPO allotment guidelines can help reduce the chances of rejection due to errors or mismatches.