The Complete IPO Guide for Indian Investors · Chapter 9 of 15
IPO Allotment: How It Works
Subscription decides everything
If the issue is subscribed less than one time in your category, you will normally receive your full application. If it is oversubscribed, shares are allotted by a process laid down in the regulations.
Retail allotment
When the retail category receives more applications than there are lots on offer, a computerised lottery picks the winners and each winner gets a single minimum lot. Everyone else gets nothing and has their money unblocked.
Worked example: an issue offers 10 lakh shares to retail in lots of 100, which is 10,000 lots. If 8 lakh valid applications arrive, roughly one in 80 applicants receives a lot, which is why high-demand issues leave most applicants empty-handed.
NII allotment
In the non-institutional category allotment is proportionate: if the category is subscribed 20 times, an applicant receives about one-twentieth of the shares applied for, rounded to lots. Big applications therefore receive meaningful quantities when demand is moderate.
Where to check
Registrar websites such as KFin Technologies, MUFG Intime and Bigshare publish the allotment status by PAN or application number on the day after the issue closes. Your demat account is credited the next day.
Unblocking of funds
If you do not get shares, your bank unblocks the money. You pay nothing; the only cost is the interest you might have earned on that money in the meantime.
Key takeaways
- Oversubscribed retail issues are decided by lottery.
- NII allotment is proportionate to subscription.
- Check status on the registrar website the day after closing.
- Unallotted funds are unblocked, not debited.