The SME IPO Handbook · Chapter 4 of 12
Lot Size and Application Size
How the lot is set
The lot is a fixed number of shares chosen so that one lot is worth at least about ₹1 lakh at the issue price. Multiply the lot size by the issue price to know the cost of one lot.
Retail and HNI
In SME issues the investor categories are defined by the number of lots as well as by the rupee amount, and the retail category can be small. Always check how the issue defines each category and what the minimum application is before you choose where to bid.
Funding the application
Because each application is large, many applicants use borrowed funds or margin funding. That magnifies both gains and losses, and is a recurring reason for losses in weak SME listings. If a falling price would force you to sell, you are too leveraged.
Worked example
Issue price ₹70, lot 2,000 shares, so one lot costs ₹1,40,000. If you fund two lots (₹2,80,000) with a loan at 12% a year for ten days, the interest is about ₹920. A listing 3% below issue price costs another ₹8,400. Costs and risk add up quickly on large tickets.
Key takeaways
- One lot is typically ₹1 lakh or more.
- Category rules differ: read the prospectus.
- Leverage magnifies SME listing losses.
- Count funding costs before you apply.