IPO Allotment Process Explained: How Shares Are Allocated in India
IPO Allotment Process Explained: How Shares Are Allocated in India
A complete Bullrun guide to the IPO allotment process in India, covering retail quota, oversubscription, lottery system, basis of allotment, refunds, registrar role and practical investor expectations.
What Is IPO Allotment?
IPO allotment is the process through which shares are allocated to investors who applied for an IPO. When an IPO receives applications, the registrar and exchange system determine how many shares each investor receives based on category, demand, lot size and rules for allocation.
Many investors think IPO allotment is random in every case. That is only partly true. If an IPO is not oversubscribed in your category, you may receive full allotment. If it is heavily oversubscribed, retail allotment often happens through a lottery-style system where eligible applications are selected fairly.
Bullrun rule: IPO allotment is not based on who applies first. It depends on category demand, lot size, subscription and allotment rules.
Who Handles IPO Allotment?
The registrar handles the allotment process in coordination with stock exchanges, banks and depositories. The registrar verifies applications, removes invalid bids, calculates category-wise demand, prepares the basis of allotment and initiates refunds or share credits.
Popular IPO registrars in India include Link Intime, KFin Technologies, Bigshare Services, MUFG Intime and others. Investors can usually check IPO allotment status on the registrar website, exchange website or broker platform after the basis of allotment is finalized.
Investor Categories in an IPO
IPO allotment depends on investor category. Different categories have reserved portions, and each category is subscribed separately. Retail investors compete with other retail investors, not directly with QIBs or NIIs.
| Category | Who It Includes | Allotment Logic |
|---|---|---|
| Retail Individual Investors | Individuals applying up to the retail limit | Allotment usually by lots, lottery if oversubscribed |
| NII or HNI | High-value non-institutional applications | Allotment based on proportionate rules and category demand |
| QIB | Institutions like mutual funds and FIIs | Institutional allocation within QIB quota |
| Employee Quota | Eligible employees if reserved | Separate quota if offered |
| Shareholder Quota | Existing shareholders of parent company if applicable | Separate reserved category |
What Happens When an IPO Is Undersubscribed?
If the retail category is not fully subscribed, eligible retail applicants may receive full allotment, subject to valid application and issue terms. In simple cases, if there are enough shares for everyone in the category, allotment is straightforward.
However, total issue subscription, category limits and minimum subscription rules still matter. Investors should not assume allotment until the registrar finalizes the basis of allotment. Application validity, mandate approval and correct PAN or demat details are still necessary.
What Happens When an IPO Is Oversubscribed?
Oversubscription means applications are received for more shares than available. In retail category, if the number of valid applicants is higher than available lots, allotment is usually done through a lottery method. Each selected applicant may receive one lot, while many applicants receive no shares.
This is why applying for more lots in the retail category often does not improve allotment chances in a heavily oversubscribed IPO. If the category is oversubscribed beyond available retail lots, the system tries to allot at least one lot to as many applicants as possible.
In a heavily oversubscribed retail IPO, applying for multiple lots may not increase your chance meaningfully. The number of unique valid applications becomes more important.
Simple Example of Retail Allotment
Assume an IPO has 10,000 lots available for retail investors. If 8,000 valid retail investors apply, there may be enough lots for everyone. If 1,00,000 valid retail investors apply, only 10,000 investors can receive one lot each. The rest will receive refunds or unblock of funds.
| Retail Lots Available | Valid Retail Applications | Likely Outcome |
|---|---|---|
| 10,000 | 8,000 | Eligible investors may receive allotment |
| 10,000 | 10,000 | One lot may be allotted to each eligible applicant |
| 10,000 | 50,000 | Lottery among valid applicants |
| 10,000 | 1,00,000 | Low probability of allotment |
| 10,000 | 5,00,000 | Very low probability despite strong demand |
What Is Basis of Allotment?
The basis of allotment is the official document or calculation that shows how shares are allocated across categories. It reflects subscription demand, valid applications, reserved quota, lot size and final allotment method.
Once the basis is finalized, successful applicants receive shares in demat account before listing. Unsuccessful applicants get their blocked amount released through UPI or ASBA. The process is usually completed before the listing date.
Why Your IPO Application May Be Rejected
- UPI mandate was not approved before deadline.
- PAN or demat details did not match.
- Application amount was incorrect.
- Multiple applications were made using the same PAN in the same category.
- Bank account had insufficient funds or mandate failed.
- Application was submitted after cut-off time.
- Wrong investor category was selected.
Can Multiple Demat Accounts Improve Allotment?
Multiple applications from the same PAN in the same category are not allowed and can be rejected. However, different eligible family members with different PANs and demat accounts can apply separately. This may increase household-level probability, but each application must be genuine and valid.
Investors should avoid shortcuts. IPO allotment systems are designed to identify duplicate PAN-based applications. Invalid applications reduce chances rather than improving them.
Common Investor Questions
Is IPO allotment first come first served?
No. IPO allotment is not first come first served. All valid applications submitted within the window are considered according to category rules and subscription levels.
Why did I not get allotment in an oversubscribed IPO?
If the IPO was heavily oversubscribed, available lots were fewer than valid applicants. In such cases, allotment is usually lottery-based for retail investors.
Does applying for more lots increase retail allotment chances?
In a heavily oversubscribed retail category, applying for more lots usually does not improve chances meaningfully because allotment aims to give one lot to as many valid applicants as possible.
Allotment Is a Process, Not a Reward for Excitement
IPO allotment depends on valid applications, category demand and available shares. Investors should focus on applying correctly and analysing the IPO well. Getting allotment is only the first step. The bigger question is whether the stock is worth holding after listing.