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The short version
Allotment only gets complicated when more people want shares than there are shares to give. If a category is undersubscribed, every valid bid in it gets the full number of shares applied for.
When a category is oversubscribed, SEBI’s rules decide who gets what. The rules differ for retail investors, non-institutional investors and institutions, so it helps to know which category you are in.
The three categories at a glance
| Category | Who | How shares are allotted when oversubscribed |
|---|---|---|
| Retail | Individuals bidding up to ₹2 lakh | Lottery; each winner gets one minimum lot |
| Small NII | Bids above ₹2 lakh up to ₹10 lakh | Draw; each winner gets the minimum NII application |
| Big NII | Bids above ₹10 lakh | Draw; each winner gets the minimum NII application |
| QIB | Mutual funds, insurers, foreign funds | In proportion to the bid |
Retail investors: one lot by lottery
When the retail portion is oversubscribed, the aim is to give as many applicants as possible the minimum bid lot. The registrar divides the retail shares by the lot size to find how many lots are available. It then runs a computerised draw among all valid applications.
Each winner gets one lot. If shares are left after every applicant has had a chance at one lot, they are allotted in proportion to the remaining bids. In practice that only happens when demand is modest.
So an application for 13 lots has the same chance in the draw as an application for one lot. What changes the odds is the number of separate applications, each from a different PAN and demat account.
Non-institutional investors: small and big NII
Bids above ₹2 lakh go into the non-institutional investor (NII) category. For issues opening on or after 1 April 2022, one-third of it is for bids of ₹2 lakh to ₹10 lakh (small NII). The other two-thirds is for bids above ₹10 lakh (big NII).
Each winning NII applicant gets at least the minimum NII application size. That is the smallest number of lots worth more than ₹2 lakh at the issue price. When there are more applicants than such blocks, the winners are picked by draw. Anything left over is allotted in proportion.
Before 2022, NII shares were allotted only in proportion, so bigger bids always got more. The draw makes small NII bids competitive with large ones.
Qualified institutional buyers and anchors
QIBs such as mutual funds, insurers and foreign portfolio investors get shares in proportion to the size of their bids. A small part of the QIB portion is set aside for mutual funds.
Anchor investors are QIBs who bid one working day before the issue opens. They can take up to 60% of the QIB portion at a single price. Half of their shares are locked in for 30 days after allotment and half for 90 days.
A worked example
Say the retail portion of an IPO has 7,00,000 shares and the lot is 50 shares. That makes 14,000 lots available.
- Applications. 2,80,000 valid retail applications come in, asking for 30 lakh lots in total.
- Subscription. That is about 214 times the lots on offer (30,00,000 ÷ 14,000).
- The draw. There are 14,000 lots for 2,80,000 applicants, so 1 in 20 applicants wins one lot.
- Your odds. Your chance is about 5%, whether you applied for 1 lot or 13.
- Three family members. If three family members each apply from their own PAN, the chance that at least one gets a lot is about 14%.
These are illustrative numbers and our calculation. Real IPOs report retail subscription in times; divide the number of retail applications by the lots available to estimate your odds.
The timeline after closing
| Day | What happens |
|---|---|
| T | Issue closes; UPI mandates must be approved by 5 pm |
| T+1 | Basis of allotment finalised and approved by the exchange |
| T+2 | Shares credited to demat; money released for bids that got nothing |
| T+3 | Shares start trading |
T is the closing day, and days are working days. This timeline has been mandatory since 1 December 2023.
How to check your allotment
The registrar publishes allotment status on T+1. You can search by PAN, application number or demat account. NSE and BSE also show it on their application status pages.
Our allotment status page links the right registrar for each IPO. If you got shares, they show in your demat account on T+2.
Reading the basis of allotment
After allotment, the registrar publishes the basis of allotment, a notice approved by the exchange. It is the official record of how each category was shared out.
For each category it shows the number of valid applications, how many times the category was subscribed and the ratio of allotment. A retail line such as “1 lot to 1 in 20 applicants” tells you exactly what the odds were. For NII categories it shows how many applicants got the minimum application and how any balance was shared.
The notice also lists rejected applications and the reasons, such as duplicate PANs or bids below the issue price. It is published on the registrar’s site and in newspapers within a few days of allotment.
Why a valid bid can still get nothing
“Not allotted” usually just means you lost the draw. In a retail category subscribed 100 times, about 99 of every 100 applicants get nothing.
Sometimes the cause is the application itself. A bid can be rejected if the PAN and demat details do not match, the UPI mandate was not approved in time, or the bank could not block the money. Your broker’s order book shows whether your bid was accepted by the exchange. If it shows “accepted” and the registrar shows “not allotted”, you were in the draw and did not win.
Common mistakes to avoid
- Bidding for more lots to improve retail odds. It blocks more money for no extra chance in an oversubscribed issue.
- Several applications from one PAN. Only one counts; the rest are rejected, and sometimes all are.
- Bidding below the final price. A bid below the issue price is invalid. Retail investors can tick cut-off to avoid this.
- Missing the 5 pm UPI deadline. A bid without an approved mandate is not counted.
- Reading the headline subscription only. Your odds depend on your category’s subscription, not the overall figure.
What to do next
If you did not get shares, the money is released on T+2 and you can still buy after listing. If you did, decide before listing day whether you plan to sell or hold.
Our guide on how to apply for an IPO covers the application itself, and what an IPO is covers the basics.
Sources: SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR), on allotment in book built issues; Outcome of SEBI board meeting, 28 Dec 2021 (NII split for issues opening on or after 1 Apr 2022); SEBI circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 on the T+3 listing timeline, 9 Aug 2023.
Frequently asked questions
Does applying for more lots improve my chance of allotment as a retail investor?
No. In an oversubscribed mainboard IPO each winning retail application gets one minimum lot, so the number of lots you bid for does not add lottery tickets.
When is IPO allotment done?
On the first working day after the issue closes (T+1). Shares are credited to demat accounts on T+2 and trading starts on T+3.
Who decides the IPO allotment?
The registrar to the issue works out the basis of allotment, and the designated stock exchange approves it. The lottery is computerised.
What happens to my money if I do not get shares?
The blocked amount is released on T+2. It was never debited, so there is nothing to refund.
Does bidding early or late change my chance?
No. Every valid bid received before the issue closes is treated the same in the draw, whatever day it was placed.
Can I get more than one lot as a retail investor?
Yes, if the retail category is undersubscribed, or if shares are left over after every applicant has had a chance at one lot. In popular IPOs, one lot is the most you can expect.