How IPO Allotment Works in India: Lottery, Lots and Rules

IPO allotment is the process that decides who receives shares in a public issue and how many. In India, the method depends on your investor category: retail bids that ask for more shares than are available go to a computerised lottery for one lot each, high-value individual bids follow a similar minimum-lot rule, and institutions are allotted proportionately. The basis of allotment is finalised one working day after the issue closes.

This guide explains each step, using the rules in SEBI's Issue of Capital and Disclosure Requirements (ICDR) Regulations. The offer document of each IPO states the exact split for that issue.

Who bids in an IPO: the investor categories

Every bid falls into one category, and each category has its own share of the issue (the reservation).

Many issues also set aside a small employee quota or a shareholder quota for existing shareholders of a listed parent company. You can see each IPO's reservation on its page, for example in the upcoming IPOs list.

How shares are split between categories

For a company that meets SEBI's profitability track record (Regulation 6(1)), the issue is divided as:

• QIBs: not more than 50% of the net offer
• Non-institutional investors (NII): not less than 15%
• Retail individual investors: not less than 35%

Companies that don't meet the profitability test list under Regulation 6(2) instead. For them at least 75% goes to QIBs, and NIIs get no more than 15% and retail investors no more than 10%.

Within the NII portion, one third is kept for small NIIs and two thirds for big NIIs. Up to 60% of the QIB portion can be offered to anchor investors one working day before the issue opens. Part of the anchor portion is reserved for domestic mutual funds.

How IPO allotment works for retail investors

The retail rule is designed to give shares to as many applicants as possible:

1. The registrar removes invalid bids, such as duplicate PANs, bids below the issue price, or mandates that were not approved.
2. It then counts valid retail applications and works out how many minimum lots the retail portion can cover.
3. If the retail portion is undersubscribed or fully subscribed, every valid applicant gets the shares they bid for.
4. If it is oversubscribed, each applicant can receive at most one minimum lot. When there aren't enough lots for everyone, a computerised draw of lots picks the winners.
5. If shares are left after every applicant has one lot, they are allotted proportionately to applicants who bid for more than one lot.

So for an oversubscribed issue, a retail bid for one lot and a bid for the maximum ₹2 lakh usually have the same chance of getting one lot. Applying from more than one PAN in the same family is allowed only if each applicant is a separate individual with their own demat account. Multiple bids under the same PAN are rejected.

Example

Suppose the retail portion has 10,000 lots and 2,00,000 valid applications. Only 10,000 applicants can get a lot, so each application has roughly a 1 in 20 chance in the lottery, whatever its bid size.

How NII and QIB allotment works

Non-institutional investors. Since April 2022, NII allotment follows a minimum-application rule similar to retail. Each successful NII applicant receives the minimum NII application size, which is the smallest number of lots worth more than ₹2 lakh. In an oversubscribed issue, a draw of lots decides who receives it, and any remaining shares are allotted proportionately. The small and big NII buckets are allotted separately.

QIBs are allotted shares in proportion to their bids, with no lottery. If the QIB portion is 20 times subscribed, each QIB receives roughly one twentieth of the shares it bid for. Anchor investors receive their shares on the anchor bidding day. Half of their shares are locked in for 30 days and the rest for 90 days.

Timeline: from issue closing to listing (T+3)

Since December 2023, every public issue in India must list within three working days of closing. "T" is the closing day.

Each IPO page on Eyepio shows these dates as a timeline once the RHP is filed. You can also see them across issues on the IPO calendar. For every stage, see the IPO timeline in India.

How to check whether you got shares

The registrar named in the offer document publishes allotment results, searchable by PAN, application number or demat account. The stock exchanges also offer a lookup. Step-by-step instructions are in how to check IPO allotment status.

Frequently asked questions

Does a bigger retail bid improve my chances of allotment?

Not in an oversubscribed issue. Each valid retail application can receive at most one minimum lot through the draw of lots, so bidding for more lots doesn't increase the chance of getting one.

What does "basis of allotment" mean?

It is the document, approved with the designated stock exchange, that records how many shares each category and each application size receives. It is usually finalised on T+1.

Can I apply twice using the same PAN?

No. Multiple applications under the same PAN in the same category are treated as duplicates and rejected.

Why was my bid rejected?

Common reasons are a UPI mandate that wasn't approved before the cut-off, a PAN that doesn't match the demat account, bidding below the final issue price, or duplicate applications.

When is the money unblocked if I get no shares?

Under the T+3 timeline, unblocking starts by T+2. Your bank releases the amount held for the bid.