IPO Allotment — How It Works

You have applied for an IPO. The subscription period has closed. Now comes the question every applicant is asking: did I get shares?

IPO allotment in India follows a highly structured process governed by SEBI guidelines. Understanding how it works — especially the lottery mechanism for retail investors — helps you set realistic expectations and plan your application strategy.

The Basic Principle: Separate Rules Per Category

Allotment is not a single process. Each investor category — Retail (RII), HNI/NII, and QIB — has its own allotment methodology. What happens in the retail category has no bearing on what happens in the HNI or QIB categories.

Retail Investor Allotment: The Lottery System

SEBI's approach to retail allotment in oversubscribed IPOs is deliberately egalitarian: a lottery where the minimum lot applicant has the same probability as the maximum lot applicant of receiving exactly one lot.

Here is how it works:

Step 1: Calculate available lots The total shares reserved for retail investors, divided by the lot size, gives the number of lots available for retail allotment.

Example: 30 lakh shares reserved for retail, lot size of 50 shares = 60,000 lots available.

Step 2: Count eligible applications All valid retail applications are counted. Let us say 6 lakh applications came in.

Step 3: Check if fully subscribed If applications (6 lakh) are fewer than or equal to available lots (60,000): everyone gets allotment. This is rare — most mainboard IPOs are oversubscribed.

Step 4: Oversubscribed — run the lottery Since 6 lakh applicants are competing for 60,000 lots (10x oversubscribed), only 60,000 applicants can receive a minimum of one lot each. SEBI mandates that the lottery be computerised and conducted in the presence of a representative of the stock exchange to ensure fairness.

Each valid application — regardless of how many lots it applied for — gets one lottery entry for the first lot. Applications for multiple lots get additional entries, but the advantage is marginal. In a 10x oversubscribed retail category:

• A 1-lot application has approximately a 1-in-10 chance
• A 13-lot application (maximum retail) has a slightly higher chance, but not 13x higher

This is why, for retail investors in heavily oversubscribed IPOs, applying for a minimum of one lot is often the most capital-efficient strategy.

Step 5: Basis of Allotment published After the lottery, the registrar publishes the Basis of Allotment — a document showing exactly how many applicants were in each category, how many lots were available, and the allotment ratio.

HNI/NII Allotment: Proportional

For the HNI/NII category, allotment is proportional — not a lottery.

If the HNI category is subscribed 200x and you applied for ₹20 lakh:

• You would receive approximately ₹10,000 worth of shares (₹20L ÷ 200)
• The exact amount is rounded down to the nearest lot

This makes HNI investing in heavily oversubscribed IPOs capital-inefficient. Many HNI investors use leverage (IPO financing) to apply for very large amounts and still receive a meaningful allocation. This is legal but carries significant listing risk.

After SEBI's 2022 reform splitting the NII category into sNII and bNII:

• sNII (₹2L to ₹10L): 1/3rd of NII quota, minimum allotment one lot
• bNII (above ₹10L): 2/3rd of NII quota, proportional

QIB Allotment: Proportional

QIB allotment is straightforward and proportional. If the QIB category is 10x subscribed and a mutual fund bid for 1 crore shares, it receives approximately 10 lakh shares.

Anchor investors, who bid before the IPO opens, receive their allocation separately and are subject to lock-in periods (30 days for 50% of allocation, 90 days for remaining 50%).

The Registrar's Role

The registrar processes all applications, validates them (checking for duplicate PANs, incorrect demat details, etc.), runs the lottery, and coordinates share crediting and refund processing.

The registrar is a neutral third party — not affiliated with the company or the BRLMs. In India, the major registrars are Link Intime, KFin Technologies, Bigshare Services, and Cameo Corporate Services.

How to Check Your Allotment Status

You can check IPO allotment status through multiple channels:

1. Registrar's website Every IPO registrar has a dedicated allotment status page. You need your PAN number or application number or DP client ID to check.

2. BSE website BSE provides a centralized allotment status check at bseindia.com.

3. NSE website Similarly at nseindia.com for NSE-listed IPOs.

4. ipomarket.in The allotment section on ipomarket.in links directly to the registrar check page for every IPO — saving you the step of finding the registrar yourself.

5. Your broker app Most brokers display allotment status directly in the IPO section of their app.

Refund Timeline

If you did not receive allotment (or received partial allotment in the HNI category):

• The blocked amount is released automatically
• Under T+3 listing rules, refunds are processed by T+2 (two working days after IPO close)
• You do not need to do anything — the unblock happens automatically

What If You Received Partial Allotment?

Partial allotment only applies in the HNI category (proportional). Retail investors either receive a full lot or nothing — there is no such thing as half a lot in the retail lottery.

If you applied for ₹10 lakh as an HNI and received allotment worth ₹50,000, the remaining ₹9.5 lakh block is released.

Tips to Maximise Allotment Probability

For retail investors:

• Apply early (reduces operational rejection risk, same lottery probability)
• Use multiple family members' PANs legally
• Apply for exactly one lot in heavily oversubscribed IPOs
• Ensure your application is error-free (correct PAN, correct demat details, UPI approved)

For HNI investors:

• Calculate whether the financing cost justifies the expected listing gain
• In lightly subscribed HNI tranches, proportional allotment can be very favourable

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