What is IPO Allotment and When Does It Happen
IPO allotment is the process by which the registrar distributes shares to investors who applied during the subscription period. Once an IPO closes and all applications are validated, the registrar — typically KFintech or MUFG Intime (Link Intime) — determines how many shares each applicant receives based on SEBI rules.
The allotment process begins the day after the IPO subscription closes. Under SEBI's current T+3 listing framework, the entire sequence — from subscription close to listing — happens within 6 working days. The basis of allotment is typically finalised on Day 2 or Day 3 after close, allotment status is published on the registrar portal the same evening, shares are credited to demat accounts on Day 4, refunds are processed on Day 4-5, and listing happens on Day 6.
The allotment process differs significantly between the three investor categories: Retail Individual Investors (RII), Non-Institutional Investors (NII/HNI), and Qualified Institutional Buyers (QIB). Understanding how each category works is essential for setting realistic expectations about your chances of getting shares.
Retail Allotment — The Lottery System Explained
For retail investors (applications up to Rs 2,00,000), allotment in oversubscribed mainboard IPOs works on a lottery basis. This is fundamentally different from how most people assume it works. Here are the key rules:
One lot per allottee. In an oversubscribed retail category, each successful applicant receives exactly one lot — regardless of how many lots they applied for. If you applied for 1 lot or 13 lots (the maximum within the Rs 2 lakh retail limit), your allotment is the same: one lot or zero lots.
Equal probability for every application. Every valid retail application has an equal chance of being selected in the lottery, regardless of the application size. An application for 1 lot has the same probability as an application for 13 lots.
Lottery selection by computer. The registrar uses a computerised random selection process to pick which applications receive allotment. This process is audited and supervised by the stock exchange and SEBI-appointed officials.
Minimum allotment rule. SEBI mandates that if there are more applications than available lots, each successful applicant must receive at least one lot. This means the registrar cannot give partial lots or fractional shares to more people — it is all-or-nothing for each application.
This lottery system is why the optimal retail strategy is to apply for just 1 lot. You block less capital (typically Rs 14,000-15,000 instead of Rs 2,00,000) while maintaining the exact same allotment probability. Use our IPO Allotment Calculator to estimate your probability based on current subscription levels.
How the Lottery Works Mathematically
Let us walk through a concrete example to understand the mathematics of retail allotment:
Example scenario:
- Total shares offered in the retail category: 10,00,000 shares
- Lot size: 100 shares per lot
- Available lots for retail: 10,000 lots
- Total retail applications received: 1,00,000 applications
- Retail subscription: 10x oversubscribed
Step 1 — Determine available lots. The registrar calculates that 10,000 lots are available for the retail category (10,00,000 shares divided by 100 shares per lot).
Step 2 — Count valid applications. After rejecting duplicate PAN applications, invalid demat details, and failed UPI mandates, suppose 95,000 valid applications remain.
Step 3 — Run the lottery. Since 95,000 valid applications compete for 10,000 lots, each application has a probability of 10,000 / 95,000 = approximately 10.5 percent.
Step 4 — Select winners. The computerised lottery randomly selects 10,000 applications. Each selected application receives exactly 1 lot (100 shares).
Step 5 — Remaining applicants. The 85,000 unsuccessful applicants receive zero shares. Their blocked application amount is released back to their bank accounts within 1-2 business days.
Key insight: In this example, whether you applied for 1 lot (Rs 14,000) or 13 lots (Rs 1,82,000), your chance of getting allotment was exactly 10.5 percent. The only difference is that the 13-lot applicant had Rs 1,82,000 blocked in their bank account for a week, while the 1-lot applicant had only Rs 14,000 blocked.
For SME IPOs, the allotment mechanism is slightly different. The minimum lot size is much larger (typically Rs 1,00,000+), and allotment is still by lottery, but the dynamics differ because the applicant pool is smaller.
HNI/NII Proportionate Allotment Explained
Non-Institutional Investors (NII) — commonly called HNIs — are divided into two sub-categories:
- sNII (small NII): Application value between Rs 2,00,001 and Rs 10,00,000. Gets 15 percent of the total issue.
- bNII (big NII): Application value above Rs 10,00,000. Gets 15 percent of the total issue.
Unlike retail investors who get allotment by lottery, NII allotment was traditionally proportionate. However, SEBI changed the rules in 2022:
Current rule (since 2022): If a NII sub-category is oversubscribed more than a threshold, allotment switches to a lottery system similar to retail. Each successful applicant receives the minimum bid lot. This change was made to prevent the old practice where HNIs would apply for massive amounts (Rs 5-10 crore using borrowed funds) to get proportionately larger allotments.
Practical impact: For most popular IPOs where NII subscription exceeds the threshold, the allotment is effectively a lottery. Applying for Rs 15 lakh versus Rs 50 lakh makes little difference in your allotment. This has significantly reduced the advantage that deep-pocketed HNIs used to have.
IPO financing for NII: Many bNII applicants use borrowed funds from NBFCs at 10-16 percent annualised interest for 7-10 days. The calculation is: if the IPO allotment value times listing gain exceeds the interest cost, the trade is profitable. However, if the applicant does not get allotment (increasingly common with the lottery system), they still pay the interest on the borrowed amount for the blocked period.
QIB Allotment Process
Qualified Institutional Buyers (QIBs) — mutual funds, insurance companies, FIIs, and banks — receive 50 percent of the total issue in mainboard IPOs. Their allotment process is discretionary:
Anchor investors (a subset of QIBs) can subscribe one day before the IPO opens. They receive up to 60 percent of the QIB quota. Anchor allocation is decided by the company and its investment bankers, not by lottery.
Remaining QIBs apply during the regular subscription window. Their allotment is proportionate — if QIB is 20x subscribed, each QIB receives approximately 1/20th of what they applied for (adjusted for minimum lot rules).
Why QIB allotment matters to you: Even though retail investors do not participate in the QIB category, QIB subscription levels are the most important signal for predicting listing performance. Check our live subscription tracker to monitor QIB demand for every open IPO.
Why You Didn't Get Allotment — 5 Common Reasons
If you did not receive allotment in an IPO, it is most likely due to one of these five reasons:
Reason 1 — Oversubscription lottery. This is the most common reason. In a 20x oversubscribed retail category, only 5 percent of applicants receive shares. There is nothing wrong with your application — you simply were not selected in the random lottery.
Reason 2 — Duplicate PAN application. If you applied from multiple platforms (e.g., both Zerodha and Upstox) using the same PAN, all your applications are rejected. SEBI allows only one application per PAN per investor category.
Reason 3 — UPI mandate not approved. If you submitted the application but did not approve the UPI mandate on your payment app before the deadline, your application is treated as invalid and excluded from allotment.
Reason 4 — Insufficient bank balance. If your bank balance dropped below the blocked amount before the allotment date, the ASBA mandate fails and your application is rejected.
Reason 5 — PAN or demat details mismatch. If the PAN in your broker account does not match your bank account PAN, or if your demat details (DP ID, client ID) are incorrect, the registrar rejects the application during validation.
You can check your IPO allotment status on the registrar's portal using your PAN, application number, or DP ID. Our allotment page links directly to all five major registrar portals.
How to Check Allotment Status
Once allotment is finalised, you can check your status through several channels:
Registrar portal (fastest). Visit the registrar's website (KFintech or MUFG Intime for most IPOs, Bigshare for some SME IPOs). Select the IPO, enter your PAN or application number, and view your allotment status. Our allotment status page has direct links and step-by-step guides for all five registrars.
BSE website. Go to BSE's IPO allotment status page, select the issue, enter your application number or PAN, and check. This works for all IPOs regardless of registrar.
NSE website. Similar to BSE, NSE provides an allotment status checker on their website under the IPO section.
Broker app. Zerodha, Upstox, Angel One, and Groww all show allotment status directly in their apps. However, this information may appear a few hours after the registrar portal updates.
Demat account. If allotted, shares will appear in your demat account on the credit date (typically Day 4 after IPO close). If you see the shares in your holdings, you have been allotted.
What Happens After Allotment — Refund and Share Credit Timeline
Here is the exact timeline of what happens after the registrar finalises allotment:
Allotment Day (Day 2-3 after close): Allotment status is published on the registrar portal, usually by evening. You can check using the methods described above.
Share Credit Day (Day 4): Allotted shares are credited to your demat account. You can see them in your broker app under Holdings. These shares are not yet tradeable — you must wait until listing day.
Refund Day (Day 4-5): For non-allotted applicants, the entire blocked amount is released back to the bank account. For partially allotted applicants (rare in retail, more common in NII), the excess amount is released. The unblock happens through the ASBA/UPI system automatically — you do not need to take any action.
Listing Day (Day 6): The stock begins trading on NSE and BSE. Pre-open session runs from 9:00 AM to 9:45 AM (for IPO listing), and regular trading starts at 10:00 AM. You can sell your allotted shares at any point after trading begins.
Important note on timing: The T+3 timeline counts working days only. Weekends and exchange holidays extend the calendar time. An IPO closing on Wednesday might list the following Tuesday (skipping Saturday and Sunday).
Frequently Asked Questions
If I apply for 13 lots in retail, do I get more shares if allotted?
No. In an oversubscribed mainboard IPO, every successful retail applicant receives exactly 1 lot regardless of how many lots they applied for. Applying for 13 lots does not increase your allotment quantity — it only blocks more capital. The lottery gives equal probability to every application, whether it is for 1 lot or 13 lots.
What is the "basis of allotment" document?
The basis of allotment is an official document published by the registrar after the allotment process is complete. It shows the total applications received per category, the ratio of allotment, and the methodology used (lottery vs proportionate). This document is filed with the stock exchanges and is publicly available.
Can I appeal if I did not get allotment?
No. The allotment process is computerised, audited, and final. There is no appeal mechanism. If you were not selected in the lottery, the only option is to buy shares on listing day in the secondary market (though the price will likely be higher than the issue price for popular IPOs).
How long does it take for the refund to appear in my account?
Refunds for non-allotted applicants typically appear within 1-2 business days after the allotment date. Since the UPI/ASBA system blocks funds rather than debiting them, the "refund" is actually an unblocking of the amount. You should see the funds available in your account by Day 5 after the IPO close at the latest.
What happens if I get allotment but the stock lists at a loss?
If the stock lists below the issue price, you have three options: (1) Sell immediately and book the loss. (2) Hold and wait for the price to recover. (3) Average down by buying more shares at the lower price (only if you believe in the company's fundamentals). The loss on listing day is a real loss — your allotted shares are worth less than you paid for them.
Is allotment different for SME IPOs?
Yes. SME IPOs have larger minimum lot sizes (typically Rs 1,00,000 or more). The allotment mechanism is still a lottery for oversubscribed issues, but the applicant pool is smaller because the higher minimum investment filters out many retail investors. SME IPOs also have a market maker who provides liquidity post-listing.
Related reading: Want to maximise your chances? See our guide on 7 strategies to improve your IPO allotment chances.
Disclaimer: This article is published by ipomarket.in for educational and informational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security, or an offer to invest. IPO investments are subject to market risks. Grey Market Premium (GMP) data is sourced from unofficial market participants and is not endorsed by SEBI, NSE, or BSE. Past performance is not indicative of future results. Please read all scheme-related documents carefully and consult a SEBI-registered financial advisor before investing. ipomarket.in is not a SEBI-registered investment advisor or research analyst.