How IPO allotment works in India
On this page
- What allotment is
- Who gets which share of the issue
- Price band, lots and cut-off
- From bid to listing in T+3
- What “times subscribed” counts
- Retail: one lot by lottery
- Non-institutional: the sNII and bNII draw
- Institutions and anchors
- Why applications are rejected
- After the basis of allotment
- Common questions
- What to read in an offer document
What allotment is
An initial public offering (IPO) sells shares to the public for the first time. Some are new shares (a fresh issue, where the money goes to the company) and some may be existing shares sold by current owners (an offer for sale, where the money goes to those sellers). The RHP states the split. Allotment works the same way for both.
If total demand is less than the shares on offer, every valid applicant gets what they asked for. Allotment rules only matter when an issue, or one category within it, is oversubscribed. That is common for popular issues, so the rules decide most outcomes.
Who gets which share of the issue
| Category | Who | Company with a profit record | Company without one |
|---|---|---|---|
| QIB | Mutual funds, banks, insurers, registered foreign investors | Up to 50% | At least 75% |
| NII | Individuals and entities bidding above ₹2 lakh | At least 15% | Up to 15% |
| Retail (RII) | Individuals bidding up to ₹2 lakh | At least 35% | Up to 10% |
The first column applies to companies that meet SEBI's profit and net-worth tests. A company that doesn't can still list, but most of the issue must go to institutions, and the retail slice shrinks to 10% or less. The category percentages for a given issue are printed in its RHP and on the exchange's issue page.
Some issues carve out extra reservations before this split: an employee quota, and a shareholder quota for people who hold shares of a listed parent company. These are separate pools with their own allotment, covered in the companion deep dive.
A company with a profit record raises ₹1,000 crore. The price band is ₹480–500 and one lot is 28 shares. The final price is fixed at ₹500, so one lot costs ₹14,000.
| Category | Share | Amount | Shares at ₹500 |
|---|---|---|---|
| QIB (including anchors) | 50% | ₹500 crore | 1,00,00,000 |
| NII | 15% | ₹150 crore | 30,00,000 |
| Retail | 35% | ₹350 crore | 70,00,000 (2,50,000 lots) |
Price band, lots and cut-off
- Lot (market lot). The minimum bid and the step size. SEBI sets the minimum application value in a range of ₹10,000 to ₹15,000, so the company picks a lot size that fits it.
- Retail limit. A retail bid can be up to ₹2 lakh at the upper end of the price band. Above that, the same person is an NII.
- Cut-off. The final price is set after bidding closes, usually at the top of the band. A retail bid at cut-off counts at that price. A bid below the final price is not eligible for allotment.
- Revising. Retail bids can be changed or cancelled while the issue is open. NII and QIB bids cannot be withdrawn or reduced once placed.
- Payment. Every application goes through ASBA (application supported by blocked amount): your bank blocks the money and only debits it for allotted shares. Through UPI, applications up to ₹5 lakh are allowed; larger ones go through net banking ASBA.
₹2,00,000 ÷ ₹14,000 a lot = 14.28, so the retail maximum is 14 lots (392 shares, ₹1,96,000). Fifteen lots would cost ₹2,10,000 and make the bid an NII bid.
From bid to listing in T+3
| Day | What happens |
|---|---|
| Before opening | Anchor investors are allotted shares (one working day before the issue opens) |
| Open to T | Bidding is open for at least three working days; UPI mandates must be approved by the cut-off time on day T |
| T+1 | The registrar and exchange finalise the basis of allotment; results go up on the registrar's and exchanges' websites |
| T+2 | Shares are credited to demat accounts; blocked money for unallotted bids is released |
| T+3 | The shares list and start trading |
Exact clock times for mandates and refunds are set in SEBI circulars and shown by brokers. Cancelling a bid on the last afternoon, or approving a mandate late, is the step most likely to slip past the cut-off.
What “times subscribed” counts
Retail bids add up to 14,00,00,000 shares against 70,00,000 on offer: 20 times subscribed.
If the average retail application was for 2.5 lots (70 shares), the 50,00,000 lots bid for came from 50,00,000 ÷ 2.5 = 20,00,000 applications, not “20 people for every lot”. The difference matters for the lottery below.
Exchanges publish category-wise subscription during the issue, and the registrar's basis of allotment later shows the number of valid applications at each bid size. Anchor shares are excluded from the QIB multiple.
Retail: one lot by lottery
2,50,000 lots and 20,00,000 valid applications. Every winner gets exactly one lot, whatever they bid for.
An applicant who bid for 14 lots and one who bid for 1 lot have the same 1 in 8 chance, and a winner in either case receives one lot.
Suppose demand is weaker: 1,50,000 applications bidding for 3,00,000 lots in total (1.2 times subscribed). Each applicant first gets one lot, using 1,50,000 lots. The remaining 1,00,000 lots are shared in proportion to the extra lots each person bid for (1,50,000 extra lots in total), so each extra lot is filled about two-thirds of the way, with rounding settled by the registrar.
So the size of a retail bid only matters when the lottery isn't needed. The companion deep dive works through what that means for anyone comparing bid sizes.
Non-institutional: the sNII and bNII draw
The minimum NII application is the smallest number of lots worth more than ₹2 lakh. When a part is oversubscribed, winners are drawn by lottery and each gets that minimum application; any shares left over are then shared in proportion.
| Part | Shares | Minimum application | Allotments possible |
|---|---|---|---|
| sNII (₹2–10 lakh) | 10,00,000 | 15 lots, 420 shares, ₹2,10,000 | 2,380 |
| bNII (above ₹10 lakh) | 20,00,000 | 72 lots, 2,016 shares, ₹10,08,000 | 992 |
If 30,000 valid sNII applications come in, each has about 2,380 ÷ 30,000 = 7.9%, roughly 1 in 13, whether it was for ₹2.1 lakh or ₹9.9 lakh.
Before 2022, NII allotment was proportionate to bid size, which made very large borrowed bids attractive. The draw ended that: within each part a bigger bid no longer buys a bigger share once the part is oversubscribed.
Institutions and anchors
Anchor investors are large institutions that commit early. Their names and allotments are published before the issue opens. Half of an anchor's shares are locked in for 30 days after allotment and the rest for 90 days, so the end of each lock-in is a date when those shares can first be sold.
Anchors take 60% of the ₹500 crore QIB portion: ₹300 crore. The remaining ₹200 crore (40,00,000 shares) is open to QIB bids. If QIBs bid for 4,00,00,000 shares (10 times), each gets about a tenth of what it bid for.
Why applications are rejected
| Reason | What happened |
|---|---|
| UPI mandate not approved | The block request was not accepted in the UPI app before the cut-off on day T |
| Name or PAN mismatch | The bank account or UPI ID belongs to someone other than the applicant |
| Duplicate PAN | More than one application under the same PAN in the same category, for example through two brokers |
| Not enough balance | The bank could not block the full amount |
| Bid below the final price | A price bid lower than the price set; cut-off bids avoid this |
| Over the category limit | A retail bid above ₹2 lakh, or an NII bid below the NII minimum |
After the basis of allotment
On T+1 the registrar publishes the basis of allotment: for each category and bid size, how many applications were received and how many were allotted. Your status appears on the registrar's website and on NSE and BSE, searchable by PAN or application number. If nothing was allotted, the block on your money is released by T+2. If shares were allotted, they appear in your demat account by T+2, and the amount is debited.
Listing day starts with a pre-open session that discovers the opening price. That price can be above or below the issue price, and getting an allotment says nothing about which way it goes. The costs and taxes deep dive covers the charges and tax that apply when shares are later sold.
Common questions
Does applying on the first day give a better chance?
No. The lottery covers every valid application received while the issue was open. Timing only matters for meeting the mandate cut-off.
Is my money taken if I'm not allotted?
No. With ASBA the money stays in your account, blocked. The block is released once allotment is final.
What is the grey market premium (GMP) I see quoted?
It is an informal, unregulated quote for trading shares before listing. It isn't published by any exchange or regulator, can't be verified, and isn't a measure of the listing price.
Are SME IPOs allotted the same way?
SME platform issues follow their own rules, with much larger minimum bids and different category splits. This page covers main-board issues only.
What to read in an offer document
- Category split. Retail at least 35% or up to 10% tells you which rule set applies and how big the retail pool is.
- Fresh issue vs offer for sale. Who receives the money: the company, or existing shareholders selling out.
- Reservations. Any employee or shareholder quota, who qualifies, and the cut-off date for being a shareholder.
- Lot size and price band. The cost of one lot and the retail maximum in lots.
- Objects of the issue and risk factors. What the fresh money is for, and the risks the company itself lists.
- Dates. Opening, closing, the mandate cut-off, allotment, refund and listing days.
For the arithmetic of the odds, and a calculator, see what changes your chance of an allotment.
Educational explanations only, not investment advice, research or a recommendation to buy, sell or hold any security. Past performance does not indicate future results. Every example uses made-up round numbers. Read the Disclaimer before relying on any figure.