How IPO Allotment Works in India

Getting allotted shares in a popular IPO feels arbitrary to most first-time applicants, and in a specific technical sense it genuinely is: for oversubscribed retail categories, allotment is decided by a computerised lottery. Understanding exactly how that lottery and the broader allotment process work removes much of the confusion around why one lot gets shares and another does not.

The Two Broad Scenarios

Allotment mechanics differ depending on whether a category is undersubscribed or oversubscribed.

If a category is undersubscribed or subscribed close to one time, every valid applicant typically receives the full number of shares applied for, since there is no scarcity to ration.

If a category is oversubscribed, SEBI's rules require a proportionate allotment method, and for the retail category specifically, this proportionate method takes the form of a lottery once the number of applicants exceeds the number of lots available.

Retail Allotment: The Lottery Explained

The retail category is reserved a minimum of 35 percent of the issue in most book-built mainboard IPOs. If the number of retail applicants exceeds the number of lots available in that reservation, every retail applicant is first guaranteed a minimum of one lot before any lottery applies, but not everyone can receive even one lot when applicant numbers are large enough.

Here is the actual process:

1. The registrar tallies valid retail applications after removing invalid or duplicate bids.

2. If the number of lots demanded is less than or equal to the lots available, everyone gets what they applied for.

3. If demand exceeds supply, the registrar determines how many applicants can be allotted at least one lot, based on total retail shares reserved divided by lot size.

4. A computerised random selection, run under registrar and exchange supervision, picks that many successful applicants from the full pool of valid applications.

5. Successful applicants in the lottery receive one lot each; if any shares remain after this first round, they are distributed proportionately among those who applied for multiple lots.

This is precisely why applying for many lots as a single retail applicant does not meaningfully improve your odds of allotment. Since each retail applicant is functionally capped at one lot in the lottery's first pass for a heavily oversubscribed issue, having multiple demat accounts across family members, each applying for one lot, is a far more common strategy for improving overall odds than applying for a large number of lots from a single account.

NII and QIB Allotment: Proportionate, Not a Lottery

The Non-Institutional Investor and Qualified Institutional Buyer categories are allotted proportionately rather than through a lottery, since these applicants generally bid for amounts large enough that a strict lottery would be impractical. If the NII category is subscribed 12 times, an applicant who bid for shares worth 500,000 rupees receives an allotment scaled down to roughly one-twelfth of that value, subject to rounding to whole lots. Read how HNI IPO applications work for the specific sub-category mechanics between the 2 lakh to 10 lakh and above 10 lakh HNI bands.

The Timeline From Close to Listing

Since the shift to the shortened listing cycle, the timeline from the close of bidding to listing on the exchange typically runs as follows:

• Day of close (T): Bidding window shuts.
• T+1: Basis of allotment is finalised by the registrar in consultation with the exchanges, and the allotment is typically approved.
• T+1 or T+2: Refunds are initiated for unsuccessful or partially successful applicants, and shares are credited to successful applicants' demat accounts.
• T+3: The stock lists and begins trading on the exchange.

This condensed cycle means the entire process from the close of an IPO to its first day of trading now typically takes just three working days, a significant reduction from the earlier T+6 cycle.

How Your Money Is Blocked and Released

Under the ASBA and UPI mandate system, your application amount is blocked in your own bank account rather than debited upfront. If you are not allotted shares, or are allotted fewer than you applied for, the blocked amount, or the relevant portion of it, is released automatically once the basis of allotment is finalised. You never lose access to unallotted funds beyond the blocking period itself, and no separate refund request is needed.

Checking Your Allotment Status

Once the registrar finalises the basis of allotment, status is published and searchable using your PAN, application number or demat account details. Check it directly on the IPO allotment status page, and use the IPO allotment calculator beforehand to get a rough sense of your probability of allotment in a given oversubscription scenario.

Why Some Applications Are Rejected Outright

A meaningful share of applications in every large IPO are rejected before the lottery even runs, most commonly due to:

• Multiple applications from the same PAN in the same category, which SEBI rules explicitly disallow.
• Insufficient funds available for blocking at the time of UPI mandate approval.
• Incorrect or mismatched demat and PAN details.
• A UPI mandate that is not approved within the required window before the bidding cut-off.

Since technical rejection removes your application entirely, double-checking mandate approval status before the bidding window closes is worth the two minutes it takes.

After Listing

Once shares are credited and the stock lists, what happens to the price over the following sessions is a separate question from allotment mechanics. See what happens after IPO listing for how listing-day price discovery and the following weeks typically unfold, and track the outcome for any specific issue on the IPO performance tracker.

Frequently Asked Questions

Q: Does applying for more lots increase my chance of allotment in an oversubscribed retail category?

A: Not meaningfully. In a heavily oversubscribed retail category, the lottery first allots one lot per successful applicant, so multiple demat accounts each applying for one lot generally improve overall odds more than one account applying for many lots.

Q: How long does IPO allotment take after the issue closes?

A: Under the current T+3 listing cycle, the basis of allotment is typically finalised within a day of the issue closing, with shares credited shortly after and listing following on the third working day.

Q: Is IPO allotment always through a lottery?

A: Only for oversubscribed categories, particularly retail. Undersubscribed categories receive full allotment, and NII and QIB categories are allotted proportionately rather than through a random lottery.

Q: What happens to my blocked funds if I am not allotted shares?

A: The blocked amount under ASBA or UPI is released back to your account automatically once the basis of allotment is finalised, with no separate refund request required.

Q: Where can I check my IPO allotment status?

A: The IPO allotment status page lets you check using your PAN, application number or demat details once the registrar publishes results.