The Problem of Too Much Demand
When an IPO receives far more applications than available shares, SEBI's allotment framework kicks in to ensure fair distribution. The system has evolved significantly from the older proportionate allotment method (where everyone got a fractional lot) to the current lottery-based approach for the retail category.
The current system, in place since 2012, ensures every successful retail applicant gets exactly one minimum lot or nothing — preventing large applications from crowding out smaller ones.
How the Retail Lottery Works
Once retail (RII) oversubscription exceeds 1x, the registrar (KFIN Technologies, Link Intime, or Bigshare Services) runs a computerised draw:
- All valid retail applications are entered into the lottery pool, with each application getting exactly one "ticket" regardless of how many lots were applied for
- The computer draws the required number of winners to fill the retail quota (total retail shares ÷ minimum lot size = number of winners)
- Each winner receives exactly one minimum lot
- Applications for additional lots are treated the same as applications for one lot — no advantage to applying for the maximum
This is why the widely-used strategy of "apply for maximum lots to maximise allotment" is a myth for retail investors. In the lottery, every valid application gets one ticket. Two tickets (two demat accounts) doubles your probability; three tickets triples it. The number of lots in each application is irrelevant to allotment.
NII (HNI) Allotment: Different Rules
The NII/HNI category (applications above ₹2 lakh) uses a proportionate allotment system. If NII is 100x oversubscribed, each applicant gets 1% of their applied amount in shares. This means:
- An HNI who applied for ₹10 lakh in shares gets ₹10,000 worth of shares (one lot at most issue prices)
- An HNI who applied for ₹1 crore gets about ₹1 lakh worth of shares (10 lots)
HNIs who fund large applications through loans calculate their break-even based on expected allotment ratio. At 100x NII oversubscription, the effective return must cover the interest cost on the 100x borrowed capital.
The Role of the IPO Registrar
The registrar is a SEBI-registered entity responsible for processing all IPO applications, running the allotment lottery/proportionate calculation, and initiating share credit and refunds. Registrar quality matters — a slow or error-prone registrar can delay refunds and cause investor frustration. KFIN Technologies and Link Intime handle the majority of mainboard IPO registrations in India.
Checking Allotment Status
Allotment results are typically announced 6 days after subscription closes. Check your allotment status:
- Registrar website: Enter your PAN or application number on the registrar's allotment status page
- BSE website: Direct link to allotment status under the IPO section
- GMPIpoWatch: Shows allotment date and links to the official registrar status page for each IPO
- Demat account: Allotted shares appear in your demat account on the day of listing, confirming allotment before you check any external site
Loading comments...