How IPO allotment works: retail, HNI and SME, and the draw of lots

An IPO sets aside a share of the issue for each category of investor. When a category gets more bids than it has shares, the registrar decides who gets shares by the rules SEBI sets for that category. The registrar publishes the result as the basis of allotment.

Retail individual investors (mainboard)

Retail investors apply for up to ₹2 lakh. When the retail portion is oversubscribed, the registrar first works out how many applicants can get the minimum bid lot, then picks that many applications by a computerised draw of lots. Each successful application gets one lot. Applying for more lots does not raise the chance of being picked; it only matters if the category is undersubscribed and there are shares left to go round.

Non-institutional investors (mainboard)

Non-institutional investors apply for more than ₹2 lakh. Since April 2022 the category is split in two: one third for applications of ₹2 lakh to ₹10 lakh and two thirds for applications above ₹10 lakh. In each part, when oversubscribed, the minimum application (the smallest number of lots worth more than ₹2 lakh, or more than ₹10 lakh) is allotted by a draw of lots, and any shares left over are allotted proportionately.

Qualified institutional buyers

Institutions are allotted proportionately to their bids. Up to 60% of the institutional portion can go to anchor investors one working day before the issue opens.

SME issues

For SME issues opening from 1 July 2025, the retail category is replaced by individual investors, whose minimum application is two lots, worth more than ₹2 lakh. Each successful individual application gets the minimum application; when the category is oversubscribed, the successful applications are picked by a draw of lots.

Working out the chance

In a category allotted by draw of lots, the chance of getting the minimum is the number of minimum applications the category can fill divided by the number of applications. newboard's subscription pages show this for each issue from the exchange's bid book. The common shortcut, 1 divided by times subscribed, counts shares rather than applications and understates it.

What gets an application rejected

• More than one application with the same PAN in the same category.
• A PAN, DP ID or client ID that does not match the depository's records.
• A UPI mandate not accepted by the cut-off time on the last day of bidding.
• Bids below the final issue price (for bids not placed at the cut-off price).