What is the IPO Allotment Process? Step-by-Step Guide for Indian Investors 13th July
By CapitalKeeper | Beginner’s Guide | Indian Equities | Market Moves That Matter
What is the IPO Allotment Process? A Step-by-Step Guide for Retail Investors
Learn how the IPO allotment process works in India, from bidding to share credit in your Demat account. Includes ASBA, UPI mandates, and allotment timelines.
📌 Introduction: Behind the Scenes of IPO Allotment
Applying for an IPO (Initial Public Offering) is exciting. But once you hit ‘submit’ on your application, the suspense begins — Will you get the allotment? How are shares distributed? What decides your luck?
The IPO allotment process is transparent, rule-based, and governed by SEBI and stock exchanges. Whether you’re a first-timer or a seasoned investor, understanding how allotments work helps you plan better, track application status, and avoid myths around IPO “luck.”
📈 What is an IPO Allotment?
IPO allotment refers to the process where shares are distributed to investors after the IPO bidding closes. When the IPO is oversubscribed, shares are allotted via a lottery system, especially for retail investors.
It’s carried out by the registrar to the issue (e.g., Link Intime, KFin Technologies) based on SEBI guidelines, ensuring fairness and transparency.
🧾 Step-by-Step IPO Allotment Process
✅ Step 1: IPO Closes for Subscription
The IPO bidding window (usually 3 days) closes. Data is collected from UPI, ASBA, and broker apps.
✅ Step 2: Data Reconciliation
The registrar reconciles:
- Number of valid bids
- UPI mandate approvals
- ASBA blocks
- Demat account validation
✅ Step 3: Basis of Allotment Finalized
Depending on demand, the registrar prepares a “Basis of Allotment” (BoA):
| Subscription Level | Allotment Basis |
|---|---|
| Undersubscribed | Full allotment to all applicants |
| Oversubscribed | Lottery system based on lots (retail) |
| QIB/NII Categories | Pro-rata allotment or block-wise allotment |
Retail investors are allotted at least one lot (if lucky) via a computerized draw.
✅ Step 4: Allotment List Published
Once BoA is approved by stock exchanges:
- Registrar publishes allotment status on its website
- Investors can check using PAN, application number, or DP ID
✅ Step 5: Credit of Shares to Demat Account
Successful applicants receive shares directly in their Demat account (usually T+6 days from IPO close). No need for manual actions.
✅ Step 6: Refund of Blocked Funds
For non-allottees:
- ASBA/UPI amounts are unblocked automatically
- No manual refund required
- UPI refunds usually reflect within 2–3 working days
🎯 Key Points Retail Investors Must Know
| Parameter | Details |
|---|---|
| Minimum Lot Size | Defined in RHP (e.g., 1 lot = 50 shares) |
| Max Bids per PAN | One application in retail category |
| UPI Mandate Approval | Mandatory to validate application |
| Allotment Odds | Based on subscription & number of applicants |
Example: If an IPO has 10 lakh lots and 50 lakh retail applications, only 1 in 5 applicants will receive a lot.
⚠️ Common Reasons for IPO Rejection
- Incorrect UPI ID
- UPI mandate not approved before cutoff
- Insufficient funds in linked bank account
- PAN or Demat mismatch
- Multiple applications from the same PAN
✅ Pro Tip: Use the same PAN, bank, and DP details across platforms to avoid rejections.
📅 Typical IPO Timeline in India
| Event | Timeline |
|---|---|
| IPO Opens | Day 1 |
| IPO Closes | Day 3 |
| UPI Mandate Cutoff | Day 3 by 5 PM |
| Basis of Allotment | Day 5 or 6 |
| Credit of Shares | Day 6 or 7 |
| Listing on NSE/BSE | Day 7 or 8 |
Always refer to the RHP (Red Herring Prospectus) or broker announcements for exact dates.
🧠 FAQs on IPO Allotment
❓ Can I increase my allotment chances?
Apply with one PAN only, use UPI on time, and apply early. Multiple accounts with different PANs in your family may improve chances.
❓ Is IPO allotment really a lottery?
For oversubscribed retail portions — yes, it’s randomly generated to ensure fairness.
❓ Where can I check IPO allotment status?
Visit registrar websites like:
📌 Conclusion: Patience, Compliance & a Bit of Luck
The IPO allotment process is fair, regulated, and system-driven. While you can’t control the outcome, you can maximize your chances by ensuring:
- UPI mandates are approved
- KYC is updated
- You apply correctly and early
Remember: Missing out on an IPO allotment doesn’t mean it’s over. Many quality IPOs provide good entry points even post-listing.
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