IPO allotment status is a document or an online update that shows whether or not an investor has been allotted shares from the IPO they applied for. This information is crucial because it gives investors clarity about their application – whether they will receive the shares they requested or not. The allotment status is typically updated after the IPO subscription period ends and the share allocation process is complete.
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IPO allotment is done on a pro-rata basis or via a lottery system depending on the demand for the IPO shares and the number of applications received.
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How Does IPO Allotment Work?
Once the IPO subscription window closes, the allotment process begins. The number of shares applied for will determine the allotment procedure, especially when the IPO is oversubscribed (when the demand for shares exceeds the number of shares offered). Here’s how it works:
- Oversubscription:
- If an IPO is oversubscribed (more shares are applied for than available), the shares will be allotted based on a lottery system or pro-rata allocation.
- Pro-rata allotment means if you apply for a larger number of shares than you can be allotted, your shares will be reduced proportionally based on the number of shares subscribed by other investors.
- If oversubscription is extremely high, the allotment is generally done randomly through a lottery system.
- Under-subscription:
- If the IPO is under-subscribed (where the demand for shares is lower than the number of shares offered), all applicants typically receive the shares they applied for in full.
- Priority Based Allotment:
- Institutional Investors (QIBs) generally receive priority allotment, followed by Non-Institutional Investors (NIIs), and then Retail Investors. Retail investors are often allotted shares through a lottery system, especially in the case of oversubscription.
Categories of IPO Allotment
IPO allotment is categorized based on the type of investor applying for shares. There are three primary categories:
- Retail Investors:
- Retail Investors are individual investors applying for an amount that does not exceed a specified limit, usually ₹2 lakh.
- For oversubscribed IPOs, retail investors receive shares through a lottery system or pro-rata basis, depending on the demand and availability of shares.
- Qualified Institutional Buyers (QIBs):
- QIBs are large institutional investors such as mutual funds, insurance companies, and foreign institutional investors.
- This category gets a specific allocation in the IPO and is usually the first to receive shares before retail investors and non-institutional investors.
- Non-Institutional Investors (NIIs):
- NIIs include high-net-worth individuals (HNIs) and corporate investors who apply for shares in larger quantities (greater than ₹2 lakh).
- Like QIBs, the NII category often gets priority, but in cases of oversubscription, the allotment may be done on a pro-rata basis.
- Employee Quota:
- Some IPOs allocate a certain percentage of shares to employees of the company issuing the IPO. If this quota is oversubscribed, the allotment is done based on the demand from employees.
How to Check IPO Allotment Status?
The IPO allotment status is typically available once the allotment process is complete. Investors can check their allotment status through several platforms:
- Stock Exchange Websites (BSE and NSE):
- Both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) publish the allotment status once it’s finalized. Investors can visit these websites and enter their application number or PAN to check their allotment status.
- Registrar Websites:
- IPO registrars (e.g., KFin Technologies, Link Intime, Bigshare Services & More) also offer the allotment status on their websites. Investors can check their allotment status by providing their application number or PAN number.
This content has been researched and written by the IPO Investors Team…
Disclaimer: Readers are strongly advised to seek guidance from a qualified financial advisor before making any investment decisions. Relying solely on the content presented here for financial choices is done entirely at the reader’s own risk.
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