How to check IPO Allotment Status?

What is IPO Allotment?

An Initial Public Offering (IPO) is the process through which a company goes public and sells its shares to investors via a stock exchange. IPOs are launched in the primary market, and investors can apply for the shares in the public offering between the opening and the closing dates of the IPO.

IPO allotment is the process by which the shares of the company are allotted to the investors who have applied for the IPO. It is through the IPO allotment process that a company divides its shares among investors. The process is conducted according to the guidelines laid out by the Securities and Exchange Board of India (SEBI), and typically takes around 7 days.

If you have applied for an IPO, you can perform a quick IPO allotment status check online on the Depository Participant’s website or app, or via the registrar’s or the stock exchange’s website.

What is the Procedure for IPO Allotment of Shares?

The procedure for allotting shares in an IPO depends on the number of successful bids received. There may be two scenarios in this regard, and here’s how the IPO allotment process occurs in each of these cases.

• Scenario 1: The number of bids is less than or equal to the number of shares offered

  In this case, each investor will receive complete allotment. In other words, they will receive the exact number of lots or shares they applied for.

• Scenario 2: The number of bids is more than the number of shares offered

  Here, the IPO is considered to be oversubscribed. So, no investor will receive complete allotment. Instead, the company must allot shares according to SEBI’s guidelines. In case of a small oversubscription, each investor will receive the minimum lot, and the remaining shares are proportionally allotted to investors who may have bid for more than one lot.
  
  However, in case of a large oversubscription, it may be difficult to allot the minimum lot to each applicant. So, companies resort to the lucky draw strategy for IPO allotment via a computerized process.

How is IPO Allotment Calculated?

Share allotment in an IPO is calculated based on the kind of subscription received. Let’s take an example to understand this better. Say a company plans to issue 10 lakh shares via an IPO, with a lot size of 10 shares per lot.

In that case, the total number of lots issued will be 1 lakh (i.e. 10 lakh shares ÷ 10 shares per lot). Now, let’s take up three possible subscription scenarios and see how the IPO allotment is calculated.

• If the IPO is undersubscribed and receives applications for only 80,000 lots

  Here, each investor will receive the exact number of lots they bid for.

• If the IPO is minorly oversubscribed and receives applications for 1,10,000 lots from 9,000 investors

  Each of the 9,000 investors will receive 1 lot of shares, so 90,000 shares will be thus allotted. The remaining 10,000 shares will be proportionately allotted to those investors who bid for more than 1 lot.

• If the IPO is largely oversubscribed and receives applications for say 2,00,000 lots from 15,000 investors

  Here, the calculator occurs through a computerized lucky draw process, as mentioned above.