IPO stands for Initial Public Offering. A corporation selling its own stock to the general public is known as an initial public offering (IPO).

Investor funds are given to the company, and they may aid in its expansion and growth. The investors acquire stock in the same business and stand to gain if the venture is successful.

The current IPO procedure begins when a business intends to sell stock to the general public. Even if they do not require the money, they can still issue an IPO, however this is typically done in order to raise money for growth or other projects. There are numerous steps in the IPO process, and it could take months before it starts.

One such phase in this approach is IPO allotment. You may learn more about impending IPO allotments in this post, as well as how to monitor the status of upcoming IPO allotments.

By lowering the minimum subscription quantity, the government has made it simpler to invest in initial public offerings (IPOs), but it has also made it easier for investors to get their money back.

Process of IPO Allotment -The Fundamentals

  1. The IPO issuing company distributes documentation for the proposed most current IPO.
  2. These documents are only available for a limited time for prospective investors to review. This is “book-building” period.
  3. Based on the number of applications received during the book-building period, the IPO issuing company can issue more or fewer shares than it had initially intended to. Sometimes they even cancel the IPO if there isn’t sufficient interest. Insurance companies, for example, may cancel an IPO if they don’t receive enough applications to cover their initial target amount.The IPO issuing business will announces the number of shares that is available for sale. in accordance with the IPO listing. and then announce the brokerage firms (if any) that is authourised to sell these shares at that time. It is too late to join the IPO list at this time. You’ll have to hold off till it actually occurs.
  4. Once all this is done, the IPO issuing company announces how many shares will be sold in as per IPO listing and which brokerage houses (if any) will be authorized to sell these shares at that time. At this point, it is too late to subscribe to the IPO list. You’ll need to wait for it actually to happen.

Before you can even begin to think about subscribing to an IPO, you need to have the following:

  • Demat account (necessary for buying shares)
  • Trading Account (necessary if you intend on selling shares)
  • Amount in Demat account that corresponds to your bid (usually UPI is most prefered mode of payment, accepted by the brokers.)

If you do have all the basics in place, you will have to initiate the application process. It’s a fairly straightforward procedure and happens in the following sequence:

First Step: Initiate an Application

You can do this both online and offline, but it’s crucial that you have enough money in your account to cover the bid you submit. Since the “Blocked amount facility” is now required for IPOs by the market authorities, your bid is unlikely to be taken into consideration if you don’t have the money set aside.

Second step: Allotment

This takes place behind closed doors, and depending on the quantity and legitimacy of the bids submitted, it might go either way. It is crucial to remember that not all applicants receive what they requested because supply is typically far outstripped by demand.

Third Step: Approval

The IPO registrar completes and certifies the allotment of to successful bidders in around seven days. On the registrar’s website, you can monitor the status of the IPO allotment. Additionally, it is possible to verify it on the NSE or BSE websites. For the IPO allotment status check, you will require the PAN, DPID/Client ID number, or bid application number.

Now that we are aware of how the allotment process works, it is important to investigate the dynamics at play and How extreme circumstances are handled.

How Does The Registrar Decide On The Allotment?

When the application process for an IPO is done, one of two things usually happen:

Case 1: Total number of bids is more than shares offered by the firm.

Case 2: Total Number Of Bids ≥ Shares Offered By Firm

Case 1: Total number of bids is more than shares offered by the firm.

In this case supply is equal to demand. The registrar won’t need to step in if this were to take place (which it doesn’t do very often). Every candidate who submitted a legitimate bid will receive the particular lot. No one walks out without any allotment.

Case 2: Total Number Of Bids ≥ Shares Offered By Firm

In this more likely scenario, the registrar will need to make some preparations for how the allotment will really occur. Fortunately, SEBI (Securities and Exchange Board of India), India’s market regulator, has mandated that at least one lot must be provided to each applicant. Let’s use an example to better comprehend the allotment procedure while keeping this in mind.

Let’s assume that A Company XYZ offers 10,00,000 shares as a part of it’s IPO and the minimum lot size is 100. As per the SEBI mandate, the maximum number of investors who are bound to get at least one lot is: 10,000(10,00,000 ÷ 100). Consequently, 10,000 investors will definitely receive at least one lot.

Depending on the margin by which the IPO is oversubscribed, the allotment procedure varies. They are dealt with in the following manner:

  1. Small Margin: All applicants will receive the minimal lot (70 in the example above) if the IPO is only marginally overcrowded. To the investors who made multiple bids, the remaining shares will be distributed proportionately.
  2. Large Margin: The registrar will use a fortunate draw to distribute shares in circumstances where the shares are oversubscribed by many times the original amount, such as Reliance’s IPO in 1977. Investors whose bids are unsuccessful during the draw in such circumstances will not get any shares.


The company’s IPO status is a reflection of the level of public confidence it has attained. An IPO has become a major event in recent years, receiving a lot of media attention and sparking interest from both retail investors and major financial institutions wanting to buck the current trend. After the allocation process is complete, the shares are listed on the exchange within a few days, allowing for trading to begin. To alert you of the upcoming IPO events, companies do offer their IPO calendars.

Watching their stocks trade immediately after listing is one of the IPO market’s most thrilling experiences for investors. However, it’s crucial to keep in mind that the trading price will be extremely volatile.

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