What is an IPO allotment?

When you apply for an IPO, there’s always that moment of anticipation, will you get the shares or not? To understand that outcome, it helps to know the meaning of IPO allotment and how the entire process works behind the scenes.

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IPO allotment, in simple terms, refers to the process of distributing shares among investors who have applied for them during the subscription period. After the closing of the IPO, the company and its registrar scrutinize all the applications and decide the number of shares each qualified investor will get. The ultimate aim is to distribute the limited number of shares available as equitably as possible among the thousands of applicants.

Breaking down the process of IPO allotment in simple terms: after the subscription window ends, the registrar checks whether the IPO is undersubscribed, fully subscribed, or oversubscribed. If the total demand for shares is less than or equal to the number of shares on offer, everyone who applied gets the full quantity they requested.

However, when an IPO is oversubscribed, which is quite common for popular offerings, allotment becomes more selective. In the retail category, shares are usually distributed through a lottery based system, where each valid application has an equal chance of getting a minimum number of shares. This ensures fairness and prevents large investors from cornering too much of the issue.

In contrast, institutional and high net worth investors receive allotments on a proportionate basis, meaning their allocation depends on the amount they have applied for. This is how IPO share distribution works differently across investor categories, balancing retail participation with larger financial entities.

Once the allotment is finalised, details are made public on the registrar’s website. Investors can check their status by entering their PAN or application number. Those who receive shares will see them credited directly into their Demat accounts, while others will automatically get their funds unblocked or refunded.

Understanding IPO allotment is not just about whether you got lucky, it is about recognising the system’s structure and fairness. By knowing how it works, you can better interpret subscription data, set realistic expectations, and plan your investment strategy for future issues with more clarity.