How the IPO allotment lottery works

Subscription is the number of shares bid for divided by the number on offer. At 0.8x, only 80% of the shares were bid for, and every valid bid is allotted in full. At 1x or below there is nothing to decide. Above 1x, some bids must be cut back or turned down. The rule depends on the category.

When the retail category is oversubscribed, SEBI's rules say each retail applicant should get at least the minimum bid lot, if shares are available, and any shares left after that are shared on a proportionate basis. When there are more applicants than lots to go round, the registrar runs a computerised draw, giving one lot to as many applicants as it can. Applicants who win get a lot. The rest get nothing, and their blocked money is released.

Three things follow.

• Each valid application is one ticket, whatever the number of lots in it. A bid for 13 lots is one ticket, the same as a bid for one lot. Bidding for more lots does not improve your chance in the draw. It only ties up more money.
• The chance is roughly 1 divided by the subscription, at worst. At 38x, if every applicant bid for one lot, about 1 in 38 would win, about 2.6%. Because some applicants bid for several lots and some bids are rejected, there are fewer valid applications than the subscription suggests, so the real chance is at least that and often higher.
• Only separate applications add tickets. Family members who each have their own PAN, demat account and bank account are separate applicants. Several applications from one PAN are not allowed and can be rejected.

In the non-institutional categories (S-HNI and B-HNI), allotment is broadly proportionate to the size of the bid. If a category is subscribed 100x, a bid receives about one hundredth of the lots it asked for, on average. A bid for 20 lots would get about 0.2 lots on average, which in practice means either one lot or none. How a fraction of a lot is settled is described in each offer document, so treat any rule of thumb here as a guide and check the document for the exact method.

Because allotment follows the size of the bid, a larger bid gets more on average. That is the opposite of the retail draw, where size does not matter.

Institutions in the QIB category are allotted proportionately, after the anchor allotment that happens a day before the issue opens. As an individual you will not see or affect this part, but it is the reason the QIB subscription number is large: institutions often bid late and in size.

These are floors for a one-lot bid, not promises. The allotment probability calculator works out the same for any subscription and bid size, and each IPO's Allotment tab on this site shows the figures for that IPO from its own subscription.

The registrar finalises the basis of allotment about a working day after the issue closes, and the result is available on its website and often in your broker app. See how to check IPO allotment status for the steps.