Decoding IPO Allotment

Initial Public Offering (IPO) is a company’s first foray into the world of the stock market. This delicate and monumental move can be a game-changer for both the company and the investors. For the investors, it can mean an opportunity to get in on the ground floor of a potentially lucrative new business venture.

However, investing in an IPO is not as simple as buying a stock off the exchange. IPOs are in high demand, and investors can never be sure about the allotment of shares. The IPO allotment process determines the number of shares issued to each investor, and it is essential for investors to know how it works.

In this article, we will break down the IPO allotment process and give a blueprint for smart investors to understand what to expect, how they can increase their chances of allotment, and what to do after allotment.

IPO Allotment Process

The IPO allotment process starts after the IPO is closed and all applications are collected. The lead manager of the IPO’s issue will collate all the applications from different sources and allot the shares based on the rules laid down by SEBI (Securities Exchange Board of India).

The allotment is done computerized and is a random selection process. The allotment of shares is done based on the rules mentioned in the Red Herring Prospectus. The process involves removing multiple applications from the same PAN card and then allotting shares via a lottery system. The process ensures transparency, and every applicant has an equal chance of getting shares.

The applicants can track the IPO allotment status on the websites of the registrar and BSE/NSE. The registrar’s website will have the allotment status, and investors can check whether they have been allocated shares or not.

To increase your chances of IPO allotment, there are a few things you can do.

Increase Your Chances of IPO Allotment

1. Spread your application across different categories

The allotment process for IPO follows the principle of ‘equal distribution.’ Hence an aspiring investor with a small investment budget should apply in the retail category as it has an allocation of 35% of the total shares. An application from the retail category is guaranteed to be allotted some shares, unlike in case of high net worth individuals, where the probability of getting allotment is much lower.

Also Reda: Custom Box

2. Apply for a smaller lot size

It is better to apply for a smaller lot size if you are applying for shares in an IPO for the first time. The chances of smaller lots getting allotted are higher due to the principle of equal distribution.

3. Invest through multiple accounts

To increase the probability of getting allotted shares, apply for the IPO through multiple accounts, through different brokerage firms.

What to do after IPO Allotment?

After you have been allotted shares in the IPO, you become a shareholder, and you have two choices – hold on to your shares or sell them.

1. Hold on to the shares

Holding on to the shares is a strategy that can yield good returns over an extended time period. This is because early investors usually get shares at a discounted price. After the shares are listed on the secondary market, the price tends to rise as there is an increase in the demand for the shares. By holding on to your shares, you can participate in the company’s growth and earn greater returns.

2. Sell the shares

Another option is to sell the shares on the secondary market, which is called listing after the shares are listed. The listing price of the shares is generally higher than the IPO price, and investors can make a quick profit by selling the shares. Investors should carefully consider the current market trend, the company’s future, and other factors that could impact the share price before selling the shares.


IPO allotment process is a crucial process that determines the number of shares an investor gets allotted. Due to the high demand, the allotment of shares is purely based on a lottery system. Investors can increase their chances of allotment by applying for smaller lots, spreading their applications across different categories, etc. After allotment, an investor has two choices to hold onto the shares or to sell them.

IPOs can be an excellent opportunity for investors to earn profits. However, investors must carefully weigh the pros and cons of investing in the Indian stock market. Additionally, investors are encouraged to undertake their thorough research and consult with financial advisors before making any investment.
Disclaimer: The Indian stock market is subject to risks, and investors must gauge all the pros and cons of trading in the Indian stock market before making any investment. This post is only for informational purposes & does not constitute financial advice.

Author Bio:

I am a passionate blogger. I love to share my thoughts and ideas through blog posting. I have five years of experience in Tech, Business, & Health. I am associated with,,,,,,,,,,,,,