How IPO Allotment Actually Works

Most explanations of IPO allotment stop at "it's a lottery". That is true for one category, in one situation, and it leaves out nearly everything that decides whether you actually get shares.

Here is the full path — from the moment you place a bid to the moment shares appear in your Demat account.

Step 1: Your bid and your blocked money

When you apply, money does not leave your account. It gets blocked.

This is ASBA — Applications Supported by Blocked Amount — and it is mandatory for IPO applications in India. Your bank marks a lien on the amount, you continue to earn interest on it, and it is only debited if you are actually allotted shares.

Retail investors typically apply through the UPI route: you submit the bid via your broker, receive a mandate request in your UPI app, and approve it. The mandate is what creates the block. The UPI IPO application limit is currently ₹5 lakh.

Two things go wrong here more often than anything else in the process:

One PAN, one application. Multiple applications under the same PAN are rejected, and typically *all* of them go, not just the extras. This is checked, and it is checked reliably.

Step 2: The issue closes and the book is counted

An IPO is normally open for three working days. When it closes, the registrar has the complete book: who bid, how much, at what price, in which category.

The bids are then sorted into the categories that determine everything else.

Step 3: The categories, and why they matter so much

Shares are not allotted from one common pool. The issue is carved up in advance, and you only ever compete against people in your own slice.

For a standard book-built mainboard issue:

There is an important variation: if the company does not meet SEBI's profitability track record, the split changes to QIB 75% / NII 15% / Retail 10%. Loss-making companies must sell three quarters of the issue to institutions — a deliberate guardrail that pushes unproven businesses to be priced by professional buyers rather than retail enthusiasm.

Some issues also carve out an employee quota (often at a discount) and a shareholder quota where a listed parent exists. If you qualify for either, competition there is dramatically lower than in general retail. It is the most under-used edge in the whole process.

The NII category is itself split in two:

That split exists because very large applicants used to crowd out smaller HNIs entirely.

Step 4: Basis of allotment — where the lottery comes in

This is the part everyone means when they say "allotment", and it works differently in each category.

Retail, when the issue is undersubscribed

If retail bids for less than its reservation, everyone gets their full bid. No lottery, no drama. This is the only situation where applying for more lots gets you more shares.

Retail, when the issue is oversubscribed

This is the normal case, and the rule is unintuitive enough to be worth stating carefully:

Every valid retail application is reduced to one minimum lot, and lots are then drawn at random.

Bidding for ten lots does not give you ten tickets. Once retail is covered more than once, a ₹15,000 application and a ₹1,95,000 application are treated identically — both are candidates for exactly one lot, both are in the same draw.

The consequence is the single most valuable thing to know about IPO allotment:

In an oversubscribed retail book, **more applications beat bigger applications**. One large application from one PAN is strictly worse than several minimum-lot applications from several different PANs.

The draw itself is computerised, run by the registrar, and supervised by an exchange official. The odds are roughly the inverse of the retail subscription multiple — retail covered 10x means broadly a 1-in-10 chance per application.

NII and QIB

NII allotment is proportionate, but since SEBI's 2022 change, oversubscribed NII categories also use a draw of lots to ensure a minimum allotment — the same logic as retail, applied to a larger minimum.

QIB allotment is discretionary and proportionate, decided in consultation with the book-running lead managers. Anchor investors — institutions that commit a day before the issue opens — are allotted from within the QIB portion and carry a lock-in.

Step 5: The timeline after closing

India runs a T+3 listing timeline, where T is the issue closing date. It is one of the fastest in the world, and it compresses everything:

If you were not allotted, your bank simply releases the lien. Nothing was ever debited, so there is no "refund" to wait for — though it can take a few hours to reflect, and occasionally a full working day.

Step 6: Checking your status

Allotment status goes live on the registrar's site on T+1. Four registrars handle nearly every Indian issue:

You can look yourself up by PAN, application number, or Demat client ID. PAN is the most reliable — application numbers get mistyped, and some brokers display a different reference.

For mainboard issues, BSE and NSE also publish a lookup, which is often faster on T+1 when registrar sites are under heavy load.

What actually improves your odds

Stripping out the folklore, only a few things genuinely help:

1. Apply from multiple PANs. Family members with their own PAN, Demat account and bank account can each apply. This is entirely legitimate, and in an oversubscribed retail book it is the *only* thing that materially changes your odds. Applying multiple times from one PAN is not — that gets everything rejected.

2. Apply at cut-off price. Retail investors can tick "cut-off", agreeing to whatever final price is discovered. Bidding below the eventual cut-off puts you out of the running entirely, for no benefit. There is essentially no reason for a retail applicant not to use it.

3. Bid exactly one lot. In an oversubscribed retail issue, extra lots block extra money for no extra chance. Blocking ₹1.95 lakh to receive one ₹15,000 lot is a poor use of capital that could have funded other applications.

4. Apply on day one or two. Not because early bids get priority — they do not — but because last-day UPI mandate volumes are enormous and technical failures spike. Applications that fail to get a mandate approved in time are simply not considered.

5. Use the employee or shareholder quota if you qualify. Vastly better odds, and consistently overlooked.

And the things that do not help, despite being repeated constantly: applying in the last hour, applying through a particular broker, the size of your bid in retail, or how many times you refresh the registrar's page.

The short version

Allotment is a sequence of filters, not one event. Your application has to be valid, it has to land in a category, and only then does it face the draw. Most failed applications never reach the lottery at all — they are rejected for an unapproved mandate or mismatched details.

Get the mechanics right, use every PAN in the household legitimately, bid one lot at cut-off, and you have extracted essentially all the edge available to a retail applicant. The rest is genuinely random, and it is meant to be.

*Nothing here is investment advice. Allotment rules are set by SEBI and the exchanges and can change; check the issue's prospectus for the terms that apply to a specific IPO.*