How IPO allotment works: why you do not always get shares
An IPO (initial public offering) is when a company sells its shares to the public for the first time. Many people apply, but not everyone gets shares.
How to apply
- You need a demat account and a bank account linked to UPI.
- You place a bid through your broker or bank app, and the money for the bid is blocked (held) in your account, not taken.
- Retail investors can bid up to Rs 2 lakh in an IPO.
What happens after the IPO closes
- If the IPO is not fully subscribed in the retail category, everyone gets shares.
- If it is oversubscribed, there are more applications than shares. Then a computerised lottery decides who gets shares, and each winner gets the minimum lot.
- The registrar of the IPO publishes the allotment status. You can check it on the registrar's website using your application number or PAN.
After allotment
- If you get shares, the money is taken from your account and the shares appear in your demat account.
- If you do not, the blocked money is released.
- The shares usually list on the exchange three working days after the issue closes.
Things to remember
- Opening more than one application with the same PAN is not allowed and can be rejected.
- A high demand does not guarantee the share price will rise after listing. Read the company's prospectus before you apply.
This article is for information and is not investment advice.