Allocation Algorithm and Basis of Allotment

Understand how IPO shares are allotted among investors when demand exceeds supply, and the rules applied.

Last Updated: 2025-09-0512 minutes

Proportionate Allocation

When the IPO is oversubscribed, shares are allotted on a proportionate basis.

Allocation depends on the number of shares applied relative to total shares applied in that category.

Remembering Point

Proportionate allocation tries to be as fair as possible when supply is limited.

Retail investors often receive shares via a lottery system if oversubscription is significant.

Each valid application is entered into a random draw for allotment.

Warning

Lottery means even if you apply correctly, allocation isn’t guaranteed.

Different categories (Retail, HNI, QIB) have separate reserved shares.

Oversubscription in one category does not affect others.

In case of excess demand in Retail, a minimum one lot is allotted to all applicants, with extra allocation by lottery or proportionate methods.

Check Points

Always apply at least one lot to be eligible for allotment. Explore applying via different Pan Cards to increase chances.

Investor Category	Allotment Method	Notes
Retail Individual Investors	Lottery or Proportionate	Minimum 1 lot allotment
High Net Worth Individuals	Proportionate	Based on application size
Qualified Institutional	Proportionate	Large bulk allocations

Q: Can I get full allotment if IPO is oversubscribed?

A: Full allotment is rare; usually partial allocation happens in oversubscription.

Q: What is “basis of allotment”?

A: It’s the official record that lists how shares are distributed among applicants.

How does the allotment process differ between retail investors and QIBs?

Why might applying in multiple demat accounts improve chances?

Allocation depends on category and subscription levels.

Lottery affects retail investors most.

Proportionate allocation aims for fairness.

SEBI IPO Allotment Guidelines

Registrar Websites (Link Intime, KFintech)

NSE IPO Application FAQs