Why IPO Subscription Numbers Can Be Misleading
Introduction
IPO subscription figures are often treated as a direct indicator of allotment chances. However, these numbers can be misleading if interpreted without understanding how demand is structured and reported.
This document explains the key reasons why headline subscription data does not always reflect actual allotment outcomes.
Subscription Numbers Show Demand, Not Applications
IPO subscription figures represent total shares bid, not the number of investors or applications.
A small number of large bids can significantly inflate subscription multiples, especially in the NII and QIB categories.
Category-Wise Differences Are Ignored
Overall subscription numbers combine demand across Retail, NII, and QIB categories, each of which follows different allotment rules.
A heavily oversubscribed QIB portion does not improve allotment chances for retail investors.
Retail Subscription Does Not Equal Retail Allotment Probability
In the retail category, allotment depends on the number of valid applications versus available lots, not the total shares demanded.
Two IPOs may both show 10× retail subscription, yet have very different numbers of retail applicants and thus different allotment probabilities.
Late Institutional Bids Distort Final Numbers
QIB investors often place large bids on the final day or final hours of the IPO.
This can cause subscription figures to jump sharply near closing, creating a misleading perception of sudden demand.
Anchor Investors Are Already Allocated
In mainboard IPOs, a portion of QIB shares is allocated to anchor investors before the IPO opens.
Anchor participation does not impact retail or NII allotment, but can still influence overall subscription headlines.
Invalid and Duplicate Applications Are Included Initially
Live subscription data includes all bids submitted, even though some may later be rejected.
Duplicate PANs, incorrect UPI mandates, and bid modifications are filtered out only during final reconciliation.
Bid Modifications Inflate Demand Temporarily
Investors are allowed to modify or cancel bids during the IPO period.
This can temporarily inflate demand figures, even though the final valid demand may be lower.
SME IPOs Are Especially Sensitive
SME IPOs have smaller issue sizes and fewer lots, making subscription multiples highly volatile.
A few large HNI bids can dramatically skew subscription numbers without improving retail outcomes.
Subscription Is Not a Measure of IPO Quality
High subscription does not guarantee listing gains or long-term performance.
Subscription data reflects short-term demand dynamics, not business fundamentals or valuation comfort.
How Investors Should Use Subscription Data
- Analyze category-wise subscription instead of overall numbers
- Focus on retail application count, not just retail subscription multiple
- Treat subscription data as directional, not definitive
Important Disclaimer
IPO subscription numbers are indicative and provisional. Final allotment is determined only after registrar verification as per SEBI regulations and may differ materially from live subscription data.