IPO Allotment: Single Lot vs Multiple Lots

Introduction

Many IPO applicants believe that applying for multiple lots increases their chances of allotment.

This article explains how single-lot and multiple-lot applications are treated during the IPO allotment process.

A lot represents the minimum number of shares an investor can apply for in an IPO.

All retail IPO applications must be made in multiples of this predefined lot size.

A single-lot application means applying for the minimum permissible quantity of shares.

In oversubscribed IPOs, single-lot applications are often treated equally with other retail applications.

A multiple-lot application involves applying for more than one lot within the retail category limit.

Applicants may choose this approach assuming higher quantity improves allotment chances.

When an IPO is oversubscribed in the retail category, allotment is generally done on a lot basis.

If the number of valid retail applications exceeds available lots, a lottery-based system is used.

In a lottery-based allotment, each valid retail application is considered once, regardless of the number of lots applied for.

This means applying for multiple lots does not necessarily increase the probability of receiving allotment.

If the number of retail applications is lower than available lots, applicants may receive full allotment for all lots applied.

In such cases, multiple-lot applications can result in higher share allocation.

In undersubscribed IPOs, demand is lower than supply.

Both single-lot and multiple-lot applicants usually receive allotment as per their bid quantity.

The main difference between single-lot and multiple-lot applications lies in allocation quantity, not allotment probability.

Choosing between single-lot and multiple-lot applications should be based on capital allocation preference, not assumed allotment advantage.

This explanation is provided strictly for educational and informational purposes only and does not guarantee any allotment outcome.