Why IPO Allotment Is Not Guaranteed

Introduction

Many investors assume that applying for an IPO automatically leads to share allotment.

In reality, IPO allotment is not guaranteed, especially when demand exceeds available shares.

Every IPO has a fixed number of shares available for allotment.

When applications exceed this number, it becomes mathematically impossible to allot shares to everyone.

IPO oversubscription occurs when demand is higher than supply.

Higher oversubscription means more applicants competing for the same shares, reducing individual chances of allotment.

IPO shares are reserved separately for different investor categories such as Retail, NII, and QIB.

Oversubscription in one category does not affect allotment in another category, but it can eliminate guarantees within that category.

In heavily oversubscribed retail IPOs, allotment is often conducted through a lottery system.

Each valid application has an equal chance or no chance, regardless of application timing or expectations.

In categories where allotment is proportionate, applicants may still receive fewer shares than applied for.

Even a valid application does not ensure full allotment of requested quantity.

Applications may be rejected due to technical or compliance reasons.

Bids placed below the cut-off price may receive lower priority or no allotment.

Cut-off bids are considered first, and remaining shares are allotted to price bids if available.

IPO allotment is carried out exclusively by the official registrar.

No tool, estimate, or expectation can influence the registrar’s final decision.

Probability figures only describe possible outcomes based on assumptions and public data.

They do not predict, assure, or promise actual allotment.

Applying for an IPO means requesting shares, not reserving them.

Investors should always rely only on the official allotment results published by the registrar.