IPO Allotment Status

An Initial Public Offering (IPO) represents a significant step for a company transitioning from private ownership to becoming a publicly-traded entity. This process allows a company to raise funds by offering shares to the general public. IPOs create an exciting buzz for investors, especially those looking to get in early and potentially see high returns. One critical part of this process is the IPO allotment status, which refers to the allocation of shares to investors who have applied for them.

In this article, we will dive deep into the stock market IPO allotment status, explaining what it means, how it’s determined, how you can check it, and what happens after shares are allotted.

What is IPO Allotment Status?

When a company announces an IPO, investors can apply for a certain number of shares at a predetermined price band. However, due to the limited number of shares and high demand, not every applicant is guaranteed to receive the number of shares they apply for. The IPO allotment process determines how shares are distributed among investors.

The IPO allotment status is essentially the result of this allocation process. Investors can check whether they have been allotted shares and how many shares they received after the IPO subscription period closes.

How is IPO Allotment Decided?

IPO allotment is largely based on demand and supply dynamics. There are three key categories of investors:

1. Retail Individual Investors (RIIs): These are individual investors who can apply for shares worth up to ₹2 lakhs.
2. Non-Institutional Investors (NIIs): High-net-worth individuals and other non-institutional investors who can apply for shares worth more than ₹2 lakhs.
3. Qualified Institutional Buyers (QIBs): Large institutional investors like mutual funds, foreign institutional investors, and banks.

The allocation mechanism differs for each group. For retail investors, IPO allotment is typically done on a lottery basis in the event of oversubscription. For example, if the demand for shares far exceeds the available quantity, shares are distributed through a random computerized lottery. On the other hand, institutional investors are allotted shares proportionally based on their application size.

Factors Influencing IPO Allotment

Several factors influence whether or not you will receive IPO shares:

1. Oversubscription: If an IPO is oversubscribed, meaning more shares are applied for than are available, the allotment will be based on a lottery system for retail investors. The more oversubscribed an IPO is, the slimmer the chances of getting an allotment.
2. Application Size: Retail investors are capped at ₹2 lakhs per application, and applying for multiple lots does not guarantee higher allotment chances. In an oversubscription scenario, allotment is often done randomly, and one large application is treated the same as several smaller applications.
3. Cut-off Price: Investors have the option to bid within a price band during an IPO. Bidding at the cut-off price maximizes your chances of getting an allotment because it ensures your bid is within the price range the company sets after the IPO closes.
4. Application through Multiple Demat Accounts: Some investors believe that applying through multiple Demat accounts in different names can increase their chances of allotment. While this may increase the probability, it’s essential to note that multiple applications under the same name are not permitted and may lead to rejection.

How to Check IPO Allotment Status

Once the IPO application process is over, the company and its registrar finalize the allotment process, typically within a week after the subscription closes. Investors can check their IPO allotment status using several methods:

1. Through the Registrar’s Website

The company appoints a registrar, like Link Intime, KFin Technologies, or others, to manage the IPO process. Registrars are responsible for maintaining the investors’ data, and they provide an online portal to check the IPO allotment status.

Here’s how you can check your allotment status on the registrar’s website:

• Visit the registrar’s official website.
• Navigate to the ‘IPO Allotment Status’ section.
  https://www.bigshareonline.com/ipo_Allotment.html
• Enter your PAN number, application number, or DP/Client ID.
• Click ‘Submit’ to check whether you have been allotted shares.

2. Through the Stock Exchange Website

You can also check the IPO allotment status through stock exchange websites like the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE). The steps to check on the BSE are:

• Visit the BSE official website.
  https://www.bseindia.com/investors/appli_check.aspx
• Go to the ‘IPO Allotment Status’ page.
• Select the issue name from the dropdown list.
• Enter your application number and PAN card details.
• Click ‘Search’ to view the allotment status.

3. Through Your Broker’s Website or App

Many stockbrokers offer an easy way to check IPO allotment status directly on their platforms. After the allotment process is finalized, the broker will notify you via email or SMS if shares have been credited to your Demat account.

What Happens After IPO Allotment?

Once the allotment process is complete, the next steps are critical for investors:

1. Refunds for Unsuccessful Applicants

If you don’t receive any shares in the IPO allotment, the money you invested is refunded. The refund process is initiated immediately after the allotment, and you can expect to receive it in your bank account within 3-5 working days.

2. Shares Credited to Your Demat Account

If you are allotted shares, they will be credited directly to your Demat account. You can verify the credited shares through your Demat account statement or by logging into your broker’s platform.

3. IPO Listing Day

The next significant event after the allotment is the IPO listing on the stock exchanges. The listing day is when the company’s shares are publicly traded for the first time. On this day, investors can choose to hold onto their shares for long-term growth or sell them based on the opening market price.

4. Post-Listing Price Movements

The listing price often varies from the issue price, and this can be due to several factors, including market sentiment, company fundamentals, and general economic conditions. Investors can either sell their shares on listing day to lock in profits or hold onto them for potential future gains.

IPO Allotment Tips for Investors

For retail investors keen on securing an IPO allotment, here are a few tips:

• Bid at the Cut-off Price: This increases your chances of getting shares allotted, as it shows your willingness to pay the highest price within the price band.
• Avoid Multiple Applications in the Same Name: Multiple applications in one name are likely to be rejected, reducing your chances of receiving an allotment.
• Apply Early: While allotment is largely based on a random lottery, applying early ensures that you are not locked out due to technical glitches or last-minute application rush.

Conclusion

Understanding the IPO allotment status is an essential part of participating in the stock market’s IPO process. By staying informed about how the allotment process works, how to check your allotment status, and what to expect post-allotment, you can better navigate the exciting but competitive world of IPO investments. Whether you’re a seasoned investor or new to the stock market, IPOs offer a unique opportunity to be part of a company’s growth journey from its early public days.