Basis of Allotment | IPO Allotment Process Explained

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Basis of Allotment

What is Basis of Allotment?

The Basis of Allotment is the structured method used by IPO registrars to decide how shares are distributed among investors when the issue is oversubscribed. Since IPOs often attract bids far higher than the shares available, SEBI has defined transparent allotment rules to ensure fairness across all categories.

For example, if an IPO receives bids 50 times the available quantity in the Retail category, not every investor will receive shares. Instead, allotment is either done through a lottery system (for retail investors) or proportionately (for institutional and HNI investors). This ensures every valid application gets a fair chance.

Key Points about Basis of Allotment

Pro-rata allocation: When bids exceed available shares, allotment is done proportionally based on applications.
Investor Categories: SEBI defines quotas for Retail, QIBs, NIIs/HNIs, and employees/shareholders.
Lottery System: For retail oversubscription, a computerized draw ensures random allotment of at least one lot to as many investors as possible.
Allotment Percentage: Indicates how many shares are allotted compared to the total applied (e.g., 20% allotment in case of heavy oversubscription).
Credit to Demat: Final allotted shares are credited before the listing date, while refunds are processed for unallotted amounts.

How to Check Basis of Allotment?

Visit the registrar’s official website (e.g., KFinTech, Link Intime).
Select the IPO name from the dropdown list.
Enter details like PAN number, application number, or DP/Client ID.
Click submit to instantly view allotment status.
Brokers and financial portals also provide allotment links for easy access.

Frequently Asked Questions

Q: What happens if the IPO is oversubscribed?
A: Shares are allotted either via lottery (for Retail) or proportionally (for QIBs, NIIs). Not every applicant is guaranteed allotment.
Q: How is allotment % calculated?
A: By dividing total available shares by total applied shares in each category, then rounding to the nearest lot size.
Q: When are allotted shares credited to Demat?
A: Shares appear in Demat usually 1–2 working days before the listing date.
Q: Can I increase my allotment chances?
A: Applying from multiple Demat accounts (family members) increases chances, but applying multiple lots in the same account doesn’t help in oversubscribed issues.
Q: Who decides the basis of allotment?
A: The IPO registrar (like KFinTech/Link Intime) in consultation with the company and SEBI guidelines finalizes the allotment process.