IPO Allotment: What It Is and Why It Matters

If you’ve ever applied for an IPO, you know the excitement of getting new shares. But the big question is – will you actually get them? That’s where IPO allotment comes in. Allotment is the process the stock exchange uses to decide who gets how many shares after the subscription window closes. It’s a simple idea, but the rules can feel confusing, especially for first‑time investors.

How the Allotment Process Works

When a company launches an IPO, it sets a price band and a total number of shares for sale. Investors – retail, institutional, and qualified institutional buyers (QIBs) – place orders for the number of shares they want. After the subscription period ends, the exchange looks at how much demand there was. If the IPO is oversubscribed (and most are), the shares are divided based on a formula that usually favours institutional investors first, then retail investors.

For example, Patel Retail’s recent IPO had a price band of ₹237–255 and saw a massive 95.7x overall subscription. QIBs got a 272x oversubscription, while retail investors were allotted shares at a lower ratio. The company then fixed the issue price at ₹255 and listed the shares on August 26. This is a classic case of how high demand can affect the number of shares each applicant receives.

What Happens After Allotment

Once the allotment is done, you’ll receive an electronic confirmation showing how many shares you got. If you didn’t get any, the money you paid is refunded to your bank account within a few days. Keep an eye on your broker’s portal or the stock exchange’s website for the official allotment notice. It’s a good habit to download the statement for tax purposes later.

If you did get shares, they’ll appear in your demat account on the listing day. From there, you can hold them, sell them, or keep them for the long term. Many investors watch the opening price closely – some shares jump, some dip – but remember that short‑term moves don’t define the company’s value.

Here are a few practical tips to make the most of your IPO experience:

• Know the cutoff dates. The subscription window, allotment notice, and listing day are all scheduled in advance. Missing a date can mean you lose your chance.
• Check the offer type. Retail investors often get a smaller allocation compared to institutions, but the rules differ for each IPO.
• Watch the subscription ratio. A high ratio (like Patel Retail’s 95.7x) means you’ll likely get fewer shares than you applied for.
• Plan your exit. Decide beforehand if you’ll sell on day one, wait a week, or hold for longer. Having a plan reduces emotional decisions.

In short, IPO allotment is just the final step of a multi‑stage process. Understanding how shares are divided, where to look for your allotment notice, and what to do with the shares afterward can turn a confusing experience into a smooth one. Whether you’re eyeing the next tech IPO or a retail giant like Patel Retail, these basics will keep you on the right track.