How do IPO subscription and allotment work in India?
Short answer
Investors bid during the issue window, and subscription is the number of shares bid for divided by the number on offer. If an issue is oversubscribed, allotment is by lottery or proportion, and unallotted funds are released.
Most relevant for: भारत (India)
Bidding and categories
A book-built IPO in India stays open for a few working days. Applicants apply for a minimum lot of shares inside the price band, through a broker or bank app, using UPI or a bank account with ASBA (Application Supported by Blocked Amount). The money is blocked in the applicant’s account rather than being debited.
Shares on offer are split into categories: qualified institutional buyers (QIBs), non-institutional investors (NIIs) and retail individual investors. The regulations reserve a share of the offer for each, and a typical book-built issue reserves not less than 35% for retail investors. The retail category covers applications up to a statutory ceiling per applicant, which SEBI sets.
What "subscribed" means
Subscription is reported per category and overall. An issue subscribed "10 times" received bids for ten times the shares on offer. Figures are updated through the day by the exchanges and usually move most on the last day.
Subscription (times) = shares bid for / shares on offerAllotment
If a category is undersubscribed, applicants generally receive what they applied for, subject to the issue’s rules. If it is oversubscribed, the registrar to the issue allots shares by a lottery for small applications and by proportion in other cases, following the SEBI rules in the offer document. Many applicants may therefore receive no shares.
After allotment the registrar publishes the basis of allotment, shares are credited to demat accounts, and blocked money for unallotted bids is released. Under current SEBI timelines, listing takes place within three working days of the issue closing.
About grey market premium (GMP)
The "GMP" quoted in some media and social channels is an unofficial figure from informal, off-exchange dealings before listing. It is not published by any exchange or by SEBI, it is not regulated, it can be wrong or manipulated, and it is not a reliable indicator of the listing price. Rely on the offer document and exchange data instead.