This is the part that surprises people most. An IPO gets subscribed 40 times, they applied for 5 lots, and they end up with nothing. Not one share. Nothing went wrong, and it was not bad luck in the way it feels.
Applications are not pooled into one queue. The offer is split into categories first, and each category is allotted on its own rules.
- Retail (applications up to Rs 2 lakh) gets at least 35% of a book-built issue.
- Non-institutional investors, the NII or HNI category, gets at least 15%.
- Qualified institutional buyers get up to 50%, and in a book-built issue a slice of that is reserved for anchor investors who commit a day early at a fixed price.
Inside the retail category, the rule that matters is the minimum lot. The registrar first works out how many applicants can be given one full lot each. If there are more applicants than lots available, which is what oversubscription means, allotment becomes a computerised lottery run under exchange supervision. Every valid application is one entry, whether it asked for one lot or five.
That is why applying for more lots does not improve retail odds when an issue is heavily oversubscribed. It changes how much money is blocked, not how many entries you hold. Applying from separate eligible accounts, each with its own PAN, is what changes the number of entries, and each PAN can hold only one application.
The NII category works differently: it is allotted proportionately, so size does matter there. That is part of why subscription figures for NII and retail often look nothing like each other on the same issue.
A few practical consequences. Your money sits blocked under a UPI mandate until allotment, so it is unavailable for other things during that window. Unsuccessful applications are unblocked rather than refunded, which is usually faster. And a heavily oversubscribed issue tells you demand was strong; it tells you nothing about what the shares will be worth on listing day.
Where to check your own outcome: the registrar named in the offer document publishes an allotment status page, and the exchange publishes the basis of allotment. Both are the primary sources, and both beat any forwarded message.