Why You Didn’t Get Shares In An IPO? 

An Initial Public Offering (IPO) is often seen as one of the most exciting opportunities in the stock market. It allows ordinary investors to become shareholders of a company right at the start of its listing journey. Many investors rush to apply for IPOs because they offer the chance of listing gains (where the stock lists at a higher price than the issue price) and long-term wealth creation.

However, applying for an IPO does not guarantee that you will receive shares. In fact, a large number of investors face disappointment when they check their IPO share allotment status only to find out they were not allotted any shares. This is particularly common when the IPO is oversubscribed many times over, or when investors unknowingly make errors during the application process.

In this blog, we will explain how shares are allotted in an IPO, the common reasons for non-allotment, and the steps you can take to improve your chances.

Understanding IPO Share Allotment 

To understand why you may not receive shares, it’s important to first know how IPO share allotment works in India.

• Allotment Categories: IPO shares are divided across categories – Qualified Institutional Buyers (QIBs), Non-Institutional Investors (HNIs), and Retail Individual Investors (RIIs). SEBI regulations require a certain minimum percentage to be reserved for each group. Retail investors generally get around 35% of the issue size.
  
   
• Lot-Based System: Retail investors apply in “lots” (a fixed number of shares). The minimum application size is one lot, and investors can apply for multiple lots up to ₹2 lakh in total.
  
   
• Oversubscription Scenario: If the IPO receives more applications than the number of available lots, then allotment is done through a computerised lottery system to ensure fairness. This means that even if you applied correctly, you may not get shares simply due to high demand.
  
   
• Proportionate Allotment: In the case of HNI or institutional categories, allotment is done proportionately based on the amount applied.

Knowing these mechanics helps you see why missing out on allotment is often not personal, but rather a function of demand and supply.

Key Reasons You May Not Get IPO Allotment 

Even though oversubscription is the most common reason, there are several other factors and mistakes that may result in rejection of your IPO application. Let’s go through them in detail:

a) Oversubscription in Retail Category 

If an IPO receives applications worth 10 times more than the available retail quota, only one in ten investors will be allotted shares on average. For example, if 20 lakh lots are applied for in the retail category but only 2 lakh lots are available, the system distributes them randomly through a lottery.

b) Technical Errors in Application 

A very common reason is technical rejection. Mistakes like entering the wrong PAN, mismatched Demat details, incorrect bank account number, or not having sufficient funds in your bank account can lead to automatic rejection. Even a small typo in your details may cost you an allotment.

c) Multiple Applications with the Same PAN

SEBI rules clearly state that multiple IPO applications using the same PAN are not allowed. If you try to apply through multiple broker platforms with the same PAN, your application is likely to be rejected altogether.

d) Lack of Sufficient Funds 

IPO applications are processed through the ASBA (Application Supported by Blocked Amount) system, where funds are blocked in your account until allotment. If your account has insufficient funds or your bank fails to block the required amount, your application is automatically cancelled.

e) Not Meeting Eligibility Requirements 

Some IPOs have specific conditions for allotment, such as applying with a minimum of one lot or being eligible under certain categories. If you don’t meet these conditions, your application may not be considered.

f) Technical Glitches in Banking / Broker Systems 

Sometimes, the issue may not be your mistake but a systemic error. Banking downtimes, broker platform failures, or delays in ASBA processing can result in your application not being submitted correctly.

g) Applying for Large Lots in a Highly Popular IPO 

While applying for multiple lots increases your chances in a proportionate allotment scenario, in oversubscribed retail issues, applying for many lots does not guarantee higher odds. In fact, SEBI’s current system ensures that every valid applicant has an equal chance of getting at least one lot, regardless of the number of lots applied.

How to Improve Your Chances of Getting an IPO Allotment 

Although there is no guaranteed method of securing IPO shares in an oversubscribed issue, there are several smart practices that can increase your chances:

Apply Through Multiple Demat Accounts (With Different PANs) 

If your family members have their own PAN and Demat accounts, consider applying separately through each of them. Each unique PAN counts as a separate application, thereby multiplying your chances.

Ensure Correct Details and Sufficient Funds 

Double-check that your PAN, Demat account number, and bank account details are correct. Always maintain sufficient balance in your bank account until allotment is completed to avoid rejection.

Use UPI Mandates Carefully 

For retail IPO applications through UPI, you must approve the payment mandate in time. If you miss approving it or delay it beyond the cut-off, your application won’t be processed.

Apply at the Right Category 

Ensure you apply under the correct investor category (Retail, HNI, etc.). Mis-categorisation may lead to disqualification.

Consider Less Popular IPOs 

If you’re focused purely on allotment rather than hype, applying to less oversubscribed IPOs may improve your odds. Popular IPOs with massive demand often leave many investors empty-handed.

Stay Updated With SEBI Rules 

Keep an eye on SEBI updates and your broker’s IPO guidelines. The rules can change, and knowing the latest regulations will keep you ahead.

What to Do If You Don’t Get IPO Allotment 

Missing out on an IPO allotment can feel disappointing, especially if you were hoping to enter a promising company at its issue price. However, not getting shares is not the end of the road. There are several smart alternatives to consider:

1. Buy on the Listing Day (with Caution)

Once the stock lists on the exchange, you can purchase it directly through your Demat account. This gives you immediate access, but be mindful that listing prices may be higher due to oversubscription and market hype. A careful approach with limit orders or staggered buying can help.

2. Wait for Price Stabilisation 

IPO stocks often experience volatility in the first few weeks of trading. Instead of rushing in on day one, you may wait for the price to settle before investing. This allows you to assess how the company is performing post-listing.

3. Explore Mutual Funds and ETFs Holding the Stock 

If direct entry looks risky, you can still gain exposure through equity mutual funds or ETFs that invest in newly listed companies. This provides diversification and reduces the impact of short-term fluctuations.

4. Consider SIPs for Long-Term Wealth Building 
 

Not every IPO guarantees wealth creation. Instead of chasing every issue, you can allocate part of your capital to SIPs in equity funds or ETFs. This builds wealth steadily and shields you from the unpredictability of IPO allotments.

5. Prepare for the Next IPO 
 

Use this experience to get ready for upcoming opportunities. Apply through multiple family members’ Demat accounts to increase allotment chances, ensure your UPI mandate is approved on time, and avoid technical mistakes that can cause rejection.

Smart Tip: With platforms like m.Stock, you can track IPOs, apply seamlessly, and also invest in ETFs or SIPs as alternatives if allotment doesn’t happen.

Conclusion 

IPO investing can be exciting, but it is also competitive. Missing out on allotment does not necessarily mean you did something wrong—it is often just a matter of oversubscription. However, by avoiding technical errors, ensuring complete and accurate applications, and applying strategically, you can increase your chances.

Remember, IPOs are just one way to invest. Even if you miss out on a hyped issue, there are always opportunities to invest in good companies post-listing or through mutual funds.

Also Read: https://www.mstock.com/articles/8-factors-before-buying-an-ipo