The following are the main reasons why you might not be eligible for an IPO allotment:
Let's talk about them in more detail.
It is possible that an IPO was oversubscribed based on supply and demand. This means that more people bid for the shares than are available.
These are two instances of oversubscription in order to allocate shares.
SEBI states that an investor can only receive one lot from an IPO allotment. All applicants are allocated 1 lot. The remaining lots are divided proportionally between investors who applied for more than one lot. If 6000 investors apply for 9000 lots, then a minimum 1 lot will be assigned to each investor. The remaining 3000 lots will be divided equally among those who applied for more than one lot.
If there is a large oversubscription, shares will be distributed via a computerized lottery. Every applicant has equal chances of getting allotment.
A company may have 20,000 lots to offer to retail investors. The maximum number of applications received up to the closing date is 15,000 lots, which is five times the amount of the available lots. The allotment will be given to every applicant who applied. may not receive an IPO allotment.
The registrar of the IPO can reject your IPO application for multiple reasons. Here are some common reasons:
Book Building IPOs require investors not only to bid for lots, but also to bid for the price that falls within the price range declared by the company. You will not be eligible for an IPO if you submit an application to bid at a price lower than the Issue Price.
Retail investors should place a bid on the cutoff price to increase their chances of receiving an IPO allotment. The cut-off price is the price you agree to pay at the conclusion of the bookbuilding process. The price is still within the range of IPO.