IPO Lot Size

IPO lot size tells you the minimum number of shares you must apply for in an IPO. You can apply for one lot or multiples of that lot, depending on your investor category.

• The minimum application value is generally between ₹10,000 and ₹15,000.
• If one lot contains 28 shares and the price band is ₹500 per share, one lot costs ₹14,000.
• You must apply in multiples of the specified lot size.
• Retail investors can apply for shares worth up to ₹2 lakh.
• An application above ₹2 lakh falls under the non-institutional investor category.
   

IPO lot size is the minimum number of shares you can apply for in a single IPO application. You cannot normally apply for a quantity below one lot, and applications are made in multiples of the specified lot size.

For example, suppose XYZ Company has:

• IPO lot size: 28 shares
• Price band: ₹480 to ₹500
• Application at ₹500: 28 × ₹500 = ₹14,000

In this example, you need ₹14,000 to apply for one lot at ₹500 per share. If you want to apply for two lots, you would apply for 56 shares.

The lot size is decided for each IPO and can vary from one issue to another. Factors considered include:

• Share price
• Total number of shares offered

• Regulatory requirements

  
  
  

1. Minimum lot size

The minimum lot size is the smallest number of shares you can apply for in an IPO.
For example, if the IPO lot size is 100 shares, one lot contains 100 shares. If you apply for three lots, you apply for 300 shares.

2. Maximum lot size

There is no single maximum number of lots that applies equally to every IPO investor. The amount you can apply for depends mainly on your investor category and the conditions of the particular issue.
For example, a retail investor can submit an IPO application with a total value of up to ₹2 lakh. The number of lots that fit within this amount depends on the IPO price and lot size.
 

The number of lots available in an IPO can be understood using this calculation:
Total lots = Total number of shares offered ÷ Shares in each lot
For example:
Total number of shares: 10,00,000
Lot size: 100 shares
Total lots: 10,00,000 ÷ 100 = 10,000 lots
So, if 10,00,000 shares are divided into lots of 100 shares each, there are 10,000 lots.
 

Lot size determines the minimum number of shares you must apply for. It therefore directly affects the minimum amount you need for an IPO application.
For example, if one lot has 50 shares and the application price is ₹200 per share, you would need ₹10,000 for one lot.
Lot size also helps standardise IPO applications and share allocation. For retail investors, it is particularly important because their total application value must remain within the applicable retail investor limit.
 

The IPO lot size sets a standard quantity in which investors submit their bids. It also helps keep the minimum application amount within the applicable range.

IPO lot size can help with:

• Efficient allocation: Shares can be allocated based on clearly defined lot quantities.
• Standardised bidding: Investors submit applications in multiples of the specified lot.
• Retail participation: The lot size helps determine the minimum amount required to apply.

Once the shares are listed, normal secondary-market trading rules apply. The IPO lot size itself does not necessarily remain the minimum trading quantity after listing.

The lot size of an IPO is based on several factors.

• Share price

  
  

  The price per share is an important consideration when deciding the lot size.

  
  

  Generally, a higher share price may require fewer shares in each lot so that the minimum application value remains within the required range.

  
  

• Total number of shares offered

  
  

  Companies also consider the total number of shares being offered through the IPO.

  
  

  This number is connected to how much capital the company plans to raise through the issue.

  
  

• Regulatory requirements

  
  

  Companies must follow the applicable regulatory requirements when deciding the IPO lot size.

  
  

  These requirements affect factors such as the minimum application value and investor categories.

  
  

• Market conditions

  
  

  Market conditions, expected investor demand, and liquidity may also be considered while deciding the lot size.

  
  

• Investor participation

  
  

  The lot size affects how much an investor needs to apply for an IPO. Therefore, companies consider whether the chosen lot size allows investors to participate within the applicable investment limits.

  
  
  

IPO applications are divided into different investor categories. The lot size remains the basic bidding unit, while the amount applied for determines the investor category.

Retail individual investors (RII)

Retail individual investors can apply for IPO shares with a total application value of up to ₹2 lakh.

For example, if one lot requires an investment of ₹15,000, you can apply for multiple lots as long as your total retail application does not exceed ₹2 lakh.

Non-institutional investors (NII/HNI)

Non-institutional investors apply for shares with a total application value above ₹2 lakh.

The number of lots applied for depends on the IPO's lot size, share price, and the amount the investor wants to apply for.

Qualified institutional buyers (QIB)

Qualified institutional buyers include institutional investors such as:

• Foreign portfolio investors
• Mutual funds
• Venture capital funds
• Insurance companies
• Provident funds
• Pension funds
• Other eligible institutional investors

QIB applications are generally larger than individual investor applications. Their allocation depends on the structure and terms of the particular IPO.

The value of shares you can apply for depends on the IPO lot size, your bid or cut-off price in the IPO, and your investor category.

The main categories are:

For example, if the lot size is 50 shares and the price is ₹300 per share, one lot requires ₹15,000. A retail investor can apply for multiple lots while keeping the total application value within ₹2 lakh.

IPO lot size is the minimum number of shares you need to apply for in an IPO. Applications are made in one lot or multiples of the specified lot size.
The lot size also determines the minimum investment amount. For example, 28 shares priced at ₹500 each require ₹14,000 for one lot. Factors such as the share price, total shares offered, regulatory requirements, market conditions, and investor participation are considered when deciding the lot size.