Once the bidding window for a public offering closes, investors across India shift their attention from application strategy to a different kind of anticipation, checking every update related to their NSE IPOÂ application and waiting to see how the allotment process unfolds. This period, during which applicants try to determine whether they have successfully received shares, revolves largely around the IPO Allotment Status, a stage of the process that often generates as much curiosity and discussion as the bidding period itself. Understanding how this stage works can help investors approach it with realistic expectations rather than unnecessary anxiety.
The Process Behind Share Allocation
Once the subscription window closes, the registrar of the offering begins the process of distributing shares to applicants. If the category to which one applied is undersubscribed (i.e. there is a larger supply of shares than demand), the allocation process is fairly simple, as most or all of the applicants would have received the shares they applied for.
The challenge comes when the category one applied to is oversubscribed (there is higher demand in the category than supply), in which case a method (typically computerised) has to be decided to determine who would get the shares allocated to them, typically in a manner that is fair to the pool of applicants. For retail investors, this typically means a lottery process if the oversubscription for the category is significantly high.
The entire process takes up to a few working days, after which the results are declared to the public. During this time, one cannot know for sure if they have applied successfully or not. The suspense is one of the most stressful parts of the IPO application process.
How Investors Can Check Their Results
After the allocation of shares is complete, there are multiple avenues for an applicant to confirm their result. Most brokerages typically notify their clients via an in-app notification if they have been successfully allocated shares. In addition to this, the registrar typically provides an option to check results for the applicant via a designated portal using the application number or demat account details.
For those who were successfully allocated shares (either fully or partially), the shares are added to one’s demat account a day or two after the result has been finalised. One can check their demat account via a brokerage platform or one’s depository participant to confirm this.
On the other hand, for those who did not get allocated shares, or only a fraction of what one had applied for, the blocked amount is returned to one’s bank account automatically, again, typically after a day or two. This entire process has become significantly faster than before and is now much less of a hassle than it was in the early days of India’s capital markets. However, until one gets confirmation, it can be difficult to accurately estimate one’s chances.
Managing Expectations During This Waiting Period
There is no doubt that the waiting period can be one of the most stressful times during the IPO application process. A key reason for this is one’s expectations during the period. If the offering has garnered significant attention and is significantly oversubscribed, one’s realistic chances of receiving shares (especially for retail investors, only if one has applied for the minimum lot size) would be low. It is important for an investor to understand this before one applies, or after one has applied, but before one has received a confirmation. This is especially important if one has planned one’s finances on either receiving shares of the company or having one’s money returned quickly if one has not. Having unrealistic expectations from the situation can hurt one’s mental health during the period.
It is also important to remember that while not receiving shares in an oversubscribed and exciting IPO (especially one that has a large waitlist) can be disappointing, it is not always a bad thing. Markets will grant many opportunities for investment, and it is best to look at every event in the markets as an opportunity to learn and grow as an investor. Wealth creation is a long-term process, and as such, viewing every aspect of one’s journey in the markets as a vital learning experience will help one to grow exponentially as an investor in India’s ever-evolving capital markets.