Basis of Allotment Explained

A day or two before shares land in demat accounts, a plain PDF appears on the registrar's website and in the exchange filings for the issue. It is usually two or three pages, has no design to speak of, and is titled Basis of Allotment. Most applicants never open it, which is a pity, because it is the only official document that answers the question they actually care about: why did I get one lot, or three, or nothing? Everything about an allotment outcome that looks arbitrary from the outside is explained inside those tables, in ordinary arithmetic.

What the document is

The Basis of Allotment is the published record of how the shares in a public issue were divided among applicants. It is not a notice of your personal result - it never names anyone. It is a statement of method and outcome at the level of groups: for each investor category, and within each category for each application size, it reports how many valid applications were received, how many shares those applications asked for, how many shares were given to each successful applicant, and what proportion of applicants in that group were successful.

Its purpose is verification. When part of an allotment is decided by a draw of lots, the fairness of the outcome cannot be demonstrated by pointing at any individual result. It can only be demonstrated by publishing the whole distribution, so that anyone can check that the reported ratios multiply out to exactly the number of shares that were available. That is why the document exists in this format, and why it is filed publicly rather than sent quietly to successful applicants.

One detail worth noting early: the application counts in this document are counts of valid applications, after the reconciliation stage described in the sibling article on the allotment process. They are therefore lower than the demand implied by the live subscription figures published while bidding was open, because bids with unapproved mandates, short blocks, PAN mismatches and duplicate entries have already been removed.

Who prepares it, and who signs off

The registrar to the issue prepares it, working from the reconciled bid file. The lead managers and the company are involved, but the arithmetic is the registrar's responsibility, and the finalisation is done in consultation with the designated stock exchange for the issue. The exchange's role here is oversight rather than authorship: it is the party that confirms the method applied was the one the regulations and the offer document required. The separate explainers on the IPO registrar and on lead managers describe what each intermediary is accountable for across the wider process.

Once approved, the document surfaces in several places at roughly the same time: the registrar's own website, the corporate announcements section of the exchanges where the shares will list, the company's investor pages, and a newspaper advertisement placed by the company. Any of these is authoritative. Screenshots circulating on messaging apps are not, and they typically appear before the real document does.

The header block

Before the tables, the document restates the shape of the offer. This part is easy to skim past, but it establishes every denominator used further down, so it is worth reading first.

• The issue size and structure, including how much was a fresh issue and how much an offer for sale by existing shareholders.
• The price at which shares were allotted, which for a book-built issue is the cut-off price discovered from the book, and any discount applied to a reserved category.
• The face value of each share, which is unrelated to the issue price and is covered in its own explainer.
• The market lot, meaning the minimum number of shares that could be applied for and the indivisible unit in which allotment happens.
• The number of shares allocated to each category, including the anchor portion settled before bidding opened.
• The overall subscription achieved, category by category, computed on verified applications rather than on live bids.

Compare the category-wise subscription printed here against what the exchange page showed on the final day. A visible gap between the two is not an error. It is the reconciliation stage made numerical, and on some issues it is large enough to change the odds materially in the applicant's favour.

Anatomy of a category table

Each investor category gets its own table, and each table has one row per application size. The column headings vary slightly between registrars, but the eight quantities below appear in almost every version, in roughly this order.

1. Category, expressed as the number of shares applied for. For a lot of 80 shares the rows read 80, 160, 240 and so on, one row for every permitted application size.
2. Number of applications received in that row, meaning the headcount of valid applicants who bid for exactly that quantity.
3. Percentage of total applications that this row represents, which shows how concentrated demand was at the smallest application size.
4. Total number of shares applied for in that row, which is simply the first column multiplied by the second.
5. Percentage of total shares applied that this row represents. Compare it against the applications percentage to see how much of the demand came from larger applicants.
6. Number of shares allotted per successful applicant in that row. In an oversubscribed retail table this is usually the market lot, whatever the row's application size.
7. Ratio, written as two numbers separated by a colon, stating how many applicants out of how many in that row received the allotment described in the previous column.
8. Total number of shares allotted in that row, being the number of successful applicants multiplied by the shares each of them received.

The final row of every table is a total, and the total in the last column must equal the shares that were available to that category. If it does, the table is internally consistent and you can trust the ratios in it. That check takes about a minute and is the whole reason the document is laid out this way.

A worked retail table

Take a purely illustrative issue with 24,00,000 shares reserved for retail and a market lot of 80 shares. The retail portion therefore contains 30,000 lots, which is the hard ceiling on how many retail applicants can receive anything. Suppose the reconciled applications break down as follows.

• Row one, 80 shares applied for: 3,00,000 applications, asking for 2,40,00,000 shares in total.
• Row two, 160 shares applied for: 90,000 applications, asking for 1,44,00,000 shares in total.
• Row three, 240 shares applied for: 60,000 applications, asking for 1,44,00,000 shares in total.
• Totals: 4,50,000 valid applications, asking for 5,28,00,000 shares against 24,00,000 available.

Because there are 30,000 lots and 4,50,000 applicants, only one applicant in fifteen can be served, so the ratio column reads 1:15 in every row and the shares-allotted-per-applicant column reads 80 in every row. Row one then produces 20,000 successful applicants receiving 16,00,000 shares, row two produces 6,000 receiving 4,80,000 shares, and row three produces 4,000 receiving 3,20,000 shares. Those three figures add to exactly 24,00,000, which is the check described above.

Now notice what this table quietly demolishes. Retail demand of 5,28,00,000 shares against 24,00,000 available is a subscription of 22 times, yet the odds facing any individual applicant were one in fifteen, not one in twenty-two. The multiple counts shares; the draw counts applications. An applicant who bid for three lots faced exactly the same one-in-fifteen chance as one who bid for a single lot, and on being selected received one lot of 80 shares rather than three. This is the concrete version of the point made in the subscription data explainer about applications and shares being different units.

When the ratio is not constant

A constant ratio down a retail table is the signature of heavy oversubscription, where the minimum-lot-to-maximum-applicants rule binds and nobody can be given more than one lot. It is not the only pattern you will see.

Where retail is oversubscribed only mildly, there are enough lots to give every applicant one, and the surplus is then distributed proportionately. In that case the shares-allotted-per-applicant column rises as you move down the rows, because applicants who asked for more receive more of the surplus, and the ratio may read 1:1 in some rows, meaning every applicant in that row was allotted the stated quantity. Where a category is undersubscribed, the table becomes trivial: every applicant is allotted the full quantity they applied for.

Reading which of these three patterns a table shows tells you, without any further explanation, which allocation rule the registrar was operating under. That is a faster diagnosis than reading any commentary about the issue.

The other category tables

The non-institutional tables follow the same layout but usually look different in the shares-allotted column, because allocation there applies a prescribed minimum application size first and distributes only the balance proportionately, and the two size sub-buckets are reported separately. Ratios below 1:1 still appear where a proportionate entitlement fell short of one indivisible lot and a draw had to decide who received the minimum.

The institutional table is typically the shortest in the document, since it deals with a small number of large applicants, and it is often accompanied by a separate line for the anchor allocation that was settled before bidding opened. Employee and eligible-shareholder reservations, where the issue had them, get their own compact tables with their own subscription figures, which frequently differ sharply from the main categories.

Rounding, surplus and why the totals close

Proportionate arithmetic almost never produces whole lots. An entitlement of 1.6 lots has to become one lot or two, and rounding thousands of such entitlements in the same direction would leave the registrar allotting either more or fewer shares than exist. The regulations therefore prescribe how the rounding is done and how any resulting surplus or shortfall is adjusted, typically by a further draw among the applicants whose fractional entitlement was largest.

This is the reason the final total in a published table always closes exactly on the shares available, even though no single row's arithmetic is clean. If you reconstruct a table yourself and land a few thousand shares away from the reported total, the rounding adjustment is almost certainly where the difference went, not an error in the document.

Using it to explain your own result

The document does not contain your name, but it contains your row. Locating it takes a few steps and turns an opaque outcome into an arithmetic one.

1. Confirm which category you applied in, and open that table rather than the one for the category with the most interesting numbers.
2. Find the row matching the exact number of shares you bid for, not the number of lots.
3. Read the shares-allotted-per-applicant figure in that row. That is the most you could have received, and it explains any surprise about receiving one lot after applying for several.
4. Read the ratio. It tells you the odds you were actually facing, which are often better than the headline subscription multiple implied.
5. Compare the total valid applications in the table against the demand shown while bidding was live, to see how much of the apparent competition was removed at reconciliation.
6. If your result does not match the row, check your allotment status with the registrar or the exchange before assuming an error - a rejection at reconciliation produces no row at all.

That last case is the important one. A rejected application is invisible in this document, because the tables count only valid applications. If you received nothing and cannot reconcile that with the ratio in your row, the likeliest explanation is not bad luck in the draw but a technical rejection, and the status check with the registrar will say so directly.

What the document does not tell you

It is a record of distribution, and nothing more. It carries no view on whether the price was reasonable, no information about the business, and no indication of how the shares will trade once listing begins. It also does not confirm your personal outcome, does not tell you when funds will be unblocked, and does not fix the listing date. Those live in the allotment status facility, your bank account and the exchange notice respectively, and each has its own explainer in this pack.

“The Basis of Allotment does not tell you whether you were lucky. It tells you exactly how much luck was required.”

Read three or four of these documents across different issues and a useful instinct develops. You stop reacting to headline subscription multiples, because you have seen how differently a 22 times retail figure and a one-in-fifteen ratio describe the same event. You start noticing how much of a book was carried by a handful of institutions and how much by hundreds of thousands of small applications. And you learn where the real constraint sits in an oversubscribed issue: not in how much you were willing to invest, but in how many indivisible lots existed to be shared out.