What Is IPO Lot Size? — Complete Guide
An IPO (Initial Public Offering) allows a private company to raise capital by offering shares to the public. But before applying for an IPO, investors must understand a key concept — the IPO Lot Size.
It determines the minimum number of shares you can apply for and ensures fair and structured allotment across investors.
Definition:
IPO Lot Size = The minimum number of shares an investor must apply for in an IPO. Applications must be made in multiples of this lot size.
Example:
If the lot size is 100 shares, you can apply for 100, 200, 300… but not 50 or 150.
Why it Matters?
- Ensures Orderly Allotment: Simplifies the allocation process.
- Encourages Genuine Investors: Sets a minimum threshold.
- Fair Distribution: Maintains balance between large and small investors.
- Facilitates Trading: Helps smooth price discovery post-listing.
How It's Decided?
The company, in consultation with SEBI and exchanges, fixes the lot size based on:
- IPO price band
- Target minimum investment (₹10,000–₹15,000 for retail investors)
- Total shares offered
- Accessibility goals set by SEBI
Types:
- Minimum Lot Size: Smallest permissible application.
- Maximum Lot Size: Caps how many shares one can apply for to ensure fair distribution.
Types:
- Minimum Lot Size: Smallest permissible application.
- Maximum Lot Size: Caps how many shares one can apply for to ensure fair distribution.
Formula:
Total Lots = Total Shares Offered ÷ Minimum Lot Size
Example:
Price band ₹100–₹110
Target investment ₹15,000 → Lot size = 150 shares × ₹100 = ₹15,000 minimum.
Minimum Investment Example
If the lot size is 100 shares and price is ₹200,
Minimum Investment = ₹20,000.
IPO Lot Size vs Market Lot Size:
Allotment & Oversubscription:
If an IPO is oversubscribed, allotment happens on a lot basis via lottery. Thus, applying for 1 lot gives every retail investor an equal chance of allotment.
Example
XYZ Ltd. IPO
- Price Band: ₹480–₹500
- Lot Size: 28 shares
- Minimum Investment: ₹14,000
- Investors can apply for 1 lot (₹14,000), 2 lots (₹28,000), and so on.
Conclusion:
The IPO Lot Size determines your minimum investment commitment and helps maintain structure, accessibility, and fairness in IPO allocation.
Knowing the lot size enables smarter planning of funds and better participation in new listings.
Disclaimer: The content above is intended solely for educational and informational purposes. It does not constitute financial advice or a recommendation to invest in any specific IPO.
