What Is Lot Size in an IPO?
In an IPO (Initial Public Offering), lot size refers to the minimum number of shares an investor must apply for. You cannot apply for fewer shares than one lot. If the lot size is 30 shares and the IPO price is Rs 400, the minimum investment for one lot is Rs 12,000. You can apply for multiple lots (2 lots = 60 shares), but retail investors cannot exceed Rs 2,00,000 total application value.
How Is Lot Size Determined?
SEBI mandates that the minimum application value (lot size x cap price) must be in the range of Rs 10,000 to Rs 15,000 for retail investors. This ensures that small investors can participate in IPOs without committing very large sums. Companies adjust the lot size so that one lot is approximately Rs 10,000 to Rs 15,000 at the cap price.
Lot Size Calculation Example
If the IPO cap price is Rs 500, the company sets the lot size so that: 500 x lot size ≈ Rs 10,000 to Rs 15,000. This results in a lot size of 20 to 30 shares. If cap price is Rs 200, lot size would be approximately 50 to 75 shares to meet the same minimum value requirement.
Maximum Application for Retail Investors
| Example | Lot Size | Cap Price | Value per Lot | Max Lots for Retail |
|---|---|---|---|---|
| Company A | 30 | Rs 400 | Rs 12,000 | 16 lots (Rs 1,92,000) |
| Company B | 60 | Rs 200 | Rs 12,000 | 16 lots (Rs 1,92,000) |
| Company C | 10 | Rs 1,500 | Rs 15,000 | 13 lots (Rs 1,95,000) |
SME IPO Lot Sizes
SME (Small and Medium Enterprise) IPOs listed on NSE Emerge or BSE SME have higher lot sizes, often 1,000 to 3,000 shares, resulting in minimum investment amounts of Rs 1,00,000 or more per lot. This higher entry barrier is intentional, as SME IPOs carry more risk and SEBI wants investors to be more committed and financially capable.
Maximising Allotment Chances Using Lot Size
In oversubscribed retail IPOs, the lottery is conducted at the individual application level, not lot level. Every application (regardless of how many lots applied for) has an equal chance of winning exactly one lot. Therefore, applying for maximum lots does not improve your chances of winning the lottery. Instead, apply from multiple family member accounts (each with separate PAN) to get multiple lottery entries.
Key Takeaway
Understanding lot size is fundamental to calculating your IPO investment amount and maximum number of applications. Always check the lot size and cap price to determine the minimum and maximum amounts before applying. Use the Lemonn app to quickly view IPO details including lot size, price band, and subscription data for upcoming IPOs in India.
