What is Lot Size in IPO?
In this article, we are focused on “What is the Lot Size in IPO and the Minimum Order Quantity for an IPO?“.
However, you should know about the important characteristic given below before you make up your mind to buy the IPO.
Cutoff Date and Time – All IPO orders must be placed before the Cutoff Date & Time. No IPO orders will be accepted over and above this date & time.
Minimum Value – This is the minimum number of applications in the Retail Individual Investor (RII) category,
your application number must be greater than or equal to this value. Any application whose value is less than this minimum value will not be accepted.
Maximum Value – This is the highest possible application value your order can have in the RII category.
Any application whose value is greater than this value falls into the High Net Worth Individual (HNWI) category.
Tick size – The tick size is the price multiple within a particular price band. For example, if an issue has a price band of INR 500 to 600 with a tick size of INR 20, the acceptable price values for this issue are INR 500, 520, 540, and so on till INR 600. This is a feature of Book Building Issues only.
Another characteristic that is very important to understand is the Lot Size (IPO market lot or bid lot).
A Lot Size is the pre-determined number of shares that have to be applied for by an investor.
It is different for each issue(IPO). There is a minimum lot size which is pre-decided by the company and mentioned in the application form.
However, If investors want to bid for more shares, they can apply in multiples of lot Size of shares.
How to Calculate Lot Size?
Let’s learn how to calculate lot size.
Type of Issue: Book Built Issue IPO
Public Issue Price: INR 500/- to INR 510/- Per Equity Share
Market Lot: 20 Shares
Minimum Order Quantity: 20 Shares
Listing At: BSE, NSE
Investors need to apply for at least 20 shares. They can apply at any price within the price range i.e. INR 500 – INR 510.
If the investor wants to apply for more than 20 shares, he needs to apply in multiples of 20 i.e. he can either apply for 40 shares or 80 shares, etc.
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Minimum Order Quantity for an IPO
As per the above instance, Minimum Order Quantity is 20 shares, which is the same as the market lot.
This means that you cannot apply for less than 20 shares for this IPO. If you apply for 10 shares, then your application will be rejected. Furthermore, you can buy the shares only in a lot of 20.
As per the SEBI guideline, If an investor wants to place bids for less than INR 2L, he needs to apply in the Retail Individual Investor (RII) category.
If an investor wants to bid for more than INR 2L, he needs to apply in the High Net-worth Individual(HNI) category.
Can i Modify IPO Lot Size?
The investor can modify or withdraw the Bid lots after application. It can be done only once the order is executed.
Generally, the investor needs to go to the Order Book and select the Transaction Id and then click on Withdraw/ Revise Bid Lots. The application in the NII (i.e., non-institutional Investors) category cannot be withdrawn, but can only be revised.