Can someone pls clarify the following doubts in case of over subscription in HNI category
If applied for more than 2L how much stocks will I get ( I know this depends on how many times HNI stocks are subscribed ) but can I calculate this before allocation itself ? If so how?
Since only less amount of stocks are allocated will they refund the remaining amount ? If so when ?
Thanks in advance 
The allotment in Non Institutional Category is done on a proportionate basis.
If the issue is oversubscribed the application size or the number of shares applied will be divided by the oversubscription number to determine the number of shares allotted.
Eg. If the application was for 200,000 lakh shares and an issue was subscribed by 50 times then 4000 shares would be alloted.
Yes, only amount equal to the allotment you have received will be debited and remaining will be refunded back to you. Refund usually happens after the allotment has been finalized.
Are chances of allotment higher in Non Institutional or In retail?
Chance are high in NII category as allotment in that category is done on proportionate basis while allotment in Retail category is done on random basis.
To apply from NII category you will have to bid more than 2 lakhs, and application has to be made through Netbanking ASBA.
Though chances are high it’s not advisable to apply unless you have a large corpus set aside, especially when there is a huge demand.Mrs Bectors Food IPO got oversubscribed by 621 times in retail category so for every 621 shares you bid you will get one, which means you have to bid for approx 1.8 lacs for one share.
Hi…
I had applied Shayam metallics ipo in HNI category (306*990=302940). Quantity of applied shares was more than the times it over subscribed, still i didn’t get any allotment. While my brother who had also applied as an HNI (2.5 lac), got the ipo allotment. I didn’t get how this proportionate allotment works? It happened in Past also.
Please resolve my doubt.
One more thing… Proportionate allotment (HNI category), is a rule by SEBI or just a common understanding by stock exchanges?
As per the latest General Information Document (Page 37) issued by SEBI in March 2020, the method for allotment for HNIs (referred to as NIIs) in case of an over-subscribed offer is as follows -
7.5 BASIS OF ALLOTMENT FOR QIBs (OTHER THAN ANCHOR INVESTORS), NIIs AND RESERVED CATEGORY IN CASE OF OVER-SUBSCRIBED OFFER
In the event of the Offer being over-subscribed, the Issuer may finalise the Basis of Allotment in consultation with the Designated Stock Exchange in accordance with the SEBI ICDR Regulations.
The allocation may be made in marketable lots, on a proportionate basis as explained below:
(a) Bidders may be categorized according to the number of Equity Shares applied for.
(b) The total number of Equity Shares to be Allotted to each category as a whole may be arrived at on a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio.
(c) The number of Equity Shares to be Allotted to the successful Bidders may be arrived at on a proportionate basis, which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the over-subscription ratio.
(d) In all Bids where the proportionate Allotment is less than the minimum Bid Lot decided per Bidder, the Allotment may be made as follows: the successful Bidders out of the total Bidders for a category may be determined by a draw of lots in a manner such that the total number of Equity Shares Allotted in that category is equal to the number of Equity Shares calculated in accordance with (b) above; and each successful Bidder may be Allotted a minimum of such Equity Shares equal to the minimum Bid Lot finalised by the Issuer.
(e) If the proportionate Allotment to a Bidder is a number that is more than the minimum Bid Lot but is not a multiple of one (which is the marketable lot), the decimal may be rounded off to the higher whole number if that decimal is 0.5 or higher. If that number is lower than 0.5 it may be rounded off to the lower whole number. Allotment to all Bidders in such categories may be arrived at after such rounding off.
(f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares Allotted to the Bidders in that category, the remaining Equity Shares available for allotment may be first adjusted against any other category, where the Allotted Equity Shares are not sufficient for proportionate Allotment to the successful Bidders in that category. The balance Equity Shares, if any, remaining after such adjustment may be added to the category comprising Bidders applying for minimum number of Equity Shares.
As mentioned in point (d), a draw of lots needs to be done where after proportionate Allotment, the number of shares per bidder is less than the minimum Bid Lot (in Shyam Metalics case that is 45 shares). As Non-Institutional Investors (aka HNIs and Corporates) category was subscribed 339.98 times (1514610270 shares) in Shyam Metalics IPO against only 4455000 shares being reserved for them. Hence, in terms of lots, HNIs had only 99,000 lots ( 4455000 / 45 ) reserved for them but applied for 3,36,58,006 lots ( 1514610270 / 45 ) in total. Likely due to such heavy oversubscription in the HNI category, a draw of lots would have been done to decide who gets allocated the shares.
Also, as per the “basis of allotment” document of other IPOs (like Indigo Paints), it is possible to see how allocation happens proportionately when over-subscription occurs in the HNI category (Table referenced below). The chances of allotment (refer to Ratio field in the table below) increases as the applicant’s IPO application amount increases -
B. Allotment to Non Institutional Investors (after Technical Rejections)
The Basis of Allotment to the Non-Institutional Investors, who have Bid at the Offer Price of Rs. 1,490 per Equity Share was finalized in consultation with BSE. This category has been subscribed to the extent of 261.6452 times. The total number of Equity Shares allotted in this category is 1,167,514 Equity Shares to 2,491 successful applicants. The category-wise details of the Basis of Allotment are as under. (Sample)
Sr. No. Category No. of Applications Received % of Total Total No, of Equity Shares Applied % to Total No. of Equity Shares Allotted per Applicant Ratio Total No, of Equity Shares Allotted 1 140 2276 28.28 318,640 0.10 10 5 : 93 1,220 2 150 605 7.52 90,750 0.03 10 7 : 121 350 3 200 561 6.97 112,200 0.04 10 1 : 13 430 4 250 110 1.37 27,500 0.01 10 1 : 10 110 5 300 210 2.61 63,000 0.02 10 12 : 105 240 6 330 181 2.25 59,730 0.02 10 23 : 181 230 7 400 117 1.45 46,800 0.02 10 6 : 39 180 8 500 184 2.29 92,000 0.03 10 35 : 184 350 9 600 64 0.80 38,400 0.01 10 15 : 64 150 10 670 146 1.81 97,820 0.03 10 37 : 146 370 11 700 71 0.88 49,700 0.02 10 19 : 71 190 12 1,000 211 2.62 211,000 0.07 10 81 : 211 810 13 1,100 17 0.21 18,700 0.01 10 7 : 17 70 14 1,340 48 0.60 64,320 0.02 10 25 : 48 250 15 1,500 27 0.34 40,500 0.01 10 16 : 27 160 16 1,670 33 0.41 55,110 0.02 10 7 : 11 210 17 2,000 54 0.67 108,000 0.04 10 41 : 54 410 18 2,350 10 0.12 23,500 0.01 10 9 : 10 90 19 2,500 16 0,20 40,000 0.01 10 1 : 1 160 20 2,680 13 0.16 34,840 0.01 10 1 : 1 130 21 3,000 30 0,37 90,000 0.03 11 1 : 1 330 22 3,350 37 0.46 123,950 0.04 13 1 : 1 481 23 3,400 10 0.12 34,000 0.01 13 1 : 1 130 24 4,000 18 0.22 72,000 0.02 15 1 : 1 270 25 5,000 19 0.24 95,000 0.03 19 1 : 1 361 26 6,000 11 0.14 66,000 0.02 23 1 : 1 253 27 6,710 68 0.84 456,280 0.15 25 1 : 1 1,700 28 10,000 22 0.27 220,000 0.07 38 1 : 1 836 29 13,420 29 0.36 389,180 0.13 51 1 : 1 1,479 30 16,770 10 0.12 167,700 0.05 64 1 : 1 640 31 20,130 30 0.37 603,900 0.20 77 1 : 1 2,310 32 26,840 17 0.21 456,280 0.15 103 1 : 1 1,751 33 33,550 14 0.17 469,700 0.15 128 1 : 1 1,792 34 67,110 25 0.31 1,677,750 0.55 256 1 : 1 6,400 35 100,670 10 0.12 1,006,700 0.33 385 1 : 1 3,850 36 201,340 10 0.12 2,013,400 0.66 770 1 : 1 7,700 37 335,570 109 1.35 36,577,130 11.97 1,282 1 : 1 139,738 38 671,140 28 0.35 18,791,920 6.15 2,565 1 : 1 71,820 39 1,340,000 11 0.14 14,740,000 4.83 5,121 1 : 1 56,331 40 2,348,990 11 0.14 25,838,890 8.46 8,978 1 : 1 98,758
So It means, if it oversubscribes, allotment will be through lottery system rather giving in proportionate manner. Right?
Yes, a lottery system is used for a particular lot size if after proportionate division, the number of shares comes out to be less than the minimum lot size.
To explain this in more detail, let me take the example of Basis of Allotment for Indigo Paints shared above. There were only 1,167,514 shares reserved for the HNI category. But application for 305,807,610 shares came in the HNI category.
In the 14 lots (140 shares) category, there were 2276 applicants who applied for a combined total of 318,640 shares. This is 0.10% (318,640/305,807,610 *100 = 0.10419623%) of the total shares applied for in the HNI category. Hence, for this category (aka 14 lots), only 0.10% of the total reserved shares (aka 1,167,514) would be allotted. This comes out to be 1216.5 shares (0.10419623% * 1,167,514), which got rounded to 1220 shares as their lot size was 10 shares. Now these 1220 shares need to be proportionate allotted to 2276 applicants. As after trying to proportionate allot these shares, the number of shares per applicant comes out to be less than 10 shares i.e. their minimum lot size (1220 / 2276 = 0.53 shares per applicant), a draw of lots need to happen in this category to allot the 1220 shares in minimum lot size of 10 shares per applicant. That would mean only 122 applicants (1220 / 10) would be eligible to get the shares out of the 2276 applicants.
Similarly, if we check the 235 lots (2350 shares) category, only 10 applicants applied for a total of 23,500 shares. That comes out to be 0.01% (23500 / 305,807,610 * 100 = 0.00768457005%). Hence, for this category (aka 235 lots), only 0.01% of the total reserved shares (aka 1,167,514) would be allotted. This comes out to be 89.7 shares (0.00768457005% * 1,167,514), which got rounded to 90 shares as their lot size was 10 shares. Now these 90 shares need to be proportionate allotted to 10 applicants. As after trying to proportionate allot these shares, the number of shares per applicant comes out to be less than 10 shares i.e. their minimum lot size (90 / 10 = 9 shares per applicant), a draw of lots need to happen in this category to allot the 90 shares in minimum lot size of 10 shares per applicant. That would mean only 9 applicants (90 / 10) would be eligible to get the shares out of the 10 applicants.
But, if we check the 33,557 lots (335,570 shares) category, there were 109 applicants who applied for a total of 36,577,130 shares. That comes out to be 11.97% (36,577,130 / 305,807,610 * 100 = 11.9608305%). Hence, for this category (aka 33,557 lots), only 11.97% of the total reserved shares (aka 1,167,514) would be allotted. This comes out to be 139,738 shares (11.9608305% * 1,167,514 = 139644.3. You will notice that 94 extra shares were added to this category). Now these 139,738 shares need to be proportionate allotted to 109 applicants. That comes out to be 1282 shares ( 139,738 / 109). As you would observed, the allotment to each applicant exceeded the lot size multiple of 10 shares. This is possible because of Point (e) referenced above.
As you would have noticed, after an application of certain number of lots (in the above example, that is 250 lots), each applicant was assured to get the allotment of shares. That is usually around the number of times the category was over-subscribed (in above example, the HNI category was over-subscribed by 261 times, hence people who applied for 250 or more lots got assured allotment). In the case of Shyam Metalics, this number would have been around 340 lots. Any application whose size was above 340 lots would have been assured to have gotten the allotment of shares because even after proportionate division of shares, each person would be getting at least minimum lot size (aka 45 shares). To know the exact chances for getting shares alloted for various lot sizes, we will have to wait for Shyam Metalics Basis of Allotment document. From what I could find, this document isn’t public yet (It would likely be accessible here once its made public).
How this possible?
I came across a tweet which had shared the Basis of allotment for the HNI category for Shyan Metalics -
According to it, out of the 78 applicants that successfully applied for 990 shares, only 5 applicants were given allotment.
From this table I can infer that, in HNI category, the more money you deploy, the more probability you will have.
@Bhuvan
I don’t get why did I get this letter?
It is by mistake or all the HNIs got this kind of email?
Thanks
Sorry!! This email address is an invalid email address
Where to get this list?
HNI Allotment is not necessarily always on Proportionate basis. It is people assumption in the market and I have experienced Zero allotments for several IPOs. One of these 3 things can happen depending on Over Subscription Rate and IPO size. 1) Proportionate Allotment in case of less over subscription. 2) Lottery Allotment in case of huge over subscription 3) Zero Allotment due to heavy subscription, again this is result of case 2. Happy Investing
@Gaurav_Gau small correction Gaurav .
itll be proportionate basis even if it is over subsribed on one condition that you need to subsribe the x lots to get the allotment.
example :In tatva pharma NII subscription is 200x
so you need to apply 200 lots to get 1 lot , those who applied more that 200 lots will get atleast one lot on proportionate basis but if you subscribe less you wont get anything.
