IPO lot size in India
The IPO lot size is the minimum number of equity shares that an investor must apply for in a single bid in an Initial Public Offering (IPO). All bids in an IPO must be in integer multiples of the lot size; a bid for a quantity that is not a multiple of the lot is invalid and is rejected by the exchange’s Issue Module. The lot size is set by the issuer in consultation with the book running lead manager (BRLM) and is disclosed in the Red Herring Prospectus (RHP) and all associated advertisements. The SEBI (ICDR) Regulations, 2018 prescribe the minimum application value that the lot size must satisfy, rather than prescribing the lot size in number of shares directly; the number of shares per lot is derived from the issue price and the minimum value target.
Regulatory basis
Mainboard lot size
For mainboard issues, SEBI ICDR Regulation 49(1) requires that the minimum application size (one lot) be fixed such that the minimum application amount falls within the range of ₹10,000 to ₹15,000. Given an issue price, the lot size (number of shares per lot) is computed as the largest number of shares such that (lot size × issue price) does not exceed ₹15,000, and at least equals ₹10,000. Because the issue price is not finalised when the DRHP is filed (the price band is left blank in the DRHP), the lot size in the Draft Red Herring Prospectus is indicative and is finalised in the Red Herring Prospectus once the price band is set.
Example: for an issue priced at ₹500 per share, the lot size would be 27 shares (₹13,500 per lot). For an issue priced at ₹1,200 per share, the lot size would be 12 shares (₹14,400 per lot). For an issue priced at ₹60 per share, the lot size would be 200 shares (₹12,000 per lot).
SME IPO lot size
For SME IPO s, SEBI ICDR Chapter IX requires that the minimum application amount be approximately ₹1,00,000. This substantially higher floor is a deliberate policy choice to limit SME issue participation to investors who can deploy a larger per-application capital commitment, which SEBI treats as a proxy for financial sophistication. The practical effect is that SME lot sizes are typically 1,000 to 2,000 shares at lower issue prices, resulting in per-lot investments of ₹1,00,000 to ₹1,50,000.
Maximum lot size per retail application
While the minimum bid is one lot, the maximum a retail individual investor may apply for is constrained by the retail category ceiling of ₹2,00,000 (the definition of a retail individual investor under SEBI ICDR Regulation 2(vv)). An investor who bids for shares with a total application value above ₹2,00,000 is reclassified as a non-institutional investor (NII) for that application. The maximum number of lots that keeps the application within the ₹2,00,000 retail ceiling is thus (₹2,00,000 / issue price) rounded down to the nearest integer multiple of the lot size.
For a ₹500 issue with a 27-share lot size (₹13,500 per lot), the maximum number of lots for a retail application is 14 (14 × ₹13,500 = ₹1,89,000; 15 lots would be ₹2,02,500, pushing the applicant into the NII category).
Why lot size matters for allotment probability
In a heavily oversubscribed retail tranche, the SEBI-prescribed allotment methodology is a lottery based on application count rather than shares bid, see IPO oversubscription and allotment . This has a counter-intuitive implication: a retail applicant who bids for 14 lots has the same probability of receiving an allotment as a retail applicant who bids for 1 lot, but in a successful allotment, both receive exactly one lot (the minimum allotment in an oversubscribed retail lottery is one lot, regardless of how many lots were bid). Therefore, in a heavily oversubscribed issue, applying for more than one lot from a retail account does not increase allotment probability or allotment quantity.
The practical advice that retail investors in heavily oversubscribed issues should apply for a single minimum lot follows directly from this feature of the allotment methodology: there is no marginal benefit to bidding above the minimum, and bidding more locks up more capital for the subscription period without increasing expected returns.
Lot size changes between DRHP and RHP
The indicative lot size mentioned in the DRHP is based on the lower end of the expected price band. If the BRLM and issuer decide to set the price band higher than initially expected (a common scenario when pre-IPO institutional feedback is strong), the lot size may be revised downward in the RHP so that the minimum application value remains within the ₹10,000-₹15,000 range. Investors who have done pre-issue calculations based on the DRHP’s indicative lot size should verify the confirmed lot size in the RHP before placing their UPI ASBA bid.
Practical examples from recent Indian IPOs
Major Indian IPOs from 2022-2025 illustrate the range of lot sizes across issue prices:
- Hyundai India IPO (2024): issue price ₹1,960 per share; lot size 7 shares (₹13,720 per lot).
- Bajaj Housing Finance IPO (2024): issue price ₹70 per share; lot size 214 shares (₹14,980 per lot).
- Tata Technologies IPO (2023): issue price ₹500 per share; lot size 30 shares (₹15,000 per lot).
- LIC IPO (2022): issue price ₹949 per share; lot size 15 shares (₹14,235 per lot).
SME IPO examples:
- A typical SME IPO at ₹120 per share might have a lot size of 1,000 shares (₹1,20,000 per lot).
- A SME IPO at ₹300 per share might have a lot size of 400 shares (₹1,20,000 per lot).
Lot size and the UPI mandate cap interaction
The UPI ASBA mandate cap of ₹5,00,000 (per NPCI circular of September 2025) creates an effective upper limit on the number of lots a retail investor can apply for through the UPI ASBA route. For a mainboard issue with a lot size of ₹15,000 at the upper band, a retail investor can apply for at most 33 lots (33 × ₹15,000 = ₹4,95,000) without exceeding the UPI mandate cap, while staying within the ₹2,00,000 retail ceiling. In this example, the retail ceiling (₹2,00,000) is more restrictive than the UPI cap (₹5,00,000), so the binding constraint is the retail definition ceiling: the investor can apply for a maximum of 13 lots (13 × ₹15,000 = ₹1,95,000).
The UPI cap becomes relevant for NII applicants: an NII who applies for ₹5,00,000 of shares through the UPI ASBA channel is at the exact limit of what UPI can block. Any NII application above ₹5,00,000 requires bank ASBA via NetBanking , as the UPI mandate cannot accommodate the higher amount.
Lot size in the context of allotment
In the SEBI-prescribed retail allotment methodology, allotment for an oversubscribed retail tranche is one lot per winning applicant (in the first pass), regardless of how many lots were applied for. The lot size is therefore the unit of allotment, not merely the unit of bidding. A winning retail applicant in a heavily oversubscribed issue receives exactly one lot, valued at the final issue price × lot size.
This design, allotment in units of one lot, is what makes the lottery allotment fair: each applicant who wins the lottery receives the same sized allotment, irrespective of whether they applied for 1 lot or 13 lots. The equality of allotment across all winning retail applicants is a regulatory design choice that prioritises fairness over incentivising larger applications.
Historical evolution of the minimum application value
The ₹10,000-₹15,000 minimum application value for mainboard IPOs was not always the standard. Under the pre-SEBI and early-SEBI era, minimum application sizes were sometimes denominated in shares (for example, a minimum of 100 shares for a ₹10 face-value share at a fixed price of ₹20, implying a minimum of ₹2,000). As IPO prices increased through the 1990s and 2000s, and as book building replaced fixed-price offerings, SEBI standardised the minimum application amount in rupee terms to ensure that retail investors were not priced out of large IPOs (where a minimum of, say, 10 shares at ₹1,500 each would imply a ₹15,000 minimum) nor incentivised to apply for trivially small lots (where a minimum of 1 share at ₹1,000 would be a ₹1,000 application). The current ₹10,000-₹15,000 range reflects this calibration.
References
- Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, Regulation 49(1), Lot Size for Mainboard Issues.
- SEBI (ICDR) Regulations, 2018, Chapter IX, Lot Size for SME IPOs.
- SEBI Master Circular on Issue of Capital, 2023.
- NSE Exchange operations circulars on minimum application amount, available at nseindia.com.
See also
- IPO price band , the price range that determines lot size
- Book building , the process in which lot size is specified
- Red Herring Prospectus , where the confirmed lot size is disclosed
- Cut-off price , the retail bidding option for the minimum lot
- UPI ASBA , the retail application channel; the UPI block is lot size × upper band price
- Retail individual investor , the category for which the ₹10,000-₹15,000 lot is designed
- SME IPO , where lot sizes are ₹1,00,000 per lot
- IPO oversubscription and allotment , why lot size affects allotment strategy
- Initial Public Offering , the broader IPO process