Table of Contents
- What is IPO Subscription?
- Why IPO Subscription Data is Important for Investors?
- IPO Subscription Process: How it Works
- IPO Subscription Timing
- Are There IPO Subscription Charges?
- IPO Bidding Categories
- IPO Subscription Calculator
- IPO Subscription Types
- IPO Subscription vs Listing Price
- IPO Subscription and Grey Market Premium (GMP)
- Conclusion
IPO subscription process reflects how many shares investors are applying for during a company’s initial public offering (IPO). It measures the demand for an IPO and helps investors gauge the market interest in a particular issue.
In this blog, we will cover everything about IPO subscription, including the process, timing, charges, types, and its relationship with listing price and GMP (Grey Market Premium).
What is IPO Subscription?
IPO subscription data shows how many shares investors have applied for during the IPO window. This data is updated live and is tracked across various investor categories.
Typically, the IPO subscription window lasts 3 to 10 business days, depending on the IPO type. You can check live subscription status on websites like NSE, BSE.
As the IPO progresses, the subscription numbers constantly update until the bidding closes. A higher subscription number generally reflects strong demand for the IPO.
Why IPO Subscription Data is Important for Investors?
Gauge demand: Higher subscriptions often indicate strong investor interest.
Informed decision-making: Helps investors decide whether or not to invest.
Strategic bidding: Allows investors to choose between retail, NII, shareholder, or employee categories to increase chances of allotment.
Grey market insights: Influences the unofficial grey market premium (GMP).
Allocation chances: A highly subscribed IPO lowers your chances of allotment, while moderate subscriptions improve them.
Borrowing decisions: Guides whether it’s worth borrowing funds for applying in high-demand IPOs.
IPO Subscription Process: How it Works
Several parties are involved in the IPO subscription process:
- Investors (Retail, NII, QIBs)
- Brokers and Banks (e.g., Zerodha, ICICI Bank)
- Stock Exchanges (NSE, BSE)
- Registrar/Transfer Agents (RTA) (e.g., Link Intime, KFintech)
Steps in the IPO Subscription:
- Investors submit IPO bids through brokers or banks.
- Brokers forward collected bids to the stock exchanges.
- The exchanges publish real-time subscription data between 10 AM and 5 PM.
- After the IPO closes, data is sent to the IPO registrar.
- Registrar allocates shares following SEBI guidelines.
- Allotment status is published; emails are sent to investors.
- Blocked funds are released for unallocated bids.
- Shares are credited to demat accounts before the listing day.
IPO Subscription Timing
While brokers and banks accept IPO bids 24/7 during the issue period, exchanges accept them only between 10:00 AM to 5:00 PM on working days.
Important points:
- UPI mandates must be approved before the broker uploads the bid.
- Brokers/banks usually stop accepting bids by 2:00–3:00 PM on the closing day for processing.
Are There IPO Subscription Charges?
No. Investors don’t pay any direct charges for applying to IPOs. Brokers and banks offer IPO bidding services free of cost.
However, brokerage fees and taxes may apply when you later sell allotted shares on the stock exchange. Brokers and banks get a nominal processing fee from the IPO issuing company.
IPO Bidding Categories
IPO applications are divided into several categories:
- Retail Individual Investors (RII): Investments below ₹2 lakh.
- Non-Institutional Investors (NII): Divided into:
Small NIIs: Up to ₹10 lakh.
Big NIIs: Above ₹10 lakh.
- Qualified Institutional Buyers (QIB): Mutual Funds, FIIs, Banks, etc.
- Anchor Investors: QIBs investing ₹10 crore or more.
- Employees and Shareholders: Reserved quotas in some IPOs.
IPO Subscription Calculator
The IPO Subscription Calculator helps determine the subscription rate using the formula:
Subscription Rate = Shares Bid For / Shares Offered
Example: Denta Water IPO (Jan 2025)
| Category | Shares Offered | Shares Bid For | Subscription Times |
|---|---|---|---|
| QIB | 15,00,000 | 35,54,07,600 | 236.94x |
| NII | 11,25,000 | 57,04,54,850 | 507.07x |
| Retail | 26,25,00 | 23,72,46,800 | 90.38x |
| Total | 52,50,000 | 1,16,31,09,250 | 221.54x |
Thus, the overall subscription was 221.54 times for Denta Water IPO.
IPO Subscription Types
1. Oversubscribed IPO
When the total bids exceed the number of shares offered, the IPO is said to be oversubscribed.
Benefits:
- Positive sentiment.
- Higher chances of premium listing.
- Opportunity for the company to raise additional funds.
Example: If an IPO is offered with 10 lakh shares and receives bids for 20 lakh shares, it is oversubscribed 2x.
2. Undersubscribed IPO
When bids received are less than shares offered, the IPO is undersubscribed. This signals lower demand.
Example: If only 8 lakh bids are received for 10 lakh shares, it is undersubscribed.
IPO Subscription vs Listing Price
Subscription data helps predict listing performance. Generally:
- Higher subscriptions = Potential premium listing.
- Lower subscriptions = Risk of listing below the issue price.
However, other factors also influence listing prices:
- Market Sentiment
- Grey Market Premium (GMP)
- Future business prospects
- Promoter behavior
- Economic and industry-specific developments
IPO Subscription and Grey Market Premium (GMP)
GMP is the extra price investors are willing to pay for IPO shares in unofficial trading before listing.
- A high GMP usually leads to higher IPO subscription.
- A low GMP may signal lower subscription or less excitement.
Monitoring the GMP along with subscription numbers gives investors better insight into possible listing gains.
Conclusion
IPO subscription is a vital indicator of investor interest and market sentiment toward a company's public offering. High subscription numbers often correlate with strong grey market premiums and healthy listing gains. However, investors must also evaluate other factors like fundamentals, valuations, and market conditions before applying for an IPO.
