What Is the Lot Size in an IPO?

3 min read • Published 23 January 2023
Written by Anshul Gupta

As we already know, Initial Public Offering (IPO) is the process that a company follows to offer its shares to general investors for the first time. Before going public, these companies have to decide on several things such as the number of shares to be issued, their prices and lot size. 

So what is lot size and why do you need to know about lot sizes of shares to invest in an IPO? Keep reading for all the answers!

What Is IPO Lot Size?

Investors cannot arbitrarily purchase shares during the IPO of a company. SEBI (Securities and Exchange Board of India) governs and seeks to maintain a minimum limit for investors to purchase IPO shares from a company.

In simple terms, IPO lot size is the minimum number of shares an investor can buy from an IPO transaction. Investors can buy shares in one or more lots. For example, if the lot size of an IPO is 20 shares, investors can buy at least 20 shares from the IPO, and in multiples of 20 thereafter. 

The lot size can vary between IPO issues of different companies. While applying for IPO shares, you can find their lot size in the application form. It is also important to note that investors can bid for more shares by applying in different lot sizes.

How to Calculate the Lot Size of an IPO?

As stated earlier, lot size is the minimum number of shares one must purchase in a single transaction. To purchase more shares than the IPO lot size, investors must apply for its multiples.

Let’s understand this with a simple example below.

Company XYZ is issuing IPO shares with a lot size of 200 shares for each transaction. In this case, Mr Ray cannot bid for 1, 2 or 100 shares while applying for IPO issues. He has to bid for an entire lot of 200 shares instead. However, if he wishes to bid for more than 1 lot, he needs to apply for multiples of 200 shares.

This means, 

1 lot =200 shares 

2 lots = 400 (200*2) shares

3 lots = 600 (200*3) shares

4 lots= 800 (400*2) shares and so on. 

If the maximum lot size is 20, Mr Ray can apply for a maximum of 4,000 shares.

Final Words

Lot size is the minimum order an investor can place for an IPO. You must consider knowing the lot size before investing in an IPO as you need to pay for the entire lot. Also, companies will lock this amount in your savings amount until the allotment date. Before placing your bid, consider calculating the amount and its future impact on your finances keeping in mind the market volatility.

Was this helpful?

Anshul Gupta

Co-Founder
IIT Roorkee Alumnus and CFA with experience of structuring debt products worth more than 15000Cr for institutional and retail investors.

Popular Articles

Sovereign Gold Bond 2023-24: Series 4; Check Price, Issue Dates, and More.
Sovereign Gold Bond 2023-24: Series 4; Check Price, Issue Dates, and More.
  • 12 min read
  • 15 June 2023
What Are Gold BeES and How Do They Work?
What Are Gold BeES and How Do They Work?
  • 6 min read
  • 12 January 2023
How to File a Complaint with the Banking Ombudsman: A Step-by-Step Guide
How to File a Complaint with the Banking Ombudsman: A Step-by-Step Guide
  • 12 min read
  • 28 February 2023
Difference between Visa Classic, Platinum, Signature and Infinite Cards
Difference between Visa Classic, Platinum, Signature and Infinite Cards
  • 6 min read
  • 29 March 2023
How to Check Mutual Fund Status with Folio Number
How to Check Your Mutual Fund Status with a Folio Number?
  • 6 min read
  • 6 December 2022

Recent Articles

Complete Guide on Online Bond Platform Providers (OBPP)
Complete Guide on Online Bond Platform Providers (OBPP)
  • 4 min read
  • 12 February 2024
NPS Withdrawal Online: Rules, Process, Taxation & Exceptions
NPS Withdrawal Online: Rules, Process, Taxation & Exceptions
  • 9 min read
  • 31 January 2024
Understand Exempt-Exempt-Exempt (EEE) In Income Tax In India
Understand Exempt-Exempt-Exempt (EEE) In Income Tax In India
  • 4 min read
  • 31 January 2024
Electoral Bonds: Meaning, Price, and Eligibility
Electoral Bonds: Meaning, Price, and Eligibility
  • 8 min read
  • 29 January 2024
Interim Budget: How Is It Different From a Union Budget
Interim Budget: How Is It Different From a Union Budget
  • 4 min read
  • 29 January 2024