The basis of allotment is a crucial document that shows how a company distributes its shares to investors after an IPO closes. When an IPO gets oversubscribed, meaning people apply for more shares than available, the company cannot give shares to everyone. The company then works with the registrar and stock exchanges to finalize a fair system to allocate these shares based on SEBI guidelines. This document outlines the exact math and logic used to decide who gets shares and how many they get.
For retail investors, this process usually runs on a lucky draw system if the demand is very high. The system treats all retail applications equally to ensure fairness. The main goal here is to manage the available lots so that the maximum number of unique retail applicants get at least one minimum lot. This doc helps you understand your actual chances of winning the lottery for those shares.