The IPO (Initial Public Offering) allotment process is a crucial step in the journey of a company going public. Here’s how it generally works:

1. Company Files for IPO: The company wishing to go public files its draft prospectus with the regulatory authority ( SEBI). This document contains detailed information about the company, its financials, management, and the proposed IPO.

2. Approval and Pricing: Once the regulatory authority approves the IPO, the company, with the help of investment banks (underwriters), determines the offer price and the number of shares to be offered to the public.

3. Subscription Period: The IPO is then open for subscription for a specific period, during which investors can place their bids through their brokers or online platforms. Investors may bid at the cut-off price or at a specific price within the price band set by the company.

4. Allotment Process: After the subscription period closes, the company and its underwriters, along with the stock exchange, allocate shares to investors based on a predefined allotment process. Here’s how it generally works:

- Retail Investors: Typically, a portion of the IPO shares is reserved for retail investors. If the IPO is oversubscribed (demand exceeds supply), allotment can be done on a proportionate basis, through a lottery system, or based on other criteria set by the regulatory authorities or the company.

- Institutional Investors: Institutional investors (such as mutual funds, insurance companies, and foreign institutional investors) usually receive a separate allocation. The allocation may depend on the size of their bid and the demand for the IPO shares.

- Qualified Institutional Buyers (QIBs): In some markets, there is a specific allocation for QIBs, who are large institutional investors. They may receive a significant portion of the IPO shares, especially if the demand from this category is high.

5. Listing: Once the shares are allocated to investors, they are listed on the stock exchange for trading. The price at which the shares debut on the exchange (listing price) can be different from the IPO price depending on market demand.

6. Trading: After listing, investors can buy and sell the shares on the open market. The trading price is determined by market forces of supply and demand.

 Key Points to Note:

- Oversubscription: If an IPO is oversubscribed, investors may not receive their full desired allocation. Allotment can vary based on the number of shares available and the demand from different investor categories.

- Allotment Criteria: Each IPO may have specific criteria for allotment, which can vary by market regulations and the company’s policies. This ensures a fair distribution of shares among different investor groups.

- Refunds: If an investor’s bid is unsuccessful or partially allotted, any excess money paid during the bid process is refunded.

The IPO allotment process is designed to ensure fairness and transparency in distributing shares to investors while meeting regulatory requirements and market demand. It’s a critical phase that determines how the company’s shares are distributed among potential shareholders before they are publicly traded.