Why I am not getting SME IPO Allotment?

This is the growing concern of many SME IPO investors that even though applied in many SME IPOs but have not got a single allotment. Are we doing something wrong? Do we need to use any other process to apply in SME IPO? To understand it, let's discuss this with a simple example.

Assume ABC Company SME IPO figures

• SME IPO Issue Size: 20 Cr
• 50% HNI and 50% Retail quota
• Lot Size: approx 1200 shares
• IPO Price: Rs 100
• 1 Retail Application amount: Rs 1,20,000

With the above example for Rs 20 Cr IPO

• Total Lots: 1666 (Approx)
• Retail: 833 (1 lot application)
• HNI: 416 (2 lots application)

It means, only 833 retail investor applications and 416 HNI applications are to be selected. With this, one can understand why the probability of getting SME IPO is low. In conclusion, the size of SME IPO is very small and lot size is very big (1200 shares) so the numbers of allottees will be very less.

Whereas in Mainboard IPO, it is the complete opposite of SME IPO. Size of IPO is big and lot size is small (1000), So the numbers of allottees are much higher.

Second point to consider is the number of times the IPO oversubscribe which contributes to the probability of getting an IPO allotment.