What is the minimum and maximum for investing in an IPO?

  • Asked By
  • Updated On:
  • Replies:

Short Answer

The minimum and a maximum number of shares are defined in Lots in an IPO. The minimum number of Lots that a retail investor can apply in the Retail Segment (RII) is 1 Lot and the maximum number of Lots that can be applied should be less than 2 Lakh Rupees. On the other hand, if one wants to apply for more than 2 Lakh rupees then they can apply in the NII (Non-Institutional Investor) category where the minimum amount for investment is 2 lakhs and the maximum amount is not capped.

Detailed Answer

What is an IPO?

An IPO stands for Initial Public Offering where a Private company gets Public but selling some of its shares to the investors in return for their money. An IPO is also a method where a company gets itself listed on the Stock Exchanges like NSE (National Stock Exchange) & BSE (Bombay Stock Exchange).

IPO’s are categorized into three categories, that are QIB (Qualified Institutional Buyers), NII (Non-Institutional Investors)& RII (Retail Individual Investor). As a retail investor, only the RII & NII category is available while applying for an IPO hence let's discuss them.

Minimum & Maximum amount for an IPO

Investing in IPOs is different than buying shares from the secondary market. One can buy a minimum of 1 share and a maximum of any number of shares in the secondary market but while applying for an IPO the number of shares that can be applied is pre-defined as Lots.

1 Lot consists of a particular number of shares that is decided by the company hence one has to buy Lots of shares and not individual shares in an IPO.

The minimum & maximum amount required for investing in the RII & NII category is different hence let look at them in detail:

RII- The Retail Individual Investor

This category is the most common category in which people apply for shares. SEBI (Securities and Exchange Board of India) has provided certain guidelines of the Lot size that every company has to follow. The lot size of an IPO has to be between 12000 and 15000 hence any company that comes up with an IPO has to keep their number of shares for a total amount of less than or equal to 15000.

For example, the price of 1 share of company “X” is 600 hence the lot size can be 25 shares. Now in the Retail category, the minimum Lots that can be bought is 1 or 25 shares and the maximum amount of lots that can be bought should be less than 2 Lakh.

Hence the Minimum amount of investment for the RII category is 15000 and the maximum number of lots that can be applied under the RII category is 2,00,000/15000=13. So, the maximum amount of shares that can be applied for is 13 Lots or 325 shares of company “X”

NII- The Non-Institutional Investor

This category is similar to the Retail category but the only difference is that the minimum amount of shares that have to be applied for should be worth 2 lakh or 14 Lots of company “X” and the maximum limit is not capped for the NII category.

Maximum & Minimum Amount of IPO

To apply for an IPO under the RII (Retail Individual Investor) category the minimum number of lots that can be applied is 1 of up to 15000 and the maximum number of Lots that can be applied under this category is 14 or 2 lakh whichever is higher. The maximum amount of bids that can be placed in the RII category is 2,00,000. In the NII category, the minimum amount of investment is 2 Lakh and the maximum amount is uncapped.

Tagged With: ipoinitial public offeringinvestingipo investing
Categories: IPO Basics
Ask Your Query for FREE, Get quick answers from our FINTRAKK community!
Discussion (0)
Related FAQs
What is PPF or Public Provident Fund in India?

Public Provident Fund Scheme is a saving scheme that comes with tax benefits. Ministry of Finance introduced this scheme in the year 1968. The main objective of PPF is to encourage general people to mobilize their small savings. The interest offered on these schemes are not taxable. Precisely, PPF is an investment with non-taxable returns.

What is the life cycle of an IPO prospectus?

IPO prospectus is the document which gives information to the investors about the company statistics before they issue shares in public. It is mainly a 3 step process. For detailed description, read through the blog below.

How many days an IPO remain open for public?

IPO is the primary stage where the company goes public and starts gaining investments from people. It is essential for the company to manage the details properly. For Public, IPO should remain open for at least 6 days and for maximum 10 days.

What is an IPO or Initial Public Offering?

IPO or Initial Public Offering is the process through which a private company goes public by offering its shares to the public for the first time.

Which is best Monthly Income Plan for Senior Citizen in India?

Several monthly income plans available such as senior citizen fixed deposit, senior citizen savings scheme, post office monthly income scheme, tax-free bonds, debt funds, and many more are the best monthly income place for senior citizens in India.

Which is the Best Investment Plan in India for Students ?

There are several investing choices accessible for Indian students that might assist them in beginning their future savings. There are several options for students to build their money and make financial plans, including standard savings accounts, term deposits, and mutual funds.

What happens if the IPO is not fully subscribed?

The SEBI (Securities and Exchange Board of India) requires every IPO to get at least an overall 90% subscription to proceed to the allotment process. If an IPO fails to get a 90% overall subscription (including the QIB, NII, and Retail category) by the last day of the issue then the IPO is cancelled and the money collected from the investors is refunded back.

What are advantages of Opening Demat and Trading account with Groww?

Bangalore based online discount broker Groww was found in 2016 and provides plenty of trading and investment opportunities. Users can invest in mutual funds, currency, derivatives, equity, and more. the investment opportunities are backed with guidelines set by NSE, BSE, and SEBI.

What are disadvantages of Opening Demat and Trading account with Upstox?

With every stockbroker, there are some advantages and disadvantages. The cons of Upstox are plenty but covers up through its advantages. However, its disadvantages are that the trade and call feature is charged 20 rupees, IPO & FPO investment opportunities are not available, under the delivery segment, GTC & GTD orders aren’t supported, etc.

Is Wisdom Capital Good, Safe & Reliable Broker for Stock Trading and Investing?

Yes, Wisdom Capital is good, safe, and reliable for all stock trading and investing options. However, weighing in on the lack of trading options and the unjustified charges imposed, it is a cause of worry. But other than this, the broker is reliable enough to execute a trade from the platform.