- Jio IPO basis of allotment to be finalised Monday for about 1 crore retail applicants
- Retail portion subscribed 2.72 times, implying about 70% chance per applicant for one lot
- Institutional bids drove overall 22.19x subscription, retail demand much lower by people count
The basis of allotment for Jio Platforms' Rs 30,213-crore initial public offering is due to be finalised on Monday. About one crore retail applications are waiting on the result, and the odds for allotment are stronger for them, despite the IPO being overall subscribed 22.19 times.
Read on its own, that suggests a one-in-22 shot. It is not. The 22x figure is powered mainly by institutions, and in the retail book the contest is far milder. What decides a small investor's chances is not how many shares were sought, but how many people applied.
Where The 22x Came From
Qualified institutional buyers bid for 70.55 times the shares set aside for them, and wealthy individuals bidding above Rs 2 lakh for 14 times. The retail book, the biggest portion open for bidding at 8.5 crore shares, was subscribed just 2.72 times.
The Math That Matters
Under SEBI's rules, every successful retail applicant gets at least the minimum bid lot, subject to availability. When the retail book is oversubscribed, there are not enough lots to go round, so winners are picked by a computerised draw. For Jio, one lot is 12 shares, or Rs 13,428 at the upper price band of Rs 1,119.
That makes the contest one of people, not shares. The retail portion of 8,50,37,326 shares works out to 70,86,443 lots of 12. Aggregated exchange data shows about 1,00,63,797 retail applications. Divide one by the other and roughly 70 of every 100 retail applicants should receive a lot, odds of about 70.4%.
The headline 22.19x, by contrast, implies odds of about 4.5%.
The exact figure can shift. Registrar KFin Technologies will strike out invalid or unpaid bids before the draw, and its basis-of-allotment document will give the final count of valid applications.
ALSO READ: Jio IPO Share Allotment Status: How To Check Online With PAN Number?
Why The Headline Number Misleads
Two things inflate the 22x figure for a retail reader.
First, it blends categories that never compete with each other. Institutional demand fills the institutional book; it does not take a single share away from the retail draw. Retail shares made up about 43% of the 19.75 crore shares offered to bidders, excluding anchors, but drew only about 5% of the 438 crore shares bid for.
Second, even the retail figure of 2.72x is counted in shares, not people. Retail bids covered 23,11,62,888 shares, or about 1.9 lots per applicant on average. Many investors asked for several lots, but with more applicants than lots available, no one in the retail book will get more than one. Those extra lots swell the subscription number without hurting anyone's odds.
The practical upshot here is that bidding for 14 lots bought the same single ticket into the draw as bidding for one. Retail applicants who are allotted shares should expect exactly 12.
A Second Ticket For Reliance Shareholders
Eligible Reliance Industries shareholders had another route in. The issue set aside a separate shareholder quota, which was subscribed 7.60 times. Shareholders were allowed to bid in this quota and in the retail category, and the two applications are assessed independently, so some investors hold two chances.
The shareholder quota works differently. Allotment there is proportionate rather than a simple one-lot draw, so the size of the bid matters, and smaller bids in a 7.6x book may come away empty..
The employee quota, which came with a Rs 54 discount on the issue price, was subscribed 2.93 times.
What Happens Next
Applicants can check their status on the KFin Technologies website and on the BSE and NSE allotment pages, using their PAN or application number, once the basis of allotment is published.
Successful retail applicants will have Rs 13,428 debited for their single lot, with the rest of any blocked amount released.
In the unofficial grey market, Jio shares were last quoted at a premium of about Rs 245 to Rs 250, pointing to a listing gain of around 22%. On one lot, that would be worth roughly Rs 3,000. However, the GMP or grey market prices are unregulated, can swing sharply before listing, and are no guarantee of where the stock will open.
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