Reviewed on 24 Oct 2026 · Source: IPO Bulletin explainer; checked against SEBI ICDR Regulations 2018 (as amended) and exchange SME guidelines
The lot size is the smallest number of shares you can apply for in an IPO, and every application must be a whole multiple of it. The company and its lead managers set the lot size so that one lot costs roughly Rs 14,000 to Rs 15,000 at the upper end of the price band for a mainboard issue. This keeps the smallest application inside the retail range, because a retail investor may apply for no more than Rs 2 lakh in total. If a lot is 100 shares and the upper price is Rs 150, one lot costs Rs 15,000 and a retail investor can apply for up to thirteen lots without crossing the limit. In SME issues lots are much larger, usually costing Rs 1 lakh or more, because the exchange sets a higher minimum application size for that segment. The lot size also decides how many shares you receive if you are allotted: you are never given a fraction of a lot. Always read the lot size in the price band announcement before you apply.
Example: A mainboard IPO has a price band of Rs 140 to Rs 150 and a lot of 100 shares. One lot at the upper price costs Rs 15,000. Applying for 13 lots costs Rs 1,95,000, which stays below the Rs 2 lakh retail limit; applying for 14 lots would not.
A price band is the range, with a lower limit (floor) and an upper limit (cap), within which investors may bid for shares in a book-built IPO. The company and its lead managers announce the band in the price band advertisement, usually a few working days before the issue opens, and the Red Herring Prospectus carries the same range. The final issue price is discovered through bidding and is fixed inside this range, so it can never be higher than the cap or lower than the floor. Under SEBI rules the cap should not exceed 120 percent of the floor price, which keeps the range reasonably tight. Retail investors normally bid at the cap or at the cut-off price so that their bid stays valid whatever the final price turns out to be. The band matters because it sets the maximum money you must keep blocked in your bank account: lot size multiplied by the cap price. Companies can revise the band during the issue, but that requires public notice and an extension of the bidding period by at least three working days. Fixed-price issues do not have a band; they have a single price.
The lot size is the smallest number of shares you can apply for in an IPO, and every application must be a whole multiple of it. The company and its lead managers set the lot size so that one lot costs roughly Rs 14,000 to Rs 15,000 at the upper end of the price band for a mainboard issue. This keeps the smallest application inside the retail range, because a retail investor may apply for no more than Rs 2 lakh in total. If a lot is 100 shares and the upper price is Rs 150, one lot costs Rs 15,000 and a retail investor can apply for up to thirteen lots without crossing the limit. In SME issues lots are much larger, usually costing Rs 1 lakh or more, because the exchange sets a higher minimum application size for that segment. The lot size also decides how many shares you receive if you are allotted: you are never given a fraction of a lot. Always read the lot size in the price band announcement before you apply.
A mainboard IPO is a public issue by a company that lists on the main platform of the BSE or the NSE, as opposed to the SME platforms made for smaller businesses. Mainboard companies must meet stricter eligibility tests set by SEBI, including a track record of operating profit, minimum net worth and a minimum post-issue market capitalisation, or alternatively use the route in which at least 75 percent of the issue is allotted to qualified institutional buyers. Issue sizes are larger, disclosure is more extensive, and the shares are generally more liquid after listing, because a bigger number of investors, funds and analysts follow them. Retail investors can apply for up to Rs 2 lakh, a lot normally costs around Rs 14,000 to Rs 15,000, and there is no mandatory market maker. Mainboard companies are also included in the broader indices after meeting criteria and are subject to continuing disclosure norms under the listing regulations. A mainboard listing is no guarantee of quality, but the checks are heavier than for SME issues. IPO Bulletin separates mainboard and SME IPOs on its pages so that investors can compare like with like.
Worked example
A mainboard IPO has a price band of Rs 140 to Rs 150 and a lot of 100 shares. One lot at the upper price costs Rs 15,000. Applying for 13 lots costs Rs 1,95,000, which stays below the Rs 2 lakh retail limit; applying for 14 lots would not.
