What does oversubscribed IPO mean?

An oversubscribed IPO means that more applications have been received from investors than shares offered in an IPO. It shows that demand is greater than supply.

Example: A company offers 10 lakh shares in an IPO and receives bids for 30 lakh shares. In this case, the issue is considered to be three times oversubscribed.

It's very common for IPOs to be oversubscribed multiple times. Some IPOs are oversubscribed up to 600 times.

The oversubscription of an IPO depends on many factors:

• Size of the issue (small issues are easily oversubscribed).
• Bull market.
• Higher demand for the company.
• Reasonable price for the IPO shares.
• Trusted promoters such as Tata or L&T.

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