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What is under subscription and oversubscription of shares?

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Over Subscription Vs Under Subscription in IPO

Undersubscription and oversubscription indicate the number of times an issue has been subscribed. The main differences between oversubscription and under subscription are explained below for a better understanding of the terms.

  Over Subscription Under Subscription

Meaning

The total number of bids received is more than the number of shares offered

The total quantity of bids received is less than the number of shares offered.

Demand

The demand for shares is greater than the shares offered.

The demand for shares is less than the shares offered.

Allotment

There is no guaranteed allotment in case of oversubscription.

Investors receive guaranteed allotment in case of undersubscription.

Minimum Subscription

Minimum subscription levels are already met in an oversubscribed issue

If the minimum subscription of 90% is not received, the issuer is obliged to refund the entire application money to investors.

Company Performance

This indicates good prospects as there is a higher demand for the shares.

Indicates average performance or weak prospects considering lower demand for shares.


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