In an IPO what do 'Market Lot' and 'Minimum Order Quantity' stand for?
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The market lot size in an IPO defines the number of shares a lot consists of. There is a maximum and a minimum IPO lot size that applicants can bid for. Usually, the minimum lot size does not exceed Rs. 15,000 while the maximum lot size stays under Rs. 2,00,000. This is calculated by multiplying the price of the IPO share by the number of shares in the lot. For example, if the price is Rs. 250 and the lot size is 50, then the value of the lot becomes Rs. 12,500.
Minimum Order Quantity (MOQ) stands for the minimum number of shares an investor needs to bid for. In the above example, one lot consists of 50 shares that makes 50 as the minimum order quantity. Bidding for less than the defined MOQ will disqualify your bid. Moreover, you can only apply for multiples of the MOQ. In the example considered, you will be able to apply for shares in multiples of 50 – 50, 100, 150, etc. Applying for 75 shares will not be possible.