Subscription Ratio is a measure that shows how many times an issue (like an IPO or bond offering) has been subscribed compared to the total number of shares or units offered.
Subscription Ratio is an important indicator in initial public offerings (IPOs), follow-on public offers (FPOs), and bond issues. It reflects the level of demand from investors for a particular issue.
The formula is:
Subscription Ratio = Total Shares Applied ÷ Total Shares Offered
A high subscription ratio indicates strong investor interest and confidence in the company or issue, while a low ratio may signal weak demand. Investors often track subscription data during IPOs to gauge market sentiment and potential listing performance.
"<p> If a company offers 1 crore shares in an IPO and investors apply for 5 crore shares, the subscription ratio is:<br> <strong>5 ÷ 1 = 5 times</strong> </p> <p> This means the IPO is oversubscribed 5 times. </p>"