How to increase the chances of IPO allotment

IPO investors generally have questions such as “No shares allotted to me in IPO, why?”, “I haven’t got any allotment in multiple applications” “why I am not getting allotment in any of the IPOs?”. Thus, it is clear that the lucky people get the allotment in highly subscribed IPOs. Sometimes there are some IPOs in which even people who applied only through a single application get the allotment while some apply in multiple numbers but still do not get allotment. This shows that the process is automated and the lucky person is getting the allotment. 

We are here with some of the ideas which can increase the chances of IPO allotment. 

Avoid big applications

SEBI’s allotment process treats all retail applications (less than Rs 200,000) equally. There is no point in making a big application in case of over-subscription. For the oversubscribed IPOs, one should go for minimum bids with multiple accounts. That will help to invest spare money in multiple IPOs as well.

Apply via more than one account or multiple accounts for the same ipo

Do not apply with the maximum bid in just a single account but apply through multiple accounts for the IPO. One should apply via multiple IPOs accounts for highly subscribed IPOs. Applying through multiple accounts can definitely increase the chances of IPO allotment.

Bid at cut off price / higher price band

Investors are often confused between the bid price and cut-off price.” Cut-off price” means the investor is willing to pay whatever price is decided by the company at the end of the book-building process. Once the application is made at Cut off, the investor has to bid at the highest price band. The excess amount, in case the price is lower, the excess amount is refunded.

Avoid last moment subscription:

If already decided that you are going to apply for the IPO, then go for it on the very first day or the second day. If the investor applies on the last day, it might cause few issues like the bank account is not responding due to HNI and QIB high subscription or any other technical issues. It is to take care that the investor does not miss the opportunity to invest in the IPO.

Fill the details properly

Do not rush in filling the IPO forms. The investor should fill in the details correctly like the amount, name, DP id, bank details etc. Printed forms are also available so one should go with it as well. The most secure way to apply for the IPO is through ASBA. One can go with ASBA via their bank but the investor needs to check the details before applying the same. It will surely avoid technical rejection.

Buy parent or holding company shares

The above techniques will be applicable on all IPOs but this trick does not apply to all the IPOs. Although this tip is a brilliant one wherever applicable. Having at least a single share of the parent company in the Demat Account will make the investor entitled to apply through the Shareholder Category.

Although, it applies only in the cases where the parent of the IPO company is already listed in the stock exchange and there is a reservation for shareholders in the parent company. Thus, it is obvious that the chances of allotment are much better in the shareholder category. Additionally, one can place a bid in both retail as well as shareholder categories. Thus, this increases the chance of allotment.

Also read:

Upcoming IPOs in 2022

Performance of recently listed IPOs in 2021

Detailed Video: