How to increase the chances of IPO allotment?
With many waiting for a large number of initial public offerings (IPOs) like LIC to be listed, 2022 may be a great year for the Indian stock market. Despite this, many investors are concerned about increasing their chances of IPO allotment. Last year, although most IPOs had a high number of subscriptions, very few investors received the IPO allotment.
If you’re concerned about getting onto an IPO’s allotment list, here are some guidelines to improve your chances of receiving an IPO allotment.
Increasing your chances of IPO allotment
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Avoid large applications
Avoid big applications because the current allocation procedure of the Securities and Exchange Board of India (SEBI) treats all retail applications equally. Even if you submit a big application worth one lakh Rupees, you may not benefit from the oversubscription. Large applications can be great for large IPOs where the retail segment may have a higher chance of remaining unsubscribed.
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Apply for the IPO within the first 2 days
IPOs are available for bidding for 3 days. It’s best to bid within the first 2 days as it will increase your chances of getting the allocation. Investors may want to play it safe by bidding on the final day. They usually wait till the last day to see how the High Net-worth Individual (HNI) and Qualified Institutional Buyer (QIB) categories buy the IPO. However, bidding as early as possible can help you avoid the rush and all the technical difficulties caused by the rush. So don’t wait and miss your chance of allotment.
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Apply with more than one Demat accounts
You can make multiple applications from different Demat accounts. However, because you can apply for an IPO with only one PAN number, you can invite family members or friends to apply on your behalf. This can increase your chances of IPO allotment.
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Bid at the cut-off price
If an IPO is issued at 100 to 105 Rupees per share, bidding at the cut-off price means that you’re willing to buy the share at any price from 100 to 105 Rupees. The cut-off price represents an investor’s willingness to pay the price decided by the firm. So, when you fill out the IPO application form, use the cut-off price.
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Purchase parent company shares
Buy at least one share of the parent or holding company in your Demat account. This ensures that are eligible to apply as a shareholder.
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Approve the mandate request
New investors often make the mistake of not approving the mandate request. They apply for the IPO offered by the brokers and assume it’s done. Once you apply for the IPO, you’ll receive a mandate request. Approve this request through your banking app or website. If you approve the mandate, only then the funds will be locked in your account. Without it, you won’t be considered for the IPO allotment.
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Check your application thoroughly
Ensure that you thoroughly check your IPO form while filling it. Verify your name, Demat account number, application category, and other details on the form. Applications can get rejected due to incorrect information. So be careful while filling out the form.
The bottom line
Following these guidelines can help you increase your chances of receiving an IPO allotment. For more information contact us at ANSPL.
