How to Increase Chances of IPO Allotment? : Today more people are aware of IPO. Some people get IPO Allotment some people do not. When any person tries to apply for an IPO allotment many questions come to his mind.
What is the reason for not Getting IPO Allotment?
Why is IPO not allotted to me?
How the IPO Allotted to me?
And so many questions, Here we try to figure out these questions. I hope your all questions will solve in this article.
Lets go, first we try to under IPO allotment process.
IPO allotment process
All retail applications are treated equally. At the time of allotment no age factor, no gender factor will be considered. Generally, the Application amount lies between Rs 10,000 to Rs 15,000. Some years ago it was between Rs 5,000 to Rs 7,000.
IPO can be fall in two category Under subscribed of Over subscribed. If less people apply for IPO then demand automatically decrease. And everyone will get full allotment.
If IPO gets oversubscribed means so many people apply for an allotment. Then applicant may get one or zero lots. IPO allotment process will be done by a lottery system.
How to Increase Chances of IPO Allotment?
Use one PAN number per application
Many people apply from many Demat accounts with the same PAN number application. Never do that, it will decrease your allotment chances.
You can do that, open a Demat account of your family members or friends. And try to apply from multiple Demat accounts.
Use cut-off Price
This is one of the important parts. Many people confuse between “bid price” and “cut-off price”.
Always choose your bid price as the cut-off price means always choose the high price of the issue. Incase IPO will get oversubscribed then the allotment algorithm chooses a cut-off price most of the time.
Avoid last moment rush
More people rely on subscription data of IPO. Data like HNI, QIB, Retail category subscription before placing a bid. If this category gets a high response then they apply for IPO on the last day last hour.
That is the smart approach, but that may be the big issue if the server of the bank down or for another reason. Your application may technically reject.
Then how to deal with this situation. Before application check the total subscription in HNI, QIB, and RII. If the response is good then apply for IPO on the second day or before 2 PM or 3 PM on the last 3rd day.
Before submitting your bid check your details like the cut-off price, the number of shares. If you filled it incorrectly then your application may be rejected.
Use the same bank account which has the same Name on your Demat account. Avoid using other’s bank accounts with your Demat account.
If possible use ASBA (Application Supported by Blocked Amount) that will help you to avoid technical rejection.
If you hold a share in the parent company of IPO then the chances of allotment automatically increase. How? If you hold shares of their parent company then you fall in the category of the shareholder, not a retail category.
And shareholders category has a high probability of allotment. This option is available for very few IPO. Example – SBI Cards.
No benefits for big application
Currently all retail application (amount less than Rs 200,000) treated equally.
It means there is no sense in making a big lot application. If possible apply for 1 lot per Demat account. Apply from multiple Demat accounts.
Happy Investing !