8 Ways To Increase IPO Allotment Chances

Investing in an IPO can be exciting. It has the potential of delivering huge capital gains several years down the line. Not only that, your investment in a lucrative IPO can enable the company to grow, expand and provide cutting-edge goods and services. 

However, popular IPOs are subscribed many times over, which means that the demand for their shares hugely outsrtip the supply. For example, the Zomato IPO was subscribed 38 times, which means that for every share, there were 38 applications.

If you've zeroed in on an exciting IPO stock, let's find out how to increase your IPO allotment chances.

1. Avoid large applications. The current allotment process by SEBI is that it treats all retail applications equally. That means, even if you make an extensive application of ₹1 lakh, you may not stand to benefit in the event of oversubscription. Large applications are ideal in large IPOs where you have a reasonable certainty that the IPO will remain unsubscribed in the retail segment.
2. Apply with more than one demat account. Another way is to make multiple applications from various demat accounts. But while you can apply for an IPO through more than one application, you can only apply for the IPO with one PAN number. But you can invite your family and friends to apply for the same IPO multiple times on your behalf. Thus, using several demat accounts can help you increase your chances of getting at least one allotment.
3. Always bid at the cut-off price. Let's assume an IPO has been announced at a price band of ₹150 - 155 per share. If you bid at the cut-off price, it shows you are comfortable buying at any price between ₹150 and ₹155. Hence, it's a good idea to go with a cut-off price when filling the IPO application form.
4. Don't rush at the last minute. Several investors rely on subscription levels within the High Net Worth Individual [HNI] and Qualified Institutional Buyer [QIB] categories before placing your builds on the last day. Some investors look to wait and watch how the IPOs are bought by the HNI and QIB categories. But in the event of a technical glitch, you may face trouble in submitting your application. Further, since most banks do not accept applications after 4 pm, it may be too late in submitting the IPO application.
5. Purchase parent company shares. An intelligent way of increasing your IPO a good deal is to buy at least one share of the parent or holding company in your demat account. This can ensure your eligibility to apply in the shareholder category.
6. Remember to approve the mandate request. New investors, especially those excited to make their foray into the IPO investment world, typically make this mistake. They apply for the IPO provided by the brokers and assume the task is complete. However, when applying for the IPO, you receive a mandate request. This request needs to be accepted by you from the banking app or website. In the event the mandate is not accepted, the funds will not be locked in your account, and you will not be considered for the IPO allotment.
7. Apply within the first two days. When filling out the IPO application form, you may see that the IPO is available for three days. To increase your chances of IPO allotment, you may want to apply for the application within the first two days. That's because, on the last day, there could be technical glitches if too many people rush to apply for it. Generally, some investors wait for the last day to submit their application form as it allows them to understand the initial response of the investors towards the IPO. But if your aim is to increase the chances of IPO allotment in a particular IPO, you may want to refrain from waiting until the last day.
8. Verify all details carefully. As is with all formal applications and submissions, you need to conduct due diligence when filling out the IPO form. Remember to verify your name, demat account number, the category you're applying for, and other details specified on the form. There have been several cases where IPO applications have got rejected because of simple errors and wrong information.

Conclusion

If an IPO is oversubscribed, the allotments work on a lottery system. Hence, it is a good idea to keep a look out for undersubscribed IPOs. You may also want to research and study undervalued IPO allotments at low subscription rates. However, while no one can be certain about the IPO allotment process, following the tips mentioned can help you increase your chances of getting an IPO allotment.