IPO allotment is the only thing like a lottery in the stock market. Just like a lottery, it has the potential to bring a great amount of returns. But not everyone can lay their hands on it.

IPO investment can be enticing because it allows you to generate great returns in a short period. However, a lot of people want IPO allotment. Often, more people want shares than are available. Sometimes, even if you apply multiple times, you might not get any shares. 

Even though it’s become like a lottery, one can take certain steps to improve IPO allotment chances. Of course, there is no sure-shot way and one needs to respect the legal boundaries as well.

1. Apply as early as possible

As it is said, “the early bird gets the worm”, the earlier you apply for an IPO, the better are your chances. Most of us have the habit of keeping an eye on subscription levels of High-Net-Worth Individuals (HNI) and Qualified Institutional Buyers (QIB) to gauge interest before investing in an IPO. 

However, waiting till the last day puts you at the risk of experiencing server issues and tech glitches. Moreover, most banks have a cutoff time of around 4 p.m., so if you wait until the last minute, you might miss the window to submit your application. To avoid such risks, it’s advisable to apply for IPO shares well in advance of the deadline.

2. Get the parent company shares

Owning a share of the parent company qualifies you for the shareholder quota in some IPO allotments. Therefore, it boosts your chances of allocation. This applies when the parent company is publicly traded and reserves shares for its shareholders. By bidding in both retail and shareholder categories, you increase the odds of getting shares. It’s a smart move to improve your IPO allocation chances.

3. Apply at cut-off price

In the book-building process, investors bid within a set price range. Confusion often arises between bid and cut-off prices. The ‘cut-off price‘ means bidding at the price the company decides. Bidding at this price increases IPO allotment chances. In case the price is lower than the amount paid, the extra amount is reimbursed.

4. Large applications may do more harm than good

SEBI treats retail applicants equally. Hence, avoid large applications because its priority is to allot at least one lot to all applicants before considering additional allotments. 

Thus, filing multiple applications doesn’t offer an advantage. Large applications may not be considered in oversubscribed situations. However, they’re suitable for assuredly undersubscribed large IPOs. 

Also Read: Pros and Cons of investing in IPO

5. Try with multiple demat accounts 

Improving allotment chances involves submitting multiple applications, achieved by opening several demat accounts. Though seemingly complex, it’s straightforward. 

While only one PAN number is allowed per applicant, urging family and friends to apply on your behalf may enhance your chances. Multiple demat accounts linked to different PANs may increase chances, especially when applying for single lots.

6. Don’t forget to accept the mandate

This is one of the places where a lot of people default. Understanding and completing the IPO process is crucial. Typically, ASBA and UPI are used as IPO mandates, requiring your approval. Failure to accept means your funds won’t be frozen for IPO, and you’ll miss out on the allocation chance. Therefore, it’s crucial to accept the mandate promptly to secure your allocation opportunity.

7. Do all hygiene checks

Applying for an IPO allotment is indeed a boring process. However, minor errors like name mix-ups, inaccurate check details, or spelling mistakes can lead to rejection. Thus, verify all information, including name, demat account number, and category as well.

Conclusion

So, the above are some tips that can improve IPO allotment chances. However, actual allotment can’t be guaranteed. A good investor shall always follow all these steps to increase their chances of getting an IPO. Therefore, make sure to follow this process diligently going forward.

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Disclaimer: The above content is for educational purposes only. The 1% News suggests consulting a SEBI-registered investment advisor before applying for an IPO.