The best way to improve your chances of IPO allotment is by applying through multiple Demat accounts, as this increases the odds of being selected. Additionally, always bid at the highest price within the IPO’s price band, known as the ‘cut-off price,’ to ensure your application is considered. Avoid waiting until the final day to apply, as banks may stop accepting applications after 4 PM, leading to rejections. Lastly, if the IPO is launched by a company with a listed parent company, apply through the ‘Shareholder’ category for a better chance at securing allotment.”
Tips to Increase Chances of IPO Allotment
IPO investors often wonder why they fail to receive an allotment in highly subscribed IPOs, even after multiple applications. The IPO allotment process is automated and fair, giving each eligible application an equal chance. Here are some strategies to improve your chances of getting an IPO allotment:
1. Avoid Large Applications
- SEBI’s Allotment Rule: For retail investors (applications under ₹2,00,000), all bids are treated equally. Submitting a large application does not improve your chances in oversubscribed IPOs.
- Smart Strategy: Apply the minimum bid amount across multiple accounts. This diversifies your chances and lets you save money for other IPO opportunities.
2. Apply Through Multiple Accounts
- Increase Applications: Submit applications through different Demat accounts (e.g., family members’ accounts).
- Tip: Ensure all accounts have valid PAN cards and are ASBA-enabled. This increases the number of entries for the allotment lottery.
3. Bid at the Cut-Off Price
- Cut-Off Price Advantage: Selecting the “Cut-Off Price” ensures you are willing to pay the final price determined by the company during the book-building process.
- Refund Assurance: If the final price is lower than your bid, the excess amount will be refunded automatically.
4. Apply Early
- Avoid Last-Minute Rush: Apply for the IPO on the first or second day of the subscription window to avoid issues like payment failures or technical glitches due to high demand on the final day.
- Tip: Early applications have the same chance of allotment as last-day applications, so apply early to avoid stress.
5. Fill Details Carefully
- Accurate Information: Double-check your application for errors in name, DP ID, bank details, or bid amount.
- Use ASBA: Apply through the Application Supported by Blocked Amount (ASBA) facility offered by your bank. It is the most secure and efficient method.
6. Leverage the Shareholder Category
- Parent Company Advantage: If the IPO company’s parent or holding company is already listed on the stock exchange, owning even one share of the parent company in your Demat account can make you eligible to apply under the Shareholder Category.
- Dual Applications: You can apply under both the Retail and Shareholder categories, increasing your chances of allotment.
- Note: This strategy only applies when the IPO company has a shareholder reservation.
Summary of Key Tips
- Apply through multiple accounts with minimum bids.
- Use the cut-off price to ensure your application is considered.
- Submit your application early to avoid last-minute issues.
- Ensure all details in the application are correct to avoid rejections.
- Consider owning shares of the parent company if applicable.