6 ways of increasing your chance of getting an IPO Allotment
Over the past one year IPOs have become the talk of the town and everyone has been investing in them.
September 17, 2021
6 ways of
increasing your chance of getting an IPO Allotment
Over the past, year IPOs
have become the talk of the town and everyone has been investing in them. Most
people feel that IPOs are a good way to make quick money in the short term
through listing gains. But getting an IPO allotment is no joke especially if
there is a lot of demand for the IPO. Today we will discuss some interesting
points to keep in mind while applying for an IPO.
Do note that there is no
guarantee of these methods as they simply help to improve the chances of allotment.
1) Apply through ASBA
Since 1 January 2016, all IPO
applications are mandatorily done through ASBA (Application Supported by
Blocked Amount) mechanism.
ASBA is the best way to apply
for an IPO. UPI is another option but sometimes due to high demand, you may
face some technical issues. Another benefit of applying through ASBA is that
you will get an email from NSE/BSE at the end of the day so you can be sure
that your application is submitted successfully.
2) Apply at Cut-off Price Apply at the cut-off (highest)
price of the IPO price band.
There is usually a price band
from which one price has to be chosen. The bidder should either select the
cut-off price option or enter the price band’s maximum price.
When IPO gets oversubscribed then
the highest price will be used as the cutoff price.
For example, the price band of
Lodha Developers IPO is Rs 483 - 486 per share. If Lodha is oversubscribed,
bids below INR 486 per share will not be considered in the allotment. Hence
retail investors like yourself should bit at the cut-off price or the maximum
price to increase your allotment chances.
3) Apply for Minimum Bid Lot
Only apply for 1 lot. As per
rules if an IPO gets oversubscribed then retail investors can only get a
maximum of 1 lot. So there is no advantage to applying for more than one lot
from 1 account.
SEBI’s current allotment
process treats all retail applications (less than INR 2 Lakh) equally. There is
no advantage of making a big application in case of over-subscription. Big
applications only make sense in large IPOs or under-subscribed IPO.
4) Bid through Multiple Demat
Applying for 5 lots from one
Demat account has a lesser probability of allotment than applying for a single
lot from 5 different Demat accounts. Thus, if you want to increase your chances
of getting an IPO, then bid from multiple Demat accounts. You can apply from
your family’s Demat accounts to get a higher chance of allotment.
An example to understand
-1 single lot from your Demat
-1 single lot from your
mother’s Demat account.
-1 single lot from your
father’s Demat account.
-1 single lot from your
friend/girlfriend or wife’s Demat account.
You can have multiple bids. Keep in mind, Demat Accounts should not be
linked to different Pan numbers. In simple words, you can’t make more than
one application using the same Pan Card.
5) Verify All the Details
While applying for an IPO,
enter your details carefully. Double-check your entered information.
• Enter your name as per pan
• Check your Demat account
• Check the category you are
applying in like individual, employee, shareholder, HNI, etc.
Your application may get
rejected because of the wrong information.
6) Buy a Share of the
If the company launching the
IPO is a subsidiary of any listed company then there is a high chance that
there will be a shareholder quota to apply for the IPO of that company. Buy 1
share of the parent company and apply for IPO in shareholder quota.
Shareholder quota will have
fewer applications compared to retail investor quota.
Some other myth busters
does not work on a first come first serve basis, it’s a computer lottery-based system, you can apply on the 2nd and 3rd day and still have the same
Market Premium can change very fast, so it should not be the deciding
point to apply for IPO
If an IPO is listed for 3 to 5 days, there
will be no priority given to people applied on Day 1. Applicants on any day
will be treated the same. Many people use this advantage and watch carefully
how the IPO gets subscribed till the last day and decide based on that.
Another tip: If you are
investing more than Rs.2 Lakh, you fall under HNI (High Net-worth Individual)
category. If you decide to invest more than Rs.2 Lakhs and if the RII category
is over-subscribed compared to HNI, then investing in the HNI category can be
These are simple yet effective
strategies through which you can increase your chance of getting an IPO
If you would like assistance in
applying for IPOs and selecting the right ones, do feel free to get in touch