How You Can Increase Chances of Allotment in the IPO: 5 Tips

Getting the allotment in the IPOs is one of the unluckiest things for the investors who hold money to invest in the stock market with the motive to earn some extra profits in a short period. If you are also one of them not getting the allotment in the IPOs, then you should read this article.

Not getting the allotment in the IPOs is not a strange thing as there are many people apply in the IPOs and due to oversubscription most of the people don’t get the allotment. An oversubscription is not only the single reason but if you make any mistake or do not apply wisely your chances are less.

However, if you follow a few tips listed below then you can increase your chances of IPO allotment. It is not a guarantee you will get the allotment but there are a few things you should keep in mind while applying in any IPO, so that your possibility of getting the allotment increases.    

5 Tips & Tricks to Get IPO Allotment

#1 Make Sure have Enough Funds 

Many times people apply for an IPO through ASBA or UPI mandate and they don’t have sufficient funds in their bank account. However, it is not a wise decision to invest if you don’t have sufficient funds, because your application will be rejected or not accepted even if there a single penny is missing.    

Make sure you have sufficient funds with the amount you are applying for the IPOs. And if you need your money for any other more important work, then don’t invest much money. As it takes some time in IPO bidding, allotment and listing to get your amount free from such investments.

#2 Avoid Applying in Multiple Lots

If you think applying in multiple lots or huge amounts in an IPO can increase your chances of allotment, then you are in myth, as there is no such advantage of getting the assured allotment if applied with the huge amount or in multiple lots from the single demat account.  

So, apply only a few lots, one or two or a maximum of three to avoid decreasing the chances of allotments. Sometimes IPO issuing companies decide to first allot the shares who have applied in the single lot, and then allot the remaining shares to others as per the number of shares to be issued. 

 #3 Avoid Last Moment Subscription

Most of the retail investors are now using the Application Supported by Blocked Amount (ASBA) method to apply in the IPO. Thanks to UPI, applying in IPOs becomes not only easier but also faster and more convenient for investors. While applying through UPI, a mandate request is approved to block the fund in your bank account and submit your application successfully.

But many times while applying it takes some time to get the mandate request and even after approving the request, your application is not submitted. As when people apply at the last moment or in the last few hours on the last day then the servers of the online platform you are using or the banks and the exchanges getting the application becomes very busy and might take some time.    

#4 Apply through Multiple Demat Accounts

However, if you have two demat accounts with different brokers, if you want to apply in the IPO through both demat accounts to increase your chances of getting the allotment it is not possible. One of the applications will be rejected, as both the demat accounts are linked with your PAN. 

But you can open multiple demat accounts in your family members’ name like your spouse, parents or kids and then apply through different demat accounts in an IPO. And when you apply through multiple demat accounts from different names, your chances of getting the allotment increases.  

#5 You can Try applying in the HNI Category

Common people apply through the retail category, as there is only a limit of up to Rs 2 lakh for applying in an IPO. And due to oversubscription under the retail category, your chances of getting the allotment also become less. Hence you can try in another category like HNI where rush is low.

In the HNI category, you have to apply above Rs 2 lakh and can apply up to Rs 10 lakh. Suppose you applied in HNI and the issue is oversubscribed by 10 times in the HNI category, then for every 10 shares you have bid, you will be allotted one share and similarly get at least some shares.          

Wrapping-up

Nevertheless, getting the chance of allotment in the IPOs is totally depends on the subscription status in each category and the process of share allotment followed by the IPO issuing company. Usually, in an oversubscribed IPO, the company follows the lottery system to allocate the shares.

However, some of the companies follow the proportionate basis to allocate the shares in the IPO allotment. The decision is totally taken by the IPO issuing company with their merchant banks, anchor investors and other entities involved in organising the IPO procedure for the company.   

Also Read: IPOs Launching this Week: Latest IPO & Upcoming IPO List 2024