Are you looking for a way to increase your chances of receiving an IPO allotment in the upcoming IPO? Here are eight guaranteed methods for increasing your IPO Allocation Chances.
You would love to invest in an initial public offering (IPO) because they are profitable if you’re an investor.
However, not everyone receives an IPO allotment, and many people ask, “Where did I go wrong?” “Why was I not given any shares in the IPO?” “I have not received an allocation in my several applications.”
Occasionally, there are initial public offerings (IPOs) in which even those who apply once get an allocation, while others apply many times and receive none.
For instance, 38 persons applied for each share in Zomato’s IPO, implying that each share received 38 applications. But only one application was accepted among the 38.
We all believe that obtaining an allotment in many IPOs is a question of chance, but this is not the case. If you’ve reduced your search for a decent company at the Upcoming IPO in India, consider eight straightforward strategies for increasing your chances of obtaining a share.
Avoid Large Applications
As a retail investor, you should be aware that all retail applications (those priced less than INR 200,000) are treated identically under the SEBI’s current allocation method.
It means that making an extensive application for INR 100,000 would be futile in the case of oversubscription.
Large applications are permissible only for significant IPOs that face under subscription in the retail sector.
Multiple Demat Accounts
It raises your chances of getting allocated an IPO. It is not a difficult job to get multiple Demat accounts. However, if you desire to apply for more than one IPO in your name with several Demat accounts, you must use a different PAN card number.
Due to the failure of large applications, you may submit several applications for the same amount using various Demat accounts.
For instance, by submitting six single-lot applications rather than a single six-lot application, the probability of a successful allocation increases by six. It’s similar to a lucky draw.
Avoid Being Perplexed
Avoid mixing “bid price” with “cut-off price” while filing for an IPO. Investors often misunderstand the distinction between the two.
The cut-off price is the price range in which an investor is prepared to purchase a company share.
Following the usage of Cut-off, the investor must bid at the most excellent price in the range; this is not mandatory but will increase your chances of winning. We call it the bid price. You will get a refund if the price is lower than projected.
Assume a price range of INR 150-155 per share for the IPO. If you bid at the cut-off price, you are willing to pay between INR 150 and 155. You may choose between the cut-off pricing while filling out the IPO application form.
Avoid Any Detail Blunder
Complete the documents for the IPO gradually. On the other hand, a last-minute hurry may cost you the opportunity.
Avoid any errors in the IPO file. The investor must complete all fields correctly (money, DP ID, name, bank data, and many more.)
The most secure method of applying for an IPO is via the Best trading app with an ASBA function.
Buy Parent Company Shares
Possessing a minimum of one share in the holding or parent business increases your chances of getting assigned.
Investors that own at least one share of the parent or holding company in their Demat account qualify as shareholders. To be eligible, the investor must hold the parent business shares in Demat form before the RHP (Red Herring Prospectus) date.
What is an RHP? An RHP, a first or preliminary prospectus, is a document submitted by a company (issuer) in conjunction with a public offering of shares (stocks or bonds). It demonstrates your eligibility to participate in the company as a shareholder.
Remember To Accept The Mandate
It is a frequent error made by inexperienced investors, particularly those interested in participating in IPOs. They assume their job is complete when they submit a broker-provided application.
However, you will get a mandate request if you file an IPO. It requires approval. You will not get the IPO allocation if the mandate is not approved.
It is a critical step in increasing the available IPOs. On the first and second days, check the subscription levels for the HNI, QIB, and Retail categories. You may apply if you get a favorable answer. If the issue is significant and under-subscribed, you may choose to avoid or apply for a lot.
Use Unique Application Numbers
When submitting an application for an IPO with an extensive retail subscription, you should provide several application numbers.
If you apply with a single raw number, you may not get the stock. For Instance: If the IPO was 20 times oversubscribed and you applied with six individual accounts, you may enhance your prospects of winning by using various numbers.
The IPO allocation process is unquestionably complex. In light of that, I hope this blog has given you a peek behind the scenes of this topic. Although the operation is random and outside your control, you may still try to increase your odds.