How to get confirm IPO Allotment? I know you have all been looking for this answer everywhere and we are here to let you know some tips and tricks which we advise you should share with your circle so that you can increase your chances of IPO allotment. As many people who read this article will be beneficial for you because these tips and tricks will help you in receiving IPO allotment.
Recent IPO performance has shown quite promising results during the listing gains in which some IPOs have provided with listing gains of as high as 75%. Now you must be wondering why are shares not allotted to me? How to get confirm IPO Allotment? We have some answers for you which might be able to answer some of your questions. There are any upcoming IPOs in the line in which you can apply this strategy but in order to get an allotment, you will have to share this strategy with the people who are applying for IPO. First, let’s get to the basics of the IPO allotment process.
How shares are allotted through IPO?
Before 2012, the allotment process was quite different from what it is now. Shares were allotted to the investors who bid for more number of lots which increased the chances of IPO allotment. But now after SEBI’s procedure, the allotment process has changed where all the retails investors (RII) IPO forms are treated equally irrespective of the number of lots you have applied for. Earlier the minimum bid amount for IPO was Rs. 5000 to Rs. 7000 but now it has changed to Rs. 10,000 to Rs. 15,000. Now let’s understand the basics of some terms which are used during IPO subscription.
IPO Undersubscribed
When the IPO subscription process is going on which means that the investors are applying or bidding for the said IPO, it does not reach the number of shares offered by the company. For example, Company A is offering 2,00,000 shares during its IPO but the company has only received the bid for only 1,50,000 shares. In this scenario, the IPO is said to be undersubscribed.
IPO Oversubscribed
When the IPO subscription process is going on which means that the investors are applying or bidding for the said IPO, it exceeds the number of shares offered by the company then it is known as IPO over-subscription. For example, Company A is offering 2,00,000 shares during its IPO but the company has received the bid for 4,00,000 shares which means that the IPO is subscribed 2 times. In this scenario, the IPO is said to be oversubscribed.
Maximum RII Allotment = (Total number of shares offered for Retail Investors(RII))/Minimum Bid Lot
Truth to be told, in case of an over-subscription, one can only hope that the shares are allotted to the individual in case they get lucky. But here are some tips and tricks that you as a Retail Investor can use to get IPO allotment.
How to get Confirm IPO Allotment?
Now we all know how the allotment system works and now its time to get to the basics and follow these simple instructions given below to increase your chances of IPO allotment. There is no mantra which can assure you confirm allotment but this will definitely increase your chances so lets get started with the tips and tricks.
1. Apply Single Lot
As mentioned earlier, there is clearly no benefit if you apply for IPO in more than a single lot so if you apply for a single lot, it can increase your chances of getting allotted for the IPO. However, it can be different in the case of the IPO is undersubscribed or if the size of IPO is large where you can apply for IPO in multiple lots but if the size of an IPO is small, then it is advisable to apply in a single lot.
2. Use Multiple Demat Accounts
This can turn out to be quite useful and increase the chances of getting an Allotment for IPO. So what you can do is you can apply for IPO in multiple Demat accounts. However, there is a catch, the accounts should have a different Pan number from the accounts that you are applying. For example, you can apply for IPO in 6 accounts and each one with a different Pan number will increase the chances of IPO allotment rather than applying for 6 lots from a single account.
3. Choose Cut-off price during the IPO Application
So while applying for IPO through UPI or ASBA or submitting the IPO form in a bank, you should always opt for the cut-off price which indicates that when shares are allotted, you agree to pay the highest price in the price band at which the IPO is offered. In an oversubscription scenario, the IPO forms with a bid for the lower band are rejected, so always choose the cut-off price to increase the chances of IPO Allotment.
Let’s take an example to understand this furthermore. so there is Company X which has offered its share at the price band of Rs. 108 to Rs.110 so here Rs. 110 is the cut-off price and when applying for the IPO of Company X, you should apply the lot at Rs. 110 per share.
4. You Should Avoid Last Moment Rush
Looking at the subscription numbers of QIB and NII is a smart move but waiting till the last moment can prove to be hectic where you can get stuck between internet problems, bank server related issues or any other problems which will fail you for applying for IPO. Our advice is to apply for the IPO on the second day by looking at the subscription number of QIB, NII, RII which will give you greater insights into whether you wish to apply for IPO or not.
5. Avoiding Technical Rejections
While filling the IPO application form, your application can be rejected for small errors such as mismatch of your name, the accuracy of check details, some spelling mistakes and many more such issues. From 1 January 2016, all the IPO forms are submitted through ASBA (Application Supported By Blocked Amount) which is available in some of the banks. Also, you can apply for IPO through UPI which has much lower rejection on technical grounds and may increase the chances of IPO Allotment.
6. Buy Parent Company Shares
This trick is only available if the child company is planning for IPO. So what you can do is buy the shares of the parent company that can be as low as a single share before the IPO allotment process has begun and then you can apply for the IPO of a child company through the shareholder’s category. This is a category like QIB, NII, and RII where there is a new category for shareholders which already has shares of the parent company.
Let’s take an example to understand this trick better, so there is Company A which is a parent company of Company B. Now company B is planning for IPO in which the investors having shares of company A can apply for IPO of Company B in the shareholder’s category.
Now you may ask why is there a need for doing this? So during the time of oversubscription, RII subscription numbers are quite high as compared to the shareholder’s category so chances of IPO allotment are much higher.
Conclusion
So these are some tips and tricks that you can use to increase the chances of IPO allotment. However, you cannot get confirmed allotment unless and until the IPO is under-subscribed. But you can share this article with the other investors to help them understand the allotment process which can, in turn, help you with the chances of IPO Allotment.