Not getting allotment in an IPO is the most popular issue among investors. You’re a beginner or an experienced investor, not getting allotment in many latest IPOs has left investors in stress and they are not sure of what they’re doing.
Most people are trying to search regarding how to get IPO allotment? However, they aren’t able to find proper guidance about it.
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How To Get IPO Allotment?
A few of recent Initial public offerings have attracted large subscriptions and it is becoming quite difficult for investors to secure allotments.
People often question the IPO allotment method on social media and other platforms. So this post will clarify the mechanism of IPO allotment & also increase the possibilities of receiving an IPO allotment.
Before anything else, let’s completely checkout the information about the IPO allotment process.
Note:
Although there is no 100% guarantee that you will receive an IPO allotment if following these guidelines. However, they will help you get closer to your goal.
IPO Allotment Process
Here is the allotment process
Before October 2012
Earlier to October 2012, market watchdog SEBI made registrars mandatory to allot retail stocks proportionately if an IPO got over subscription. This method increased the chances of allotment for people who bid Rs 100,000 or Rs 150,000 rather than who bid Rs 15,000.
This method used to function perfectly in IPOs where demand was similar or lower than the number of stocks offered by the company. Whereas the method obviously supported large applications when demand surpassed supply in IPO.
Numerous high-net-worth individuals (HNI) investors put their funds into the retail segment to buy stocks, which irritated SEBI.
From October 2012
SEBI introduced a new IPO allotment method in October 2012, Which handles all retail individual investor (RII) submissions equally. Under the new process, people are guaranteed at least the minimum application size, according to the share available in the retail category.
Scenario 1
If the quantity of stocks remaining in the retail category is less than the requirement, every investor will receive a complete allotment.
Scenario 2
If demand for stocks is more than the offered stocks, then the maximum number of people who can be applied for the minimum bid lot is identified. After that they divide the total number of equity stocks offered by the company by the minimum bid lot.
No allotment is less than the required bid lot size entertained under the existing rules. (Total quantity of stocks authorized for RIIs)/(Minimum bid lot) equals to Maximum RII Allottees.
In reality, this means that for oversubscribed IPOs, investors can only wish for 1 lot if they’re extremely lucky. Now we will discuss How to get ipo allotment for sure?
How to Get Confirm IPO Allotment?
We hope now you understand the process of allotment and let’s look at How to increase IPO allotment chances? As you might imagine, there isn’t anything that people can do if IPO stocks are in high demand.
Although, there are options to reduce the errors and improve the allocation chance. Here are some tricks to get ipo allotment to know how to increase chances of ipo allotment:
1. Avoid Large Application
Frist tricks to get ipo allotment is to avoid large applications. SEBI’s new allotment method handles all retail applications (below Rs 200,000) in the same manner. As a result, there is no benefit in submitting a large application of Rs 150,000 if IPO is over subscription.
Huge applications make impact majorly in massive IPOs with a fair chance that the retail section will stay under subscribed.
Example
A recent example is Macrotech developers‘ INR 2500 crore IPO, in which every retail investor is expected to receive an allocation. Despite the fact that the explanations for this under subscription are varied, it provides a great instance.
2. Use Multiple Demat Accounts
Next tricks to get ipo allotment is using Mutiple accounts. Since large applications are unsuccessful, people may try to make multiple applications from various demat accounts with the same money.
When 6 applications of single lots are submitted instead of one submission of six lots, the chance of the allotment improves by 6 times.
It’s useful to realize that these demat accounts must be connected to separate PAN accounts. To understand it in another way, you can’t submit more than one application under your own name. It’s good to ask your friends and relatives to open demat accounts and participate in upcoming IPOs.
Demat Account
Opening a new demat account is quite simple these days, and most brokers offer free demat and trading accounts. Furthermore, with e-KYC, it only takes a few moments.
3. Bidding Price
This is a difficult part because people mostly remain confused between price offers and cut-off price. By choosing a bid price, the investor informs the registrar that he or she wishes to purchase shares at that cost.
While cut-off simply notify that the person is willing to purchase shares at any cost within the price range. The position of maximum bid price is used to calculate listing price.
If the cut-off value is set at Rs. 1000 per stock in a price range of Rs. 997-1000 per stock, no bids under Rs. 1000 per equity will be included in allotment if IPO is oversubscribed.
Note:
To improve IPO allotment possibilities, retail investors should put their proposals either at the cut-off or maximum value.
4. Avoid last moment rush
Before applying for an IPO, many people look at the subscription rate in the HNI and QIB portion. This is a good way to analyze the IPO to check out the response of big investors and companies.
However, it could be terrible if your bank’s internet banking goes offline & There might be insufficient money in other bank accounts. This thing can irradiate you and extra work to add the bank details of other accounts.
Of course, there is still the alternative of filling out a hard copy of the IPO application. Although, this is not a suitable option when time is running out.
We advise you to apply on day 2 after doing your own analysis about the IPO.
5. Avoid Technical issues
Technical glitches can cause IPO applications to be declined without the investor being aware about the glitches. After January 1, 2016, all IPO applications must use the ASBA (Application Supported by Blocked Amount) method.
The majority of investors must use net banking, which reduces the risk of spelling failures, name mismatches, and incorrect check information.
Despite this, applications are still being denied on technical grounds and anything as basic as different names in the bank account and PAN can lead to an application rejection.
6. Hold the parent company shares
Last tricks to get ipo allotment is Parent company shares. The shareholders would be entitled to apply in the shareholder category if he or she has at least one stock of the holding firm in his or her demat account.
Of course, this only happens if the IPO-bound firm’s holding entity is already listed and there is an allocation for parent firm shareholders.
The retail segment of Ujjivan Bank’s recently completed IPO was subscribed 48 times, while the shareholder segment was subscribed four times.
Note:
The possibilities of getting allotment in the shareholder portion are obviously much higher. The cherry on top is that bids can be included in both sections.
Conclusion
These are small but successful ideas that will improve your possibility of receiving an IPO allotment. However, there is no 100% guarantee of getting an allotment in IPO.
This is all from our side about how to get IPO allotment? Although, if you have any doubts about tricks to get ipo allotment you can just comment below.
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FAQ About Tricks to Get IPO Allotment
How to get ipo allotment for sure?
There is no hack which provides 100% guarantee of get IPO allotment.
how to get ipo shares in zerodha?
Open the console in the Kite app and find out the portfolio tab. In the portfolio there is a tab of IPO. Where you can apply for IPOs.
How to get confirm ipo allotment?
Under or only one time subscription of any IPO can ensure you confirmed IPO allotment.
What are the possibilities of getting ipo?
The possibility of getting an ipo is dependent on the subscription of that IPO.
is ipo allotment random?
Yes, It is a lottery based system for IPOs which are over subscribed.
