As a result of the high demand for recent public offerings, many investors find it hard to crack an IPO allotment. Investors see it more challenging to get allotments, even after applying for an online IPO. People have many questions about the IPO allotment procedure, and one of the most typical complaints following an IPO is, "Why wasn't my IPO given to me?"
First and foremost, we must fully comprehend the IPO allotment procedure. After that, we can make efforts to improve our prospects of getting an allotment. Here are a few pointers as below-
How are IPO shares distributed?
All retail individual investor (RII) applications are considered equal under the share allotment guidelines. The minimum application amount determines the minimum bid lot.
IPO Under Subscribed: If the need for an IPO in the retail sector is fewer than the number of shares offered, it is under-subscribed. Every investor will receive the entire allocation.
IPO Oversubscribed: If an IPO is oversubscribed, retail investors will only receive one lot or nothing. The lottery mechanism is used to choose the investors.
Now, let us go through the ideas which can increase the chances of IPO allotment when prefer to apply online-
There is no benefit for a large application-
All retail applications (less than INR 200,000) are treated similarly by SEBI's current allotment process. In the event of over-subscription, there is no benefit to submitting a large application. Big applications are only appropriate for heavy or under-subscribed IPOs.
Multiple Demat Accounts can be helpful-
Large applications are ineffective in cases of over-subscription. It's a good idea to submit multiple applications from various Demat accounts. Using numerous accounts to apply for an IPO online might significantly boost your chances of being accepted.
Bid at the cheaper end of the price range / higher end of the price range-
Investors frequently misunderstand the difference between the offer price and the cutoff price. The term "cutoff price" refers to an investor's willingness to pay whatever price the company decides at the end of the book-building process. After applying Cutoff, the investor must bid at the highest price range. If the price is lower than expected, the extra amount is reimbursed.
Avoid last-minute subscriptions-
If you've already chosen to apply for the initial public offering, do it on the first or second day. Suppose an investor applies on the last day. In that case, it may result in various problems, such as the bank account not responding due to excessive HNI and QIB subscriptions or other technical issues. It is to ensure that the investor does not lose out on the IPO chance.
Filling up the complete details-
Filling out the IPO forms should not be hastened. The money, name, DP ID, bank details, and other details should be filled incorrectly by the investor. There are also printed forms accessible. Therefore one should use those. ASBA (Application Supported by Blocked Amount) is the most secure approach to apply for the IPO online. One can apply for ASBA through their bank, but the investor should double-check the data before doing so. It'll almost certainly avoid technical rejection.
Purchase stock in the parent or holding firm-
The strategies mentioned above will work for all IPOs. However, this trick will not work for all IPOs. Even so, this is a fantastic suggestion that may be used in a variety of situations. Investors who have at least one share of the parent firm in their Demat Account are eligible to apply under the Shareholder Category.
Needless, the chances of allotment are much better in the shareholder category. You can place a bid in both retail and shareholder categories. So, apply for IPO online & have more chance of allotment!