Recently you must be getting to see that many IPOs have been coming out.
and some IPOs have even given good listing gains.
Many of you must have applied for IPO but very few people get their allotment.
what often happens is that the IPOs that companies issue gets oversubscribed.
For e.g. if the company has issued 1 lakh shares But applications have come for 3 lakh shares, So it’s called oversubscription.
Now the company has to give only 1 lakh shares, so in this case, chances of everyone getting an IPO are reduced.
On the other hand, in the case of under subscription, the chances of getting an IPO are high, because under subscription means that fewer applications come from issued shares.
For e.g. the company has issued 1 lakh shares but the applications have come for only 50000 shares, So whoever has applied for this company will definitely get shares.
Frankly speaking, In the case of oversubscription, the is no guaranteed method that makes sure you will get the IPO, But yes you can use some tricks to increase you allotment chances that are explained below.
Always apply at Upper Price Band
When IPO is oversubscribed, Always apply at upper price band
For example, the price band of a company’s IPO issue was 400 to 402 shares.
This IPO was oversubscribed and an investor applied for 400 or 401, So he will not be allotted shares.
and the investors who applied for 402 will have more chances of getting the allotment.
Apply Single Lot
In case of oversubscription in IPO, for any number of shares you have applied for, you can only get a single lot which is deducted through the lottery system.
If the size of the IPO is small then there are high chances of subscription, In this case, you apply for single lot only, the chances of allotment are high.
However, if the IPO is undersubscribed or the size of the IPO is large, then you can apply for multiple lots. But applying for 1 lot generally increase your chances of allotment.
Apply With Multiple Demat Account
As you know we need demat account to apply for IPO,
So you can apply with multiple demat accounts to increase the chances of your allotment.
But that account should not be of same person
i.e. from account which you are applying, a sperate PAN should be registered in it.
Means you can also apply from the demat account of your fiends and family members,
If they do not have a demat account, get them opened too.
applying from such multiple demat accounts increases your chances of getting IPO allotted.
keep in mind one thing that if you have two demat accounts with same PAN card, if you apply to a IPO from both of them, then you application will be rejected.
Avoid Technical Rejections
IPO application can also be rejected due to technical errors, While applying for IPO one should fill the details very carefully,
If there is a slight mistake, like your name is different in PAN card and bank details then you application will be rejected.
To avoid rejections on technical grounds one should apply through ASBA
ASBA means application supported by blocked amount.
This is a process developed by the market regulator SEBI to apply for an IPO.
In this, the bank of the IPO applicant is not debited until the shares are allotted to him.
Hence, for smooth processing, you should use ASBA for IPO.
Avoid Last Moment Rush
What many people do they see other people and take advise from 10 people and then at last moment they enter the IPO.
But in last moment anything can happen, like internet issue, bank server related issue etc. due to which it can happen that you are not able complete the application process in time.
Hence, don’t rush in last moment apply by the 2nd day of IPO issue.
Buy Parent Company Shares
Before getting into details of this point lets discuss what is Parent company or Subsidiary company,
So Like public purchases the shares of a company, Similarly big companies can purchase major shares of small companies.
Major shares meaning more than or equal to 51 percent shares. Due to which the controlling of the small company also comes to the big company, this big company is called the parent company.
So whenever this subsidiary company comes out with IPO and you want to invest in it, first you buy the shares of the parent company. Take only one share if you want
After that you can apply for the IPO of the subsidiary company in the category of shareholders. This increases your chances of getting an IPO.
So these were some tips and tricks that we discussed with you which can increase your chances of getting allotted IPO.
You may refer to this video if you want the explanation in Hindi