Securing an allotment in an Initial Public Offering (IPO) can be a highly competitive process, as the number of applicants often exceeds the number of shares available. Understanding the IPO meaning and how the process works helps investors make informed decisions. By understanding the allotment mechanism, selecting the right application strategy, and carefully managing bids, investors can increase their chances. Factors like applying through multiple banks, considering the lot size, and timely submission play a crucial role. A structured approach and attention to detail can make a significant difference in obtaining an IPO allotment.
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How IPO Allotment Works
IPO allotment is the process of distributing company shares to investors after the subscription period closes, overseen by a Registrar. If the IPO is undersubscribed, all valid applicants receive the shares they applied for. In an oversubscribed scenario, shares are allocated via a lottery system. The allocation depends on the investor category, such as Retail, High-Net-Worth Individual (HNI), or Qualified Institutional Buyer (QIB), as well as overall demand. Successful applicants receive the allotted shares in their Demat accounts, while unsuccessful applicants are refunded the application money.
Tips to Maximise IPO Allotment Chances
Maximising your chances of IPO allotment requires a strategic approach and careful planning.
1. Apply Through Multiple Demat Accounts
A Demat account is an account where your shares are stored in electronic form. To apply for an IPO, you must have a Demat account linked with your PAN (Permanent Account Number).
Here’s a trick that many investors use: apply through multiple Demat accounts belonging to your family members, such as your spouse, parents, or adult children. Each PAN number is treated as a unique application. Therefore, the more Demat accounts you apply for, the better your chances of being allotted one.
Important rule: Do not apply multiple times with the same PAN number. All such applications will be rejected.
2. Apply for Only One Lot in Oversubscribed IPOs
When an IPO is very popular, applying for a single lot (the minimum number of shares allowed) is a sensible approach. Whether you apply for one lot or ten lots, your chance of selection remains the same in oversubscription cases.
Instead of putting all your money into one large application, it is smarter to apply for one lot each from multiple family accounts. This way, you increase the number of entries in the lottery.
3. Approve UPI Mandates on Time
Most IPO applications are now submitted through the Unified Payments Interface (UPI). Once you apply, you will receive a UPI mandate request on your banking app. This is a payment block request, which means the required amount will be kept aside in your account.
You must approve this mandate within the deadline. If you forget or delay, your application becomes invalid. To avoid missing out:
- Apply early in the IPO window.
- Approve the mandate on the same day.
- Double-check your UPI ID.
Thousands of applications get rejected every year because of this small mistake.
4. Keep a Sufficient Bank Balance
It may sound obvious, but many investors overlook the importance of maintaining sufficient funds in their bank accounts. If the required amount is not available when the mandate is processed, the application will fail. Always check your balance before applying.
5. Apply Early in the Window
IPO applications are usually open for three days. Many people wait until the last day to submit their applications. On the last day, heavy traffic can cause delays, resulting in failed transactions or rejected applications. By applying on the first or second day, you reduce the risk of such issues.
6. Use ASBA Facility
ASBA (Application Supported by Blocked Amount) is a process where the money stays in your bank account and is only debited if you get shares. This is a safe and reliable way to apply. Most banks offer ASBA through their net banking services. It reduces the chances of payment failures.
7. Select a Good Broker and Platform
A reliable platform is essential for successful IPO participation. Technical glitches or slow apps can affect your application process. Choosing a dependable platform, such as Findoc, that ensures smooth, timely, and efficient IPO applications for both retail and institutional investors.
8. Double-Check All Details
Even a small mistake in your application can lead to rejection. Ensure that your PAN, Demat details, and bank account numbers are accurate. If applying through UPI, ensure the account is linked to the same PAN as the Demat account.
Can You Really Improve Your Odds?
The truth is, IPO allotment always involves a certain degree of luck. No strategy can guarantee success. However, by following the steps above, you can increase your chances of getting shares. Think of it like buying multiple lottery tickets. Each one increases your chance, but none assures a win.
Conclusion
IPO investing is exciting because it allows you to be part of a company from its early journey. While allotment is never fully in your control, applying smartly, avoiding mistakes, and staying disciplined can tilt the odds slightly in your favour. If you are planning to participate in upcoming IPOs, it may be a good idea to first open a free Demat account and get started.
