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How To Increase The Chances Of IPO Allotment In Upcoming IPOs?

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Looking for IPO allotment in 2022! No doubt, 2022 will be a great year for the Indian Stock Market as many IPOs are in line waiting for getting listed. With 60+ IPOs, 2021 was a great year for the investor in India. The future shall be even good as the market is very promising in terms of IPOs and investors' enthusiasm.

 

Although upcoming IPOs are big in number, IPO allotment is still a question for many. In 2021, almost every IPO subscribed more than expected. But, very few were able to make it to the allotment list of the IPO. You know you can increase your chances of IPO allotment by focusing on a few things that will help you to increase your chances. Below we discussed these factors to help you out with IPO allotment. Let's explore!

Avoid big application

Avoid big application

One thing as an investor, you need to understand, all retail applications (less than INR 200,000) are treated equally under SEBI's current allotment procedure. This indicates that submitting a large application of INR 100,000 has no benefit in the event of an oversubscription. Big applications are only appropriate for large IPOs with a fair chance of the retail segment staying undersubscribed.

Apply early for the IPO
 

Apply early for the IPO

All the IPOs are available 3 days for the bidding process. If you are planning to bid, bid within the first 2 days, if possible one day, of its availability. Bidding early as possible increases your chances of allotment. It's okay to play safe, but if you have done your research and have a clear idea bout the company and IPO, it's always better to bid early to avoid the last-minute rush. Many investors play safe and bid on the last day of the IPO. This may cause you to skip allotment and you might lose your investment opportunity.

Don't get confused, bid at cut-price

Don't get confused, bid at cut-price

When filing an IPO, don't get the terms bid price and cut-off price mixed up. Investors are frequently perplexed by the differences. To be clear, the term "cut-off price" refers to an investor's willingness to pay whatever price the firm 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 any mistake in details

Avoid any mistake in details

Filling out the IPO forms should not be hurried. Having said that, a last-minute rush could harm your investment opportunity. Try to avoid any glitch in the filling IPO. The money, DP id, name, bank data, and so on should all be filled inaccurately by the investor as these are important. There are also printed forms available, which should be used. Applying for the IPO through ASBA (Applications Supported by Blocked Amount) is the safest option. One can apply for ASBA through their bank, but before doing so, the investor should review the specifics. Technical rejection will almost certainly be avoided.

Buy shares of parent company

Buy shares of parent company

Having at least one share of the holding or parent in your Demat account is a smart strategy to make your IPO a good deal and increase your chances of allotment. The investor will be able to apply in the shareholder category if he or she has at least one share of the parent or holding company in his or her Demat account. It should be emphasized that the parent company's shares must be held in the investor's Demat account as of the RHP date (Red Herring Prospectus). This will verify that you are eligible to apply for a position as a shareholder.

Apply with multiple Demat accounts

Apply with multiple Demat accounts

It's another to increase your allotment chances. You can open multiple Demat accounts and file for the IPO. This sounds tricky, it is easy. However, it's important to note that you can't submit more than one application in your name for one particular IPO, you need to apply with a different PAN card number if you wish for allotment of that particular IPO.

Let's understand this, because huge applications are unsuccessful, you can make many applications from separate Demat accounts with the same amount. When six applications of single lots are submitted instead of one application of six lots, the chance of a successful allocation improves by six times. It's critical to realize that these Demat accounts must be connected to separate PAN accounts.

Story first published: Wednesday, December 29, 2021, 16:18 [IST]
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