An IPO is when a company offers its shares to the public for the very first time after going public. Investors can get excellent opportunities by participating in the IPO. After all, they get a chance to own a share of a big company. Nonetheless, the allotment process is quite difficult. So, are you a newcomer applying for it or someone who has been missing out? The following tips might work for you. Find out more below to improve your IPO allotment status without relying on luck.
Apply Using Multiple Demat Accounts
If you have family members with their own PAN numbers, applying for the same IPO using different Demat accounts is a smart strategy. This increases your chances since each application is considered separately. But make sure each application uses a unique PAN; otherwise, it could lead to rejection. This approach works especially well in oversubscribed IPOs, where the allotment is done through a lottery system. Applying through multiple accounts spreads the risk and boosts your chances.
Always Select the Cut-Off Price
When filling out your IPO application, choose the cut-off price option. This means you’re willing to accept the final price decided by the company, which maximises your chances of getting shares. If you enter a lower price and the final price ends up being higher, your application could be ignored. Choosing the cut-off price ensures your bid remains valid, especially in popular upcoming IPO issues where competition is fierce.
Submit Applications Early
IPOs usually remain open for three days. However, you should never wait until the last hour to apply. Note that early submissions ensure that your application is processed without system delays. Applying early does not give you a direct advantage in allotment. But it avoids the last-minute issues that may result in failed applications.
Your Application Must be under a Certain Amount
The application amount must be below 2 lakhs for retail investors who want to apply for the IPOs. Note that the applications above the above amount will be treated under the non-institutional investor category. This follows a different allotment method.
On the contrary, retail investors can benefit from the lottery-based system. Staying within the limit keeps you in the preferred category. Here, the chances of getting a minimum of a single lot of shares are generally higher in oversubscribed offers.
Use the ASBA Facility
Application Supported by Blocked Amount is a safe and efficient way to apply for IPOs. It keeps your money in your account until shares are allotted, eliminating the need to transfer funds upfront. It also ensures that you don’t face payment issues or delays. Using ASBA is not only more convenient, but also one of the preferred methods recognised by stock exchanges and registrars for a secure allotment process.
Wrap up
So, you now know that getting shares in the IPO is never about chances or luck. The secret lies in timing, and most importantly, your skills. The work starts with applying through multiple Demat accounts. You need to bid at the cut-off price. It is a wise idea to involve your family. So, stay updated with forthcoming IPO announcements. Stick to the above tips to improve your chances of IPO allotment without any speculations.