How to Increase Chances of IPO Allotment

How to get IPO allotted is a common question among investors who apply for shares in an Initial Public Offering. IPO allotment occurs when investors receive shares after the subscription period closes. Since many IPOs receive applications higher than the number of shares available, allotment is often done through a lottery-based system for retail investors. Although there is no assured method to secure shares, certain strategies may help improve the probability of allotment. This article explains the practical strategies that may help investors increase their chances of receiving IPO shares. 

Strategies to Increase IPO Allotment Chances  

The following are some tips on how to get IPO allotment that may increase the chances.   

• Apply for Multiple Lots: Many IPOs allow investors to apply for multiple lots. Applying for more lots increases the chances of getting allotted at least one lot. 
• Invest through Multiple Demat Accounts: If an individual have access to multiple Demat accounts, they can apply through different accounts. Each application is considered separately, increasing the chances. 
• Check Retail vs Non-Retail Quotas: IPOs often have separate quotas for retail and non-retail investors. Retail investors typically have a higher chance of allotment compared to non-retail (institutional) investors. 
• Monitor Subscription Levels: IPOs are oversubscribed often. Monitoring the subscription levels can give investors an idea of the demand. Higher oversubscription may mean lower chances of allotment per application. 
• Invest in Popular IPOs: Popular IPOs tend to be oversubscribed quickly. While this means higher competition, it also increases the likelihood that the IPO will be allotted. 
• Use the Cut-off Price Option: Some IPOs offer a cut-off price option where an investor can bid without specifying a price. This can potentially increase the chances as the price is determined later. 
• Apply with Maximum Bid Amount: Some IPOs have a limit on the number of shares an individual can bid for. Applying with the maximum allowable bid can improve the chances. 
• Apply Online: Apply directly through the preferred and reliable broker's online platform. Online applications are processed faster and are less prone to errors compared to physical applications. 
• Follow SEBI Guidelines: Ensure to follow all guidelines set by the Securities and Exchange Board of India (SEBI) and the IPO issuer to avoid any rejection. 
• Consider Grey Market Premium (GMP): The IPO Grey Market often provides an unofficial indication of the premium at which IPO shares are trading. A higher GMP suggests strong demand. However, remain cautious, as it's not always accurate. 

Remember, while these IPO allotment tips strategies can improve the chances, IPO allotment depends on the randomisation process. Hence, it is essential to invest wisely and not solely rely on IPO allotment as a primary investment strategy. 

Conclusion 

IPO allotment depends largely on the level of demand and the rules followed during the allocation process. Since many public issues receive applications higher than the shares available, retail investors may receive shares through a lottery-based system. Although there is no assured way to secure allotment, following proper application practices, bidding carefully, and ensuring accurate details may help improve the chances of receiving IPO shares. Investors willing to take part in IPO can track IPO announcements through a reliable online trading app. The reliable trading apps not only help in applying for IPO conveniently but may also help stay updated and manage the applications efficiently.