Investing in an initial public offering (IPO) holds the promise of substantial returns and the opportunity to support the growth of innovative companies. However, with popular IPOs often oversubscribed, securing allotment can be a challenge. Here are some strategies to enhance your chances of securing an IPO allotment.
1. Diversify Application Sizes:
- Avoid submitting large applications, as SEBI treats all retail applications equally. Instead, consider smaller applications to increase your chances of allocation, especially in oversubscribed IPOs.
2. Utilize Multiple Demat Accounts:
- Apply through multiple demat accounts to enhance your chances of allocation. While you can only apply for an IPO with one PAN number, family and friends can submit applications on your behalf, increasing your overall chances.
3. Bid at the Cut-off Price:
- Bid at the cut-off price to demonstrate flexibility in your bidding range. This indicates your willingness to buy shares at any price within the specified range, potentially improving your chances of allocation.
4. Avoid Last-Minute Rush:
- Submit your application within the first two days of the IPO launch to avoid technical glitches and ensure timely submission. Waiting until the last day may result in missed opportunities due to potential banking delays or system errors.
5. Purchase Parent Company Shares:
- Holding shares of the parent or holding company in your demat account can enhance your eligibility for IPO allotment, particularly in shareholder categories.
6. Approve Mandate Requests Promptly:
- After applying for an IPO through your broker, promptly approve any mandate requests received from your bank. Failure to do so may result in non-locking of funds, leading to disqualification from the allotment process.
7. Verify Application Details Thoroughly:
- Ensure accuracy in your application details, including name, demat account number, and chosen category. Simple errors can lead to application rejection, potentially impacting your chances of allocation.
While there is no guaranteed method for securing IPO allotment, these strategies can improve your odds in the allocation process. It’s essential to stay informed, research undersubscribed IPOs, and conduct thorough due diligence before applying. By employing these tactics, investors can navigate the IPO frenzy with greater confidence and increase their chances of successful allotment.
