How to increase the chances of IPO allotment?
IPOs remain the most discussed and debated aspect of the share markets. After a blockbuster FY21-22 where 52 companies collectively raised 1.1 trillion through IPOs, FY22-23 looks no different. Major bellwether companies, right from LIC, to new-age companies like Paytm and Zomato, went public, raising billions with a never seen before retail participation. With heavy retail participation in initial public offerings, oversubscription has become a common sighting. In fact, Paras Defence And Space Technologies Limited IPO was oversubscribed 304 times! This means there were 304 applications for one share, and only one of those subscribers got an allotment. Similarly, the Latent View Analytics IPO was oversubscribed 338 times! The latest IPO that had the investor’s attention was the LIC IPO, which was oversubscribed three times. With many participants in the markets, you may be wondering how the allotment actually takes place. But don’t worry. We decode it for you right below. Keep reading! In cases of large oversubscription, IPO allotment is routed by way of a computerised lottery. In the lottery, there’s no bias, and every subscriber
stands an equal chance of winning the IPO allotment. Now, a few individuals may invest in IPOs to cash listing gains, while others may view the company as a long term investment opportunity, wanting to participate in its future growth. However, for both things to happen, you first need to get an IPO allotment which is difficult when the subscription rate is high. Investors are often found complaining about not receiving an IPO allotment despite doing everything right. Read more on why Investing In Smallcase may be a better idea than an IPO investing strategy on the Teji Mandi blog. While the markets may not guarantee you an allotment, you can boost your allotment chances by following a few simple tricks. Want to know what these tips and tricks are? Let’s find out. Ways to boost your IPO allotment chances 1- Big applications won’t help Applications coming from the retail segment are treated equally; now, it doesn’t matter if the application is for a single lot or multiple lots. Thus an applicant who has applied for one lot (which is, say, of Rs. 15,000) and an applicant who has applied for 10 lots (which will be Rs. 1,50,000) will be treated equally during IPO allotment. In case of oversubscription, only one slot will be allotted to applicants selected by a lucky draw, irrespective of their application size. In a nutshell, your application size doesn’t give you an advantage in case of oversubscription. However, your entire application will be entertained in case of an under subscription. Read More About increase the chances of IPO allotment