How to get IPO allotment; know the strategies

In the dynamic world of investing, Initial Public Offerings (IPOs) present lucrative opportunities for investors. The chance to acquire shares in a promising company early on is highly coveted. However, with the increasing demand for IPOs, securing an allotment has become more challenging. This guide explores effective strategies to enhance your chances of securing IPO shares, providing valuable insights for both experienced and novice investors.

What is an IPO Allotment? IPO allotment refers to the process of distributing shares to investors who have applied for them during an IPO. With high demand often leading to oversubscription, getting allocated shares can be competitive.

1. Avoid Large Applications

• Equal Treatment of Retail Applications: According to the Securities and Exchange Board of India (SEBI), retail applications under Rs 2,00,000 are treated equally. Submitting large applications does not necessarily improve your chances in oversubscribed IPOs.
• Multiple Smaller Bids: Instead of making a sizable application, consider placing smaller bids across multiple accounts. This approach can help you invest in various IPOs and increase your chances of allocation in cases of oversubscription.

2. Use Multiple Demat Accounts

• Distributing Applications: Applying through multiple Demat accounts can enhance your chances of securing IPO shares. Spread your applications across different accounts to improve your odds, especially for high-demand IPOs.
• Family and Friends: Utilize accounts of family and friends to submit applications on your behalf. Although only one PAN number can be used, leveraging multiple accounts can increase your likelihood of allotment.

3. Opt for Cut-Off Price Bidding

• Understanding Cut-Off Price: The cut-off price is the highest price an investor is willing to pay for IPO shares. Bidding at the cut-off price means you agree to pay the highest price within the range.
• Advantages of Cut-Off Price: By choosing the cut-off price, you position yourself at the top end of the bid range, improving your chances of allocation. If the final price is lower, the excess amount is refunded.

4. Apply Early

• Timely Applications: Apply for IPO shares as early as possible, ideally on the first or second day of the subscription period. Late applications might face issues such as unresponsive bank accounts or technical glitches.
• Avoid Last-Minute Rush: Applying early helps avoid problems associated with high demand and ensures your application is processed smoothly.

5. Prevent Application Errors

• Accuracy in Application: Ensure all details in your IPO application are accurate, including the amount, name, DP account number, and bank details. Errors can lead to application rejections.
• Use ASBA Method: The Application Supported by Blocked Amount (ASBA) method is recommended for IPO applications. It is a secure and efficient way to submit your application.

6. Leverage Parent Company Shares

• Shareholder Category: If the IPO candidate’s parent company is already listed, holding a share of the parent company can make you eligible for the ‘shareholder’ category. This can significantly increase your chances of allocation.
• Dual Bidding: Investors can bid in both retail and shareholder categories, improving their overall chances of securing shares.

Securing IPO allotments requires a strategic approach and careful planning. By implementing these strategies, including avoiding large applications, using multiple Demat accounts, bidding at the cut-off price, applying early, and ensuring accuracy in applications, you can enhance your chances of securing shares in an IPO. Understanding these techniques will help you navigate the competitive IPO landscape more effectively.

Make wise investment choices by opening a Demat Account with HDFC Bank now! Exploring the path to successful IPO participation? Begin by clicking here to initiate the Demat Account opening process with HDFC Bank today.

​​​​​*Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.