Tips for Successful IPO Bidding

Tips to Get an IPO Allotment

• Use multiple demat accounts
• Apply at the upper end of the price band
• Select the cut-off price
• Avoid large applications
• Apply earlier if possible

When you invest in listed companies in the equity market, you will undoubtedly face several uncertainties. The prices of shares can be volatile, the market may move unexpectedly, and you may find it challenging to make investments at your preferred price points. This uncertainty also extends to the IPO bids. The IPO allotment process can be unpredictable, but you must make prudent decisions about IPO investments within limited timeframes. 

So, when a new company is due to be listed in the equity market, how do you increase your IPO allotment chances? In this article, we’ll tell you the answer to this important question, explore some tips to get an IPO allotment and help you make smarter decisions by discussing how IPO allotment is done.

What is an Initial Public Offering (IPO)?

An initial public offering (IPO) is the process through which a company issues its shares to the public for the first time. Unlike private placement, where shares are allotted to specific investors chosen by the company, an IPO is open to the public. Investors can apply for the shares being issued by a company. They can bid for their preferred number of shares via the online IPO application process. 

An IPO is typically open for a specified number of days. Once the Initial Public Offering closes, the IPO allotment process begins. Many investors remain unaware of how to improve their chances of getting an IPO allotment. While it may seem daunting for a beginner, knowing the tips and tricks to get an IPO allotment makes it easier for investors who apply for an IPO.

What is the IPO Allotment Process?

In simple terms, IPO allotment is the process through which a company allocates its newly issued shares to the investors who apply for the IPO. Ideally, the number of shares allotted will align with the number of shares that an investor bids for. However, this is rarely practical or possible because only a limited number of shares are issued by a company in an IPO. Meanwhile, there is no limit to the number of investors who bid for the shares issued. 

This discrepancy leads to a mismatch between the supply and demand because the number of investors who apply often exceeds the number of shares being issued. In this scenario, known as oversubscription, the share allocation process becomes highly competitive. Since many retail investors do not have clarity about the share allocation process in an IPO, they wonder how to get an IPO allotment for sure. 

If you have similar concerns, you must first understand how IPO allotment is done. This will help you understand how to get an IPO allotment.

How Does the IPO Allotment Process Work?

The allocation of shares in an IPO allotment depends on the investor category. Typically, a specified number of shares is reserved for different categories of investors like retail individual investors (RII), qualified institutional buyers (QIB) and non-institutional investors (NII). Some shares may also be reserved for employees and anchor investors. 

When you apply for shares in an IPO, it typically belongs to the retail investor category of applications. The allotment process depends on whether the IPO is undersubscribed or oversubscribed. In an undersubscribed IPO, investors typically receive the number of shares they applied for because the supply exceeds the demand. 

However, in an oversubscribed IPO, allocation of shares occurs according to a lottery system. Shares may also be allotted proportionately across various investor categories. Alternatively, an IPO may be undersubscribed in one investor category and oversubscribed in another. In this case, oversubscribed categories may be adjusted with undersubscribed investor applications. The QIB category is typically not included in such adjustments. 

How to Apply for an IPO Allotment?

Applying for an Initial Public Offering is quick and easy if you have the Samco Trading App. To apply for an IPO allotment via Samco’s trading platform, here is what you need to do.

• Step 1: Log into your account in the Samco Trading App.
• Step 2: Head to the IPO application section in the app to start applying for an offer. 
• Step 3: From the list of ongoing IPOs, select the initial public offering that you wish to apply for.
• Step 4: Enter the number of newly issued shares you wish to purchase. This depends on the lot size set by the company. 
• Step 5: Submit the details of your UPI ID to process the payment for the transaction.
• Step 6: Next, review the terms and conditions for the application and agree to them.
• Step 7: Submit the other required details for your IPO application via the Samco Trading App.
• Step 8: To complete the process, approve the details of the payment mandate. 
• Step 9: Complete the application and you will receive a confirmation of successful submission. 

See how simple it is to apply for an IPO allotment via Samco Securities? To make your IPO application journey more rewarding, Samco also offers a wide range of features like the IPO calendar, easy IPO allotment status checks, prompt notifications and trading tools to assess the market and make smarter investment decisions. 

What Factors Influence the IPO Allotment Process?

To improve your chances of getting an IPO allotment, it is crucial to first understand the different factors that affect the allocation of shares. The following aspects should be considered if you want to know how to increase IPO allotment chances.

• Investor Category

The category of the investor could influence the allotment process. IPOs often have quotas for retail investors, qualified institutional buyers (QIBs), and non-institutional investors (NIIs). For example, retail investors usually get up to 35% of the shares, while QIBs may receive up to 50%. 

• Demand for the IPO

If an IPO is oversubscribed, the allotment may be decided through a lottery system for retail investors or proportional allotment for institutional investors. Investors may receive fewer shares than what they applied for. However, undersubscribed IPOs may result in full allotments or even leftover shares.

• Application Size

Retail investors can apply for shares worth up to ₹2 lakh, while NIIs can apply for higher amounts. In oversubscription scenarios, retail allotments are often made on a per-applicant basis, regardless of the number of lots applied for, whereas larger applications in NII categories might receive proportional allotments.

• Cut-off Price Bidding

Retail investors often bid at the cut-off price to maximise their allotment chances. However, institutional investors are required to bid within the price band. If the bid price is below the final offer price, the application may not qualify for allotment as this affects the overall dynamics of the IPO allocation process.

• Regulatory Guidelines

The IPO allotment process adheres to regulations set by SEBI and stock exchanges. These guidelines ensure transparency and fairness. There are rules for handling oversubscription, determining the minimum application size and allotting to different investor categories. Compliance with these rules also directly shapes the allotment process.

What are Some Tips to Increase IPO Allotment Chances?

Want to know how to get an IPO allotment for sure? While there may not be a strategy to offer a guaranteed IPO allotment, you can adopt some techniques to improve your chances of getting an IPO allotment. These tips to get an IPO allotment can help you. 

• Use Multiple Demat Accounts

This is an effective trick to get an IPO allotment, especially when competing for shares in high-demand IPOs with limited retail quotas. You can maximise your chances of getting an IPO allotment by applying for shares through multiple demat accounts under the names of different family members. The bid from each account is treated as an individual application. 

This strategy is particularly effective in oversubscribed IPOs, where allotments are often decided by lottery. If you use this method, ensure that every application is unique and adheres to SEBI guidelines. Missteps like using the same PAN across applications can lead to rejection.

• Apply at the Upper End of the Price Band

IPOs typically have price bands within which bids are submitted. As a rule of thumb, it is best to always apply at the upper end of the price band to optimise your chances of getting an IPO allotment. This is because companies allocate shares based on the final offer price, and bids lower than this price are automatically disqualified. 

You should also understand how IPO allotment is done. Knowing this crucial information will show you that prioritising the upper price ensures you’re considered during allocation. When you bid lower, your chances of being allotted may reduce — especially in oversubscribed IPOs where the final price often leans towards the upper band.

• Select the Cut-Off Price

When you apply for an IPO, you will have the option to select the cut-off price, which is essentially the final offer price at which shares are allocated. Selecting the cut-off price is crucial if you are a retail investor wondering how to increase your IPO allotment chances. When you choose this price, you indicate that you are willing to pay the final offer price set by the company.

This ensures that your application remains valid even if the offer price hits the upper band. While this may not be how you get an IPO allotment for sure, this strategy improves your chances and eliminates price-related rejections — especially in IPOs that are oversubscribed and have competitive bidding.

• Avoid Large Applications

If you are a retail investor and apply for shares worth more than Rs. 2 lakh, you will automatically be moved into the NII category. In this category, allotments are proportional and not lottery-based. This reduces the chances of getting an IPO allotment for smaller retail applicants. 

So, an important tip to get an IPO allotment is to apply within the Rs. 2 lakh limit. This will ensure you are eligible for the retail quota and the lottery system. This is one of the simplest tricks to get an IPO allotment in the retail category. Smaller applications often perform better in oversubscribed IPOs where equitable distribution is prioritised.

• Apply Earlier if Possible

If you put off applying for an IPO to the last day and face any technical issues, it may make it difficult to successfully bid for the shares. Early applications give you time to reapply in case of technical glitches or delays that might occur closer to the deadline. This indirectly increases your chances of getting an IPO allotment. 

While the timing itself doesn’t directly influence how IPO allotment is done, early submissions ensure your bid is processed smoothly without last-minute errors. Applying earlier is also particularly helpful in highly popular IPOs where system overloads may prevent your application from being included. 

How to Check Your IPO Allotment Status?

As an IPO applicant, you might want to check if you have been allotted the company’s shares. Fortunately, checking the allotment status is quite simple and can be done in a multitude of different ways. Here is a comprehensive guide to checking your IPO allotment status through various methods. 

• Through the Registrar’s Website

Every company issuing its shares to the public via an IPO appoints a registrar and transfer agent (RTA). The RTA is an entity that is responsible for managing the share allotment and transfer processes. You can quickly check the IPO allotment status by visiting the website of the appointed registrar and transfer agent. Let us look at the steps you need to follow. 

• Step 1: Visit the official website of the registrar and transfer agent.
• Step 2: Find your way to the IPO allotment status check webpage.  
• Step 3: Choose the IPO for which you had applied from the list. 
• Step 4: Submit the details of your IPO application number, PAN, or DP ID/Client ID.   
• Step 5: Enter the displayed captcha code and submit. 

You should now be able to view the details of your IPO application as well as whether you have been allotted any shares in the company. 

• Through the Stock Exchange’s Website

Alternatively, you can also view the IPO allotment status through the stock exchange’s website. Here is a quick look at the step-by-step process you must follow.   

• • Step 1: Visit the official website of the stock exchange where the company plans to list its shares. 
  • Step 2: Head to the section of the website reserved for the IPO allotment status. 

• Step 3: Select the issue type and the company from the list. 

• Step 4: Enter your IPO application number or PAN in the respective field.
• Step 5: Click on the ‘I’m not a robot’ verification box and submit your request to find out whether you have been allotted shares in the company. 

You can also check if you have been allotted shares in a company by monitoring your bank account. In the case of successful allotment, the funds blocked in your bank account will be automatically debited. If not, the blocked amount will be released. 

Apply for IPOs Easily With Samco Securities

The tips to get an IPO allotment outlined in this article can help you diversify into the primary market easily. Furthermore, Samco Securities offers a comprehensive trading app designed to streamline your IPO investments. The app provides real-time updates on upcoming IPOs, so you can stay informed about new investment opportunities. 

It features a user-friendly interface for seamless IPO applications, and you can apply directly for an IPO through the app with your UPI ID. Open a Samco demat and trading account today to get unlimited access to all the features and more — at no extra cost.