How to Increase Chances of IPO Allotment

An Initial Public Offering (IPO) is often seen as a golden opportunity for retail investors to invest in companies before they’re listed on the stock market. When demand exceeds available shares, getting an allotment becomes a matter of luck. However, you can still work towards increasing your chances of receiving an IPO allotment. But how to do it?

In this blog, we’ll cover how to increase the chances of an IPO allotment, along with the key factors that influence the process and the common mistakes investors should avoid.

How to Increase the Chances of An IPO Allotment?

Here are some of the ways you can use to maximise your chances of getting an IPO allotment:

Note: While the following methods are said to increase the chances of an IPO being allotted, they do not guarantee an IPO allotment.

1. Try Applying Through Multiple Demat Accounts:

One of the best ways to increase your application count is by opening a demat account of an eligible family member and use for applying. Each application must be linked to a unique PAN number. It is important to remember that multiple applications from the same PAN will lead to rejection.

For example, if your spouse or family members each have a Demat account with a different PAN number, you can apply separately in all accounts to improve your chances.

2. Consider Bidding at the Cut-Off Price:

When applying for an IPO, choosing the cut-off price ensures that the bid is being considered at the highest price within the band. Retail investors are allowed to select this option, and it signals a willingness to pay the final issue price. Selecting the cut-off price helps to avoid rejection due to an incorrect price bid and ensures your application qualifies even in fully subscribed IPOs.

3. Apply for a Single Lot:

Instead of applying for multiple lots, applying for a single lot can actually increase your chances of allotment in heavily oversubscribed IPOs. When demand exceeds, the lottery system used for retail investors often favours applicants requesting fewer shares, as it allows the allotment to be distributed more widely.

Bidding a single lot size reduces the probability of being left out entirely in case of oversubscription. It works well for small retail investors aiming for at least some allocation.

4. Avoid Applying at the Last Minute:

Several investors tend to apply for an IPO on the final day and even the final few hours, which increases the chances of technical errors, UPI delays, and payment failures. Applying early can help you reduce the risk of application rejection and allow time to correct mistakes, if any. Even though IPO allotment is random, early applications are less likely to face last-minute glitches.

To apply early for an IPO -

• You can check the IPO subscription dates and set reminders to apply early
• You can use the pre-apply IPO feature to put in your IPO application early and avoid technical delays

5. Use ASBA Whenever Possible:

ASBA (Application Supported by Blocked Amount) is considered safer and more reliable than UPI-based applications. When you apply via net banking using ASBA, the application amount remains blocked in your account until allotment is finalised.

Why ASBA is effective:

• Lesser chances of payment failure
• Smooth processing by banks
• No accidental fund shortfalls

UPI delays are one of the common reasons why IPO applications get rejected.

6. Keep a Sufficient Balance in Your Bank Account:

Applications often get rejected due to insufficient funds at the time of blocking. Whether applying through ASBA or UPI, you must ensure that your bank account has the required balance. Maintain slightly higher than the required amount to avoid accidental shortages due to automatic debits or payments.

7. Track Oversubscription Trends:

Before applying for an upcoming IPO, check how many times the IPO is subscribed by each investor category. You can track updates on stock exchange websites and financial platforms. Highly oversubscribed retail categories reduce the probability of getting shares. If eligible, applying under HNIs, employee, or shareholder categories may help for selected IPOs.

Strategic application improves your allotment odds, especially when you’re competing with lakhs of applicants.

How IPO Allotment Actually Works?

Understanding how IPO allotment works can help you apply more effectively.

• Application Submission: Retail investors submit their IPO applications through their Demat account during the subscription period, choosing a bid price (usually the cut-off price).
  
• Categorisation: Applications are grouped based on investor type: Retail Individual Investors (RII), Qualified Institutional Buyers (QIB), Non-Institutional Investors (NII), and Employees (if applicable).
  
• Checking Validity: The stock exchange verifies applications for correctness, sufficient funds, and unique PAN numbers. Invalid or duplicate applications are rejected.
  
• Allocation in Retail Category: If the IPO is undersubscribed, all valid applicants get shares in full. If the IPO is oversubscribed, a lottery system is used to allocate shares. Each valid application is treated equally, regardless of the amount applied (for retail investors).
  
• Proportionate Allocation (if applicable): In some cases, allotment may be done proportionally based on demand.
  
• Final Allotment & Refund: Shares are allotted to successful applicants, and the corresponding amount is debited from their bank account (or released if ASBA was used). Unsuccessful applicants get refunds.

Myths Around IPO Allotment

Several misconceptions misguide new investors. Let’s debunk a few:

Myth 1: Applying with higher amounts increases allotment chances

Reality: In the retail category, every application has equal weight regardless of amount.

Myth 2: Applying on the first or last day ensures allotment

Reality: All valid applications are treated equally. Timeliness helps only to avoid technical errors.

Myth 3: Linking multiple bank accounts boosts eligibility

Reality: Only one application per PAN is allowed.

Myth 4: Certain brokers guarantee allotment

Reality: No broker or platform can influence the lottery system.

Myth 5: Small IPOs are not worth applying for

Reality: Some small IPOs offer strong listing gains due to lower participation and better valuation.

Conclusion

Getting an IPO allotment involves both strategy and a bit of luck. While there’s no guaranteed way to secure shares in oversubscribed IPOs, following the right approach can significantly improve your chances.

Remember, IPOs should be part of a disciplined, long-term investment strategy rather than a get-rich-quick approach. While strategic applications help, the lottery-based allotment process means that luck still plays a role. Focus on fundamentals, diversification, and consistent investing beyond IPOs to build wealth steadily.

FAQs

1. Can I Apply For An IPO Without A Demat Account?

No. A Demat account is mandatory because shares are allotted electronically. You can apply using someone else’s account only if the PAN and Demat details match.

2. Does Applying on The First Day Improve Allotment Chances?

Not directly. All valid applications are considered equally. However, applying early reduces the chances of payment failures and technical rejections.

3. How Many IPOs Can I Apply for Simultaneously?

You can apply for as many IPOs as you want, provided you meet eligibility and have sufficient funds in the linked bank accounts. Each application must follow SEBI norms and Demat account guidelines.