Where INVESMATE is already expecting a good chance in the Grey Market Premium (GMP) for further IPO releases, we think this is the correct time to educate those investors who missed the chance of the previous IPO disbursement for some reasons.
With these types of IPO insurance, what we see most of the time is that an investor desires to apply with his/her several Demates accounts in the hope of getting more IPO Lots of the company. But in most cases, even after these many applications, the investor can’t manage to get an IPO lot. That is because we, the retail investors, unknowingly make some mistakes while applying for an IPO, which, as a result, decreases our chance of getting it.
Here are some sure yet simple steps that we hope will help you the next time you wish to enroll in an IPO. 👇
But before that, let us understand exactly what an IPO is.
An IPO is a process in which a company declares itself a public company by offering its shares to the general public (the citizens of a country) for the first time, after which it enlists its shares on the stock exchange.
Here, many of us think that getting an IPO is all about luck since the whole process is conducted through a lottery system. In this case, if you follow a certain procedure discussed in this blog, you can greatly increase your chances of getting an IPO without any extra effort.
Let’s Dive Deep
Avoid Applying Large Amounts
As we know, the system of the Securities and Exchange Board of India (SEBI) is similar for all retail investors (capital less than 200,000); therefore, even if you submit a substantial application of 1 lakh, you may not be considered for oversubscription, as we know that if an IPO is oversubscribed, then at least one lot is allotted to each applicant who applied for it first. So we don’t see a suitable point for applying more than one lot, because no matter If you get selected in the lottery system, you will only be eligible for that one lot—not more than that. But suppose an IPO size is very large and the retail section may not be oversubscribed easily, then you can apply for more lots, and if they are available, you will definitely get the lot you applied for.
Applying multiple times with different demat accounts
Another wrong notion about IPO application is that if we apply from different demat accounts, then our chances of getting the IPO increase, which is completely wrong information because, in the lottery system through which the whole process gets conducted, and here
one PAN number is treated as one lottery.
Pro TIP: So in this case, you can open several demat accounts in the names of others in your family and apply for it. If you apply with separate PAN numbers, the chances of getting an IPO will increase.
Bid at a Cut-Off Price
Earlier is Better. Don’t Wait for the Last Moment
Must Avoid Mistakes While Applying For an IPO
- While filling out the IPO application form, you have to be careful with the bid amount or bid price because the wrong information may cause your IPO application to be rejected.
- Also, while filling in the bank details, ensure you are giving the correct information. Also, recheck the other information, like name, amount, DP ID etc.
Approve the Bank Mandate Request
Hold the Shares of the Parent Company
This is another hack that can be beneficial for your IPO investment opportunity: holding at least a share of the parent company. In that case, you can easily apply under the shareholder category. But remember, not all IPOs employ this strategy.
Whereas this can be a simple way to increase your chances of getting an IPO through shareholder quota, if the listed company wants to list its internal company separately, then there will be a separate quota for the shareholders of the parent company, from which they can avail the opportunity very easily as the competition is very low there.
So if you want, you can apply for the shareholder quota of that company by buying it on the stock market.
Very informative