Increase IPO Allotment Chances: Proven Strategies for Investors

Increase IPO Allotment Chances: Proven Strategies for Investors

Not gaining allotment in popular IPOs like Bajaj Housing Finance IPO or Waaree Energies IPO especially giving massive listing gains is tragic for investors. If you have been through that, you're not the only one. It's time to cheer you up as there are some ways to boost your chances for IPO allotment. Let's know how you can increase IPO allotment chances.

This will be talking about the probability-based approach to IPO application, what it means, and how to interpret it in making good decisions, depending on which investment category you belong to. Set your mind and gear up with a pen while reading math at the same time.

 

Detailed Video

 

 Types of IPO Allotments in Different Categories

1. Retail individual investor (RII): A maximum of Rs.2,000,000 could be invested. Designed for small individual investors.

2. Small High Net Worth Individuals (HNIs): The measure of investments is Rs.2,000,000 to Rs.1,000,000. Appropriate for the middle-tier investors.

3. Large HNIs: Minimum investment is Rs.10 million. It's meant for big investors.

Why Small HNIs the Worst Category for IPO Allotment?

To maximize their chances, most of the investors having a budget between INR 4-5 lakh generally apply in this Small HNI category.

This is a general mistake. Let's understand this with a simple example from Waaree Energies IPO subscription data. 

Small HNI Category- 53x.  

Retail Category- 11x.  

Big HNI Category- 71x.

So, it seems Small HNI is less competitive than Big HNI, but the actual math states a different picture: 

How the Big HNI Subscriptions Are Calculated

In Big HNI, the minimum application size would be 10 lac, and allotment has thus been done just for the first Rs.2 lakh, while the rest goes to over-subscription calculations.

Thus, effective subscription = Total Subscription ÷ 5.

For Waaree Energies,

Big HNI effective = 71 ÷ 5 = 14x. 

This means allotment chances in Big HNI (14x) are much more than in Small HNI (53x). 

Thus, comparing allocation probabilities:

Here’s the Waaree Energies allotment probability data-wise:

Retail: 1 in 11 applications

Small HNI: 1 in 53 applications

Big HNI: 1 in 14 applications

Cut-Off:

Invest > Rs.10 lakh: Apply in the Big HNI category. 

< Rs.10 lakh: Stick to the Retail category and maximize your chances by applying through multiple Demat accounts (one application per PAN card).  

Common Mistakes to Avoid 

1. Don’t give multiple Applications on the Same PAN Card: 

Given the way things are, there will be no processing of the result of such applications into the IPO.

2. Be Patient with UPI Mandates:

Don't get into undoing and re-initiating your application at this time since this could altogether disqualify your application for impossible processing. 

3. Always Apply at the Cut-Off Price:

Choose the top price band of your bid, since normally companies are not expected to allot shares to an applicant based on a lesser price. 

 

Tips to Increase Your IPO Chances:

• Use family member Demat accounts with unique PANs to apply.

• One thing you must do before the actual deadline as a rule: always watch the subscription statistics just before the application closure date.

• Be careful to diversify your application among several IPOs. This is the approach for maximizing your allocation chances.
  
  

Final Thoughts:

If you can fully understand the finer details of IPO allocation categories and apply probability, you will have a great advantage in increasing your chances of success. Whether you are a big HNI or an individual retail investor, it matters your investment capability and your plan alignment.

Disclaimer: No buy or sell recommendation. No trading or investment advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.