How to Increase IPO Allotment Chances?

Investing in IPOs is an opportunity for investors to gain early access to a company's share before they are listed on the stock exchange. But here's the caveat: depending on under or over-subscription, an investor may or may not get all the shares they bid for, allotted to them. Or even none at all. To increase the chances of allotment, an investor may apply through multiple PAN-linked Demat accounts and apply in the right category. This article discusses in detail how to increase the chances of IPO allotment.  

What is IPO Allotment?

IPO allotment refers to the allocation or distribution of shares to investors who apply for   them during an Initial Public Offering (IPO). The allotment process is determined by the Registrar in consultation with the Exchange. It typically takes place 3-4 days after the IPO bidding period ends. The shares are distributed based on the number of bids received and the total shares available, following the rules set by regulatory bodies. 

Strategic Approach for IPO Stock Allotment

Let’s understand how to increase the chances of getting IPOs allotted. The following are some IPO allotment tips you can follow:  

Use Multiple Demat Accounts from Family Members 

To improve your chances of getting an IPO allotment, family members with valid PAN-linked Demat accounts can apply separately, which together increases the overall chances of getting shares. As per the Securities and Exchange Board of India (SEBI), each PAN can only submit one IPO application. When you apply through multiple eligible family accounts, like those of your spouse, parents, or adult children, you multiply your chances of getting at least one allotment. You just need to make sure that the application is linked to a unique PAN. If there is any duplicate PAN use, then it will be rejected.  

Always Choose the Cut-Off Price Option 

If you are a retail investor, then always opt for the “cut-off price” instead of entering a specific bid price. This means you're willing to pay the final price decided by the company, which boosts your eligibility for allotment. If your bid price is lower than the final issue price, then your application might get rejected. 

Maintain Sufficient Bank Balance and Enter Correct Details 

The Application Supported by Blocked Amount (ASBA) blocks your amount until the shares are allotted. If there isn’t sufficient amount at the processing time, then your application might not be considered. Also, make sure all the information you add related to PAN, bank account, and Demat is correct. Even a small typo can lead to disqualification. Double-check everything before you submit. 

Use the ASBA Facility via Net Banking 

You can use the ASBA facility, as it allows you to apply for IPOs without immediately transferring funds. If the shares aren't allotted, the blocked capital is easily released. There are many banks that offer ASBA through their net banking platforms, making the process smooth, secure, and hassle-free.  

Don’t Apply for Large Quantities in Popular IPOs 

There's one thing about IPOs that every investor should know: when the IPOs get oversubscribed in the retail category, applying for more lots does not increase your chances of allotment. In such cases, it is suitable to apply for just one lot from each eligible Demat account. This might increase your possibility across multiple allotment rounds rather than relying on one large application. 

Track Key IPO Dates and Apply Early 

This is an important trick for IPO allotment. Always keep track of important IPO dates like opening and closing days, price bands, and listing timelines. Applying early doesn’t improve chances statistically, but it helps avoid technical errors or banking issues on the closing day. You can set reminders or subscribe to IPO alerts through your broker or financial app. 

Use Different Brokers or Banks for Multiple Applications 

Technical issues and delays are common on specific broker platforms. To avoid such issues, you may apply through different brokers or banks for each Demat account. There are many brokers with stable backend systems or faster integration with IPO registrars. This potentially leads to better processing speed and success. 

Watch Anchor Investor Activity 

Anchor investor activity does not impact your allotment chances, but it can serve as a useful indicator of the IPO’s market confidence and potential strength. 

How to Calculate the Probability of an IPO Allotment?

Now that you know how to increase IPO allotment chances, let's understand how to calculate the probability of an IPO allotment. Here is an example: 

• Total Shares: A company is offering 5,00,000 shares in an IPO. 

• Number of Applicants: There are 20,000 applicants. 

• Lot Size: Each lot consists of 10 shares. 

• Retail Quota: 50% of the shares are reserved for retail investors. 

By using the above data, follow the steps to find the probability of IPO allotment, which may help you understand how to increase your chances of getting an IPO allotment. 

Step 1: Calculate Total Demand 

If 20,000 applicants apply for the IPO and each applies for 1 lot (10 shares), the total demand becomes: Total Demand = 20,000 × 10 = 2,00,000 shares  

Step 2: Determine the Retail Quota 

Out of 500,000 total shares offered, 50% are reserved for retail investors. So, the Retail Quota = 50% of 5,00,000 = 2,50,000 shares 

Step 3: Calculate Oversubscription Ratio 

Now, divide the total demand by the retail quota to get the oversubscription ratio: Oversubscription Ratio = Total Demand / Retail Quota = 2,00,000 / 2,50,000 = 0.8 

Step 4: Probability Calculation 

As the demand is less than the available retail quota, this means that every applicant is likely to get an allotment. To be more precise: 

Total available lots = 2,50,000 / 10 = 25,000 lots 

Applicants = 20,000 

So, the allotment is possible for all, and some may even get more than one lot (if allowed). 

Probability = 100% 

In this example, the IPO is undersubscribed in the retail category, so every applicant has a high possibility of receiving at least one lot of shares. 

Conclusion

Applying for an IPO is a straightforward process for retail investors. Choosing the right bid option, ensuring correct details, and maintaining a sufficient bank balance increase your allotment chances. Submitting one-lot bids through family Demat accounts can further boost your progress possibility. Tracking key IPO metrics and deadlines is equally important. With a strategic approach, investors can strengthen their market participation and explore new investment opportunities confidently.