If you are someone who dabbles in IPOs and have waited for your IPO allotment, you could perhaps understand the anxiety and nail biting wait for the opening of bookings of the ColdPlay India Tour. It was a long and tedious wait with over 1 crore fans trying to buy tickets for the Mumbai shows. The wait for IPO allotments is no less tiring and even more uncertain. Given the fact that the number of investors applying for an IPO is significantly more than the shares on offer, in the retail category, the allocation is made randomly using a computerized lottery system.
What happens when you don’t get an allotment? Well, the risks are pretty much similar. Just like you are now waiting for potential fans selling the ColdPlay India Tour tickets at a marked-up price, you can hope to buy the shares after the company gets listed. Of course the listing price is in general at a premium (based on the fundamentals and subscription rate of the issue).
The ColdPlay tour might be a once-in-9-years phenomenon but in case of the primary market there is always the next big issue coming up. However, before you apply for the next share issue, here are some handy trick on how you can improve your chances at snagging an IPO
Here are 6 tips to improve your chances to get an IPO allotment
- Don’t put all your eggs in one basket – All retail applications under Rs 200,000 have an equal weightage. In that case, it is a better idea to divide your total planned investment. You can apply across multiple IPOs with minimum bids. This approach helps you to bet on more than one IPO and not block your funds in one issue. Large bids work only in case of large IPOs where there are greater chances of the retail portion remaining undersubscribed.
- Make multiple bids for same IPO: Even with smaller bids, the way you can improve your chances at an allotment are applying through multiple demat accounts. Applications from more than one demat account is particularly helpful if the issue has a brisk subscription rate. In this case, the chances of at least 1 of the applications getting allotted increases significantly.
- The price level matters: When applying for IPO allotment in the retail space, it is always a good idea to apply at the higher end of the price band or the cut-off price. In case of an oversubscription, the IPO applications that are quoting lower don’t stand much of a chance for allocation.
- Apply on time: If you are keen about applying for an IPO, it is always a good idea to apply as early as possible. Applying at the last minute significantly reduces the chance of allotment. Also in case there are technical glitches, it reduces the scope and instances when you could try again.
- Be careful while filing application: Be very careful while filling the IPO application form. It is an important step but best not done in hurry. If there are any mistakes of potential inaccuracies will lead to the application being rejected and thereby cancelling chances of allotment.
- Patience pays: IPO investment is all about discipline and persistence. Patience is crucial and will help you plan and make informed decision. Focus on the long-term objective and follow trends. Be patient in making notes and then be mindful about applying the lessons learnt in previous issues in current applications.
September busiest month for IPOs in 14 years
The primary market has been buzzing with action and these steps will surely help you enhance the chances in getting allotment for IPOs that have opened now. September has seen a record number of IPOs. In fact the RBI monthly bulletin mentioned that September has been the busiest month for IPOs in 14 years with nearly 28 companies entering the stock market. From the start of the financial year in April till date, India has seen the highest issuances globally. This along with qualified institutional placements helped raise close to Rs 60,000 crore in the first eight months of 2024.
Many of these listings were multibaggers delivering 100% return on listing day. Bajaj Housing Finance stands out amongst the stellar performers in September. Other prominent IPOs this month with double digit gains on listing day include Ola Electric, PN Gadgil, Premiere Energies and many others.
What about the Coldplay Tour?
Well, the price for an average IPO lot size is equivalent or slightly less than a ticket for the Coldplay Concert. For those of you who have not yet managed one, there are a host of other musical concerts coming up including one by Bryan Adams. Also if September was anything to go by, the IPO scenario gets even more exciting with Hyundai Motor India IPO, HDB Financial IPO and Athe IPO in the pipeline.