How to Increase Chances of IPO Allotment?

Investing in Initial Public Offerings (IPOs) is an exciting opportunity for investors in India to get in on the ground floor of promising companies. However, securing an IPO allotment can feel like a lottery due to high demand and limited shares. If you're wondering how to increase your chances of IPO allotment, this guide will walk you through practical, actionable strategies to boost your odds. By following these tips, using smart techniques, and understanding the Indian IPO system, you can improve your chances of success. Let’s dive into the world of IPOs and unlock the secrets to getting allotted shares in 2025!

What Is an IPO and Why Is It So Popular?

An Initial Public Offering (IPO) is when a private company offers its shares to the public for the first time to raise capital. In India, IPOs are a hot topic because they often provide an opportunity to invest in fast-growing companies at an early stage. Whether it’s a tech startup or a traditional business, IPOs attract both retail and institutional investors hoping to cash in on potential price surges post-listing.

The popularity of IPOs in India stems from their potential for high returns. However, the challenge lies in securing an allotment, as oversubscription is common. For instance, some IPOs in India, like those of Zomato or Paytm, were oversubscribed by several times, making allotments tough. So, how can you tilt the odds in your favor? Let’s explore the strategies step-by-step.

Understanding the IPO Allotment Process in India

Before diving into tips, it’s crucial to understand how IPO allotments work in India. The Securities and Exchange Board of India (SEBI) regulates the IPO process to ensure fairness. Here’s a quick breakdown:

Application Categories: IPOs are divided into categories like Retail Individual Investors (RII), Non-Institutional Investors (NII), and Qualified Institutional Buyers (QIB). Retail investors (investing up to Rs. 2 lakh) have a reserved quota, typically 35% of the total shares.

Lot System: Shares are allotted in lots (a fixed number of shares, e.g., 50 shares per lot). You apply for a specific number of lots.

Oversubscription: If applications exceed available shares, allotments are made via a lottery system for retail investors.

Pro-rata Basis: For NII and QIB categories, shares are allotted proportionally based on application size.

Knowing this, let’s explore how to maximize your chances of getting an IPO allotment.

1. Apply Early in the IPO Subscription Window

Timing is everything in the IPO game. Most IPOs in India are open for subscription for 3-5 days. Applying on the first day can give you an edge. Why? In case of oversubscription, some companies prioritize early applications for retail investors.

Pro Tip: Submit your application by 10 AM on the first day to ensure it’s processed early. Use online platforms like Zerodha, Upstox, or your bank’s net banking for quick submissions.

2. Use Multiple Demat Accounts

One of the most effective ways to increase your IPO allotment chances is by applying through multiple Demat accounts. SEBI allows individuals to apply for IPOs using different Demat accounts, as long as each account is linked to a unique PAN card. For example, you can apply through your own Demat account and those of family members (spouse, parents, or siblings), provided they have separate PANs.

How It Works:

Each Demat account is treated as a separate application.

If one account doesn’t get allotted shares, another might.

Ensure each account applies for the minimum lot size to stay in the retail category (up to Rs. 2 lakh).

Caution: Don’t apply multiple times from the same Demat account, as this will lead to rejection.

3. Apply for the Minimum Lot Size

In the retail category, IPO allotments are often done via a lottery system when oversubscribed. Applying for the minimum lot size increases your chances of being picked in the lottery. For instance, if the minimum lot is 50 shares, applying for one lot keeps you in the retail quota, where the odds are better than in the NII category (for investments above Rs. 2 lakh).

Why It Helps:

Smaller applications are more likely to be allotted at least one lot in a lottery system.

Larger applications in the retail category don’t guarantee more shares if oversubscription is high.

Check the IPO prospectus or your broker’s app to find the minimum lot size.

4. Leverage the ASBA Facility

The Application Supported by Blocked Amount (ASBA) facility is mandatory for IPO applications in India. It allows your bank to block the application amount in your account without debiting it until allotment. To maximize your chances:

Ensure sufficient funds are available in your linked bank account before applying.

Use multiple bank accounts with different Demat accounts to diversify your applications.

Verify that your bank supports ASBA for seamless processing.

Popular banks like SBI, HDFC, and ICICI offer ASBA services through net banking or mobile apps.

5. Apply Through UPI for Faster Processing

Since 2019, SEBI has made UPI a mandatory option for retail investors applying for IPOs. Using UPI streamlines the application process and reduces errors. Here’s how to do it right:

Link your UPI ID (e.g., via Google Pay, PhonePe, or BHIM) to your Demat account.

Ensure your UPI ID is active and linked to the bank account used for ASBA.

Double-check the UPI ID during application to avoid rejections.

Fun Fact: UPI-based IPO applications have a lower rejection rate compared to traditional methods, as they’re processed faster.

6. Avoid Common Application Mistakes

Even a small error can lead to your IPO application being rejected. Here are common mistakes to avoid:

Incorrect Details: Ensure your PAN, Demat account number, and bank details match.

Multiple Applications from One PAN: This leads to automatic rejection.

Insufficient Funds: Your bank account must have enough funds for the ASBA block.

Late Applications: Missing the subscription deadline (usually 5 PM on the last day) voids your application.

Double-check your application before submitting to avoid these pitfalls.

7. Target Less Hyped IPOs

Highly publicized IPOs, like those of big brands, often attract massive oversubscription, reducing your chances of allotment. Instead, consider applying for IPOs of smaller or lesser-known companies with strong fundamentals. These IPOs may have lower subscription rates, increasing your odds.

How to Spot Them:

Research the company’s financials, such as revenue, profit margins, and growth potential.

Check the subscription status on NSE or BSE websites during the IPO window.

Look for IPOs in niche sectors like renewable energy or healthcare, which may be less crowded.

8. Apply in the Retail Category Only

The retail investor category (investments up to Rs. 2 lakh) is your best bet for securing an IPO allotment. Why? SEBI mandates that 35% of IPO shares are reserved for retail investors, and the lottery system ensures fair distribution. Applying in the NII category (above Rs. 2 lakh) reduces your chances, as it’s often oversubscribed by high-net-worth individuals.

Quick Tip: Stick to the retail quota unless you’re a high-net-worth investor with a large capital base.

9. Monitor Subscription Status

Keeping an eye on the subscription status during the IPO window can help you strategize. If an IPO is heavily oversubscribed on the first day, your chances of allotment decrease. You can check real-time subscription data on the NSE or BSE websites or through your broker.

What to Do:

If the IPO is undersubscribed, apply for the maximum allowed lots in the retail category.

If oversubscription is high, focus on applying early with the minimum lot size.

10. Use HNI Category Strategically (If Eligible)

If you have access to significant capital (above Rs. 2 lakh), applying in the Non-Institutional Investor (NII) category can be an option. However, this category is often oversubscribed by high-net-worth individuals and firms. To improve your chances:

Apply for a higher number of lots to increase your pro-rata share.

Use shareholder quota if you hold shares of the company’s parent or group entity (if applicable).

Be prepared for partial allotments, as NII shares are distributed proportionally.

Note: The NII category is riskier due to higher competition, so weigh your options carefully.

11. Consider the Shareholder Quota

Some IPOs reserve a portion of shares for existing shareholders of the parent company or group entities. If you hold shares in the parent company, you can apply under this quota, which often has lower competition.

Example: If a subsidiary of Tata Group launches an IPO, existing Tata Motors shareholders may get a reserved quota. Check the IPO prospectus for details.

12. Stay Informed About Market Trends

Keeping up with market trends can help you pick the right IPOs. Use reliable sources like Moneycontrol, Economic Times, or BSE/NSE websites to research upcoming IPOs. Join investor communities on platforms like X to gauge market sentiment.

What to Look For:

Strong company fundamentals (revenue growth, low debt, and profitability).

Reasonable IPO valuation (avoid overpriced IPOs).

Positive industry outlook (e.g., green energy or fintech).

13. Be Patient and Persistent

Securing an IPO allotment is a numbers game. You may not get allotted shares in every IPO, but persistence pays off. Apply consistently across multiple IPOs, especially less hyped ones, to improve your overall success rate.

Motivational Tip: Think of IPO applications like planting seeds—some will grow, and others won’t. Keep planting!

Frequently asked questions

Q1: Can I apply for an IPO through multiple brokers?
Yes, as long as you use different Demat accounts linked to unique PANs. Using the same PAN across brokers will lead to rejection.

Q2: How do I know if I got an IPO allotment?
Check the allotment status on the registrar’s website (e.g., Link Intime or KFin Technologies) using your application number or PAN.

Q3: What happens if I don’t get allotted shares?
The blocked amount in your ASBA account is released within 5-7 working days.

Q4: Is it better to apply for more lots?
In the retail category, applying for the minimum lot size is better for lottery-based allotments. In the NII category, applying for more lots may increase your pro-rata share.

Q5: Can I modify or cancel my IPO application after submission?

You can modify or cancel your IPO application before the subscription window closes, provided your broker or bank allows it. Log in to your broker’s platform or net banking, navigate to the IPO section, and select the option to edit or cancel. However, changes may not be possible after the final submission deadline (usually 5 PM on the last day). Check with your broker for specific instructions.

Conclusion: Securing an IPO allotment in India requires a mix of strategy, timing, and persistence. By applying early, using multiple Demat accounts, sticking to the retail category, and avoiding common mistakes, you can significantly improve your chances. Keep an eye on less hyped IPOs, leverage tools like UPI and ASBA, and stay informed about market trends. While there’s no guaranteed formula, these tips will put you ahead of the curve.