Missed IPO allotments? How to Increase the Probability of Being Allotted an IPO: Despite the prevailing upward trend in the stock market, corporations are increasingly venturing into it through the initiation of initial public offerings (IPOs) to secure capital. Amid the soaring stock market, substantial investor participation is also observed in the primary market, where they anticipate substantial returns. Nonetheless, because the number of applications for IPOs significantly exceeds the size of the offer, the majority of investors withdraw their investments without allocating capital, as was the case with the DOMS Industries IPO.
Experts advise investors to apply via multiple demat accounts and to research IPO quotas for various categories before applying to increase their chances of receiving shares in an initial public offering (IPO).
Sunil Shah, director and group CEO of Khambatta Securities Ltd., advised prospective investors seeking gains from forthcoming initial public offerings (IPOs) to employ a strategic methodology to improve their likelihood of securing shares. Generally speaking, investors are classified as retail, non-institutional, institutional, or incurred.
“As the IPO bidding process continues to evolve, investors are advised to conduct a thorough analysis of the allocation portion for retail and non-institutional categories,” he advised. An increase in quota increases the likelihood of successful allocation.
Quotas of up to 50% are allocated to qualified institutional buyers (QIB), 15% to non-institutional investors (NIIs), and 35% to retail investors, respectively, for initial public offerings (IPOs).
Retail investors consist of individuals who submit applications for an amount of Rs 2 lakh or less. High-net-worth individuals (HNIs) who invest more than Rs 2 lakh are known as NIIs. Small NIIs (sNIIs) invest between Rs 2 lakh and Rs 10 lakh, while large NIIs (bNIIs) invest over Rs 10 lakh.
Signature Global IPO: GMP, subscription status, other details
QIBs include mutual funds, pension funds, FIIs, and provident funds, among others.
An anonymous market participant stated, “The likelihood of IPO allocation is greater for bNIIs (greater than Rs 10 lakh).” In the event of oversubscription in this sub-category, applicants are eligible to receive a minimum of Rs 2 lakh in sNII applications, contingent on the availability of equity shares in the bNII portion.
Apps should be distributed to family members.
An application for 10 units in an IPO using a single demat and PAN number is regarded as a single application. However, if ten lots are applied for individually using the demat and PAN numbers of different family members, it is regarded as ten distinct applications, which increases the likelihood of allocation.
“Distributing applications among family members increases the likelihood of securing shares,” stated Sunil Shah. By employing this strategic approach, the likelihood of success in the process of allocating IPOs is increased. “Before deciding where to apply, investors should pay close attention to the number of shares available and examine each offering thoroughly.”
In the competitive world of initial public offerings, he stated that investors can increase their chances of being granted shares by adopting these practices and making well-informed decisions.
According to the market participant, it is advisable to utilize multiple demat accounts instead of relying solely on one. As the quantity of Demat accounts increases, so do the probabilities of allotment.
He stated that the likelihood of a retail investor receiving an IPO allotment in the DOMS IPO was one in every 52 applications.
Should You Blindly Follow GMP?
The term “grey market premium” (GMP) denotes the willingness of investors to pay a premium over the issue price. It is constantly shifting and determined by market sentiment.
“Investors should not be swayed by the grey market premium surrounding an initial public offering (IPO), as it may be manipulated to attract their attention at some point,” Sunil Shah advised. Additionally, it is not prudent to apply for an IPO at random simply because market sentiment is optimistic at the moment.
He advised investors to register after conducting a thorough analysis of the company’s fundamentals. “One should not be disheartened about missing out on an IPO share, as the majority of stock prices stabilize within a few days of their initial public offering.” Thus, ultimately, after listing, there is a chance to invest in a company that possesses sound fundamentals.
InoxCVA IPO Ends Today: Subscriber’s Guide to GMP and Status
