Have you applied to participate in the IPO allotment of LIC? Have you been allotted the LIC initial public offering (IPO)? Even though the Second Day of the IPO was oversubscribed, you should not be disappointed if you did not win. You are still in luck since LIC shares started trading at a reduced price on day one.
Whether you have had past IPO success or not, we will reveal some of the most tightly guarded secrets and techniques to boost your chances of success in the upcoming IPO in India, regardless of your prior IPO success.
How are shares allotted through an IPO allotment?
There is no such thing as first come, first served when distributing IPOs. The allocation process is affected mainly by investors’ reactions to the IPO. Following are the stages involved in the distribution of IPO shares:
- After the completion of a company’s IPO, any incorrectly filed, invalid bids will be eliminated from consideration using an online system.
What went wrong with the bid? The three most likely causes for your absence from the share allocation are as follows:
- An incorrect Demat account number
- The wrong PAN account number
- You submitted numerous applications from the same Demat account
- If the total number of bids submitted by applicants is less than (considered undersubscribed) or equal to the number of offered shares, the stock will be assigned entirely. Therefore, all applicants who apply will get shares.
- More preparation is needed for the allocation method if applicants’ bids exceed the number of available shares (also known as being “oversubscribed”).
There are two types of oversubscription. The two varieties are as follows:
1. Small oversubscription
SEBI has mandated that all applicants for a lot get at least one bid if it is oversubscribed. During this, all applicants will get the minimum lot. Therefore, they will be divided proportionally to their multiple-lot proposals.
2. Large oversubscription
A random lottery will be used as the allocation mechanism if there are too many applications to distribute even one lot to each applicant. The lottery will be entirely computerized, eliminating the possibility of human error.
As a result, the lottery technique will not choose all of the names in a significant oversubscription, limiting access to many applications.
The Tips And Tricks
The following are best-kept approaches and strategies provided from best trading app in India while competing for the upcoming initial public offering (IPO):
- SEBI treats all retail applications (under Rs 200,000) equally. In circumstances of oversubscription, big applications are rendered useless.
For oversubscribed IPOs, use multiple minimum bids across numerous Demat accounts. It makes acquiring more bids easier.
- Instead of using one Demat account, use many to submit your maximum offer. For heavily subscribed IPOs, you must apply from several Demat accounts. Multiple applications from several Demat accounts increase the likelihood of an IPO allocation.
- Investors misunderstand the significance of bid and cut-off prices. The investor is prepared to pay whatever price the company sets after the book-building process, known as the “Cut-off price.”
After applying at Cut off, the investor must bid at the highest price range. They return the excess if the Cut-off price is lower after the IPO concludes.
- Suppose you’ve chosen to file for an IPO, file it on the first or second day. If an investor applies on the final day, huge HNI and QIB subscriptions or other technological concerns may cause bank account complications. It ensures that investors do not miss the IPO.Â
- The safest approach to apply for an IPO is via ASBA. You may apply for ASBA via your bank but double-check the information beforehand.Â
- Using your Demat account to purchase a parent or holding business share might aid your IPO. It might guarantee the “shareholder category.”
- Make numerous Demat applications. You may file many IPO applications through these multiple Demat applications but using only one PAN.Â
You may even have relatives and friends apply for the same IPO on your behalf. Having many Demat accounts might help you get an allocation.
- New IPO investors often make this error. They file an IPO application and consider their job done.
IPO applicants get a mandate request. The banking app or website must accept this request. It is impossible to freeze your money without authorization, and your application for IPO will be invalid.
- Complete the IPO form in the same manner as any other official application or submission.
Check the correctness of your name, Demat account number, category, and other form inputs. Incorrect information and mistakes lead to rejections of IPO applications.
- Consider smaller quantities if there is an oversupply because the lower bids may win.
The Final Word
The perception that initial public offerings are a lottery is accurate. Try applying this approach to a lucky draw if you’re having difficulties grasping the preceding recommendations, and you’ll realize how easy it is.
We hope you use all of these recommendations and get lucky at the forthcoming IPO in India.
