Large numbers are going on and about to come. Very few have value in them. Not all IPOs are bad, so getting an allotment has become a tremendous task for investors. So let me share our learning – for the IPO Tricks to get allotment in IPO. Avoiding IPO mistakes done while applying & we will also burst some IPO Myths.

First, it is my fiduciary responsibility to tell you the real truth about IPOs.

Late Sh PARAG PARIKH in his book “Value Investing & Behavioral Finance” has dedicated an entire chapter on IPOs. He says –

• For an investor, IPO makes no sense. It is an event for the company, venture capitalists & promoters.
• The investment banks are appointed to keep & justify IPOs at the maximum price possible.
• IPO Company pays investment bank fees. So their responsibility is towards the company and not to investors.
• No promoter will like to dilute his share on “discount”.
• One should always keep in mind the historical performances of IPOs in the last 2 decades.
• Investor’s Greed is exploited in IPOs.
• Values are found in Bear Market and IPOs are a product of Bull Markets.

So, IPOs are maze but very few have value.

IPO Tricks to get maximum allotment

In reality, there are no IPO tricks to get maximum allotment. The entire process is airtight & auditable. The only thing in your hand is to –

– Apply IPO in name of your family member’s Demats. The more the application more chance that you have an allotment. it is like a lottery. More application increases selection probability.

– If you see your quota being oversubscribed, it is better to put one lot in the application. Because in this case, It doesn’t matter how many lots you apply for. An allotment is given for one lot only. So save money from being in Lock-in under ASBA.

– Avoid mistakes. Many investors lose out because they make mistakes while applying.

Avoiding IPO Mistakes in Application

These are:

• Do not apply from different Demat accounts with the same name. The application will be canceled as the system catches duplicate PAN numbers.
• Do not apply differently from individual and NII quota, the application will get canceled upfront.
• You can apply through any of your bank accounts but it is advised to use the bank account linked to your DEMAT.
• DO not use the UPI ID of the third person. Many banks do not allow this. Currently, rules say any UPI will do, but many banks (like Axis) do not allow third-party payments for IPO.
• Apply at cut off. If you are putting your own price, it is a high possibility that your application might not be selected. Cut-Off means, the price at which maximum applications are received by the Investment Bank.
• Avoid mistakes like – Invalid Demat or PAN details & incomplete information.

Some IPO Myths Busted

Some investors use IPO Tricks like applying for 1 lot from their own Demat, 2 lot from their spouse’s Demat, 3 lots from their child’s Demat, thinking they might be selected when Investment Banker selects based on the number of lots applied for. This is a myth. Only one lot is awarded allotment when IPO oversubscribe.

Few investors think that applying on day1 or last day has a better probability of getting an allotment. This is again a myth. It does matter as the bidding process is continued till the day of IPO closing. Then all valid applications are randomly chosen for allotment after mixing the application.

Some investors think that IPO means – to sell the allotment. No, where it is written that you have to sell on day 1 of listing. IPO Company is the same company which can offer good returns if held. Many recent examples like IRCTC, Avenue Supermart, etc have given good returns. Companies like HDFC Bank, Asian Paints were IPOs once. So check fundamentals also.

Hope you will benefit from the IPO Tricks, IPO Mistakes & the busted IPO Myths.

Share your question in the comments section. I promise we will revert to the best of our knowledge!