Here Is Why You May Not Get An IPO Allotment
Here Is Why You May Not Get An IPO Allotment Retailers' participation in IPOs has gone up sharply in the past few years. India's IPO craze lasted through the first quarter of 2022. This article is for people who tried to get IPO shares during this time but didn't get them. Even though investors can apply for an IPO, this does not guarantee that they will get shares in the IPO. But if it happens again and again, you need to find out why. When it gives out IPO shares, a company tries to get investors to fill out applications. When investors bid on an IPO, they should keep in mind these conditions, which may include lot size, bid price, and more. If you want to get started on the stock market today and are on the lookout for the best stock trading apps, look no further than Zebull Smart Trader. It makes online stock trading simple and effective. Why do people put money into IPOs? An initial public offering is a way for a company to get money from the market. Simply put, an IPO is a process by which a company that is privately owned becomes a company that is traded on the stock market. An IPO is a way for a company to get the money that it can use to run or grow. So, it makes it possible for investors to put money into a business while it is still young. Initial public offerings have always given investors great returns, which is why people are so excited about them now. Here are a few reasons why you might not have received an allotment Oversubscription and the lottery When a company does an IPO, the price range and number of shares are set. IPO shares are sold to three different types of buyers: qualified institutional buyers, non-institutional buyers, and retail buyers. Each section has a certain number of shares given to it. When more investors sign up for a class than there are available scrips, this is called oversubscription. If there are too many people who want to buy shares, they are given out through a computerised lottery system. Since there were more investors who wanted to buy shares than there were shares available, not all of them will get one. Problem with the application The registrar checks each application to make sure it is correct and has everything it needs. Your application could be turned down if you gave wrong information or if some forms are missing. Bid price During an oversubscription, the final issue price is set by the company based on the bids investors submit. If your bid price is lower than the price of the issue, you won't get any. How to improve your chances Fill out the application correctly Make sure that all the information on your application is correct before you send it in. Most IPO allocation rejections happen because forms are not complete or are wrong. Don’t make your application large Even if you have a big application, that doesn't mean it will be accepted for IPOs. SEBI has made rules to make sure that all applicants are treated the same. Apply by a certain date If you apply at the higher end of the price range, you have a better chance of getting an allotment. If you apply before the deadline, you have a better chance of getting shares in a book-building IPO, in which the price of the shares is set after all the applications are in. Don't wait until the last minute to apply. On the last day, don't rush, because a lot could go wrong in the last few seconds. Invest in the main company If you own part of the parent company, your chances will be better if you apply as a shareholder. Conclusion Before applying for IPO shares, it's important to look over the company's prospectus. It is an important document with all the necessary information. We hope this article has helped you better understand why shares in an IPO weren't given out. Open a free demat account with Zebu so that you can apply for upcoming IPOs and increase your chances of getting shares. If you want to start trading on the stock market today and are looking for the best stock trading apps, Zebull Smart Trader is what you need. It makes online stock trading easy and effective.