Unlock the Secret to SME IPO Allotment Success

Investing in IPOs can be rewarding for investors in several ways. For instance, it helps you diversify your portfolio; you get to invest in new and big companies that may help you make big returns and much more. SME IPOs can be a great way to seize and earn profits from the growth potential of small and mid-sized enterprises.

However, while investing in these IPOs seems like an attractive opportunity, securing a successful IPO allotment status is a crucial challenge. Given the benefits and popularity of investing in IPOs, understanding how to boost your chances of IPO allotment can come in handy. 

Continue reading as we explore in detail about SME IPOs, and effective tips to increase your IPO allotment chances. 

What Makes SME IPOs a Smart Choice?

Given the recent trends, investing in SME IPOs has been an attractive choice. The reason behind the same is simple: their performance has been crossing benchmarks like NIFTY Small Cap 100 and NIFTY 50. For instance, the CAGR or Compound Annual Growth Rate has been around 39% in the last 2 years.

Additionally, the SME sector contributes around 30% to the economy’s GDP and around 45% of exports come from the given sector.¹ Further, the government has launched a bunch of new programs like MUDRA, PLI scheme, tax benefits, and more which further fuel the growth and development of the SMEs. Therefore, serving as a great opportunity for investors to dive in and enjoy the potential benefits of investing in SMEs. 

Tips to Secure a Successful IPO Allotment Status 

Now that you know the benefits of SME IPOs, let’s see some effective strategies on how to secure your IPO allotment. 

• Choosing Single-Lot Application Can Help

One of the most effective yet easy tactics to improve your chances of IPO allotment is to choose a single lot. A lot can be simply understood as minimum stocks that can be availed in an IPO. When an IPO is oversubscribed, it means it has a quite high demand. Here, all kinds of investors have an equal chance of IPO allotment, irrespective of the lot size. 

By opting for a single lot, you reduce the risk of rejection. As mentioned, the chances of allotment in an oversubscribed IPO are the same, no matter what your lot size is. Therefore, it is better to stick to a single lot and improve your chances. 

• Consider Using Multiple Demat Accounts

Another popular way to confirm your IPO allotment is to use multiple demat accounts. However, instead of using multiple demat accounts of your own, consider using the accounts of your friends or family. The same ensures each account has a unique name and PAN, and thus increases your chances of IPO allotment. 

However, always make sure to adhere to the rules to reduce the chances of technical issues or rejections. 

• Considering Cut-off Price is Important 

When trying to secure an IPO, consider bidding at a cut-off price. The cut-off price can be understood as the last price at which investors are allotted their shares, post the book-building procedure. Say an IPO has a price range of 150 to 200. Now, the cut-off price here is 200. To secure a chance at IPO allotment, make sure to buy at the cut-off price and no less. This shows your willingness to invest in these IPOs at the given price. 

• Don’t Wait for Last-minute Submissions

This might look like something minor and cliche, yet a lot of investors keep delaying submitting their applications at the very last day or minute. However, this may not seem like a problem always; try avoiding last-minute submissions, as you may end up being caught in technical errors, server issues, and other problems. 

Therefore, always consider applying early, to ensure you submit your application smoothly without missing the deadline and without any technical errors. You may set reminders to keep you up-to-date with the application process. 

Bottom Line 

Securing an IPO status might look overwhelming at the start. However, with a few easy and effective strategies like choosing a single lot, using multiple demat accounts, applying on time, and more, you can significantly increase your chances. With patience, research, and persistence, you can invest in your favourite IPOs and earn profitable returns.