How Many Lots Can We Buy in IPO?
Here are how many lots can we buy in IPO to increase the chances of an allotment.
But before that, do consider the important aspects of the lots before you make up your mind to bid for the IPO.
- When a company launches an IPO, it specifies the minimum number of shares that a retail investor can apply for. This is known as the market lot size (i.e. IPO bid lot).
- According to guidelines issued by Securities and Exchange Board of India (Sebi), an investor (retail) can bid for shares worth a maximum of INR 2,00,000/- in an IPO.
However, this has to be in minimum bid lots.
- Assume that there are INR 5L shares offered to the investors and the minimum lot size is 50.
Then the maximum number of investors who will get at least one lot is = 5L/50 = 10,000 Thus, 10,000 investors will be allotted at least one lot.
- A retail investor cannot be allotted shares less than 1 minimum bid lot size.
- In the case of an IPO getting oversubscribed, the possibility of an investor getting share allotment rise
if multiple bids are made by different members of the same family than one bid seeking up to INR 2L worth of shares. This is because of reason, in any case,
a retail investor can’t be allotted shares less than 1 minimum bid lot size.
As per the SEBI guideline, there is no guideline as to how many lots should be applied to get a maximum allocation. However, there are two aspects for the allocation –
- If the IPO is oversubscribed, a maximum of 1 lot must be alloted to the applicant using the allotment system.
- If the IPO is under-subscribed, the applicant may receive all the lots that they have applied for.
Increase the Chances of an Allotment
Let’s see how can we increase the chances with IPO allotment –
- If a family of three has applied for the same IPO at that price or cutoff price in smaller bid lots (3 IPO applications), the chances of them getting shares in the draw are better than that for single application.
However, you can never apply two lots from two different DEMATS on the same PAN number. Both applications will get cancelled.
- Some analysts say a better way can be to apply the cutoff price in an oversubscribed IPO
as it won’t be allowed if the chosen amount is less than the cutoff price.
- If you have already decided to proceed with your IPO application, you must place your application on the first/second day. This is because the possibility of getting an IPO allotment after applying in the last few days is lower.
- A retail investor should fill in the information correctly like the amount, DP id, bank details etc. However, you should avoid applying through offline. The most secure way to apply for the IPO is through bank (ASBA).
One can go with the ASBA service via their bank, but the investor needs to check the information before applying the same. It will surely avoid technical rejection.
Can I Get Multiple Lots in Oversubscribed IPO?
No, a retail investor cannot get more than 1 lot in case of an oversubscribed. Let’s understand more about the same.
if an IPO is oversubscribed in the retail category, the shares are to be allotted in a manner that ensures that every retail bidder gets at least one minimum lot. The remaining shares, if any, are then allotted on a pro-rata basis.
However, this is true only in the case of a small over-subscription.
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Here is how many lots can we buy in IPO to increase the chances of an allotment.