Explained: IPO Rejection and Non-allotment

The exponential rise in IPO trends in the Indian market indicates the rising interest of investors in IPOs. If you are one of those investors who has ever felt disappointed for not receiving an IPO allotment and are keen to know the reasons behind it, you are at the right place.

Let us take a detailed look at the two possible reasons for not receiving an IPO allotment.

  1. Rejection of Application
  2. Non-allotment
  1. Rejection of Application: Your IPO application may be considered invalid and get rejected due to:
  • Multiple applications using the same PAN
  • Mismatch of the PAN details with application, bank account and Demat account
  • Usage of wrong UPI ID
  • Not approving the UPI mandate request on your UPI app
  • Entering wrong pin while approving the UPI mandate request

You can avoid application rejection, by following these pointers:

  • Follow the thumb-rule of one application per PAN
  • Ensure that bank account, Demat account and UPI ID used for the application are mapped to the same PAN, belonging to the same person
  • Double check if you have entered the correct UPI ID
  • Authorize the IPO mandate on your UPI app as soon as you receive it
  • Make sure you enter the correct PIN on your UPI app while authorizing the mandate
  1. Non-allotment: Even after having a successful application, you may not receive an IPO allotment  due to over-subscription.

What is IPO Over-subscription?

This is a demand-supply gap scenario. Over-subscription is when the demand for a new public issue of shares is greater than the number of total shares offered.

Suppose company ‘A’ is launching an IPO to raise Rs 10 crore from the market. It has specified,

Price per share = Rs 100-102

So, The number of shares offered = 10 crore/100 10 lakh shares  

What if the company receives more applications than the offered  number of shares?

For example, if the company A receives investor applications for 1 crore shares; its IPO is over-subscribed by 10 times.

 Number of shares offeredNumber of shares applied

Now, the company cannot allot shares to each applicant. In such a case,a computerized lottery is held, leaving the allotment to a chance of luck.

Due to this, even though if you have a successful application, you might not get the allotment of IPO shares.

However, you may increase the probability of receiving an IPO allotment by Submitting applications from different Demat accounts of your family members and/or friends.

It is also important to acknowledge that Angel One is merely a platform to apply for IPOs and with this article we hope you now understand the IPO allocation process better. We encourage you to follow the Do’s and Don’t s mentioned here and leave no stone unturned to increase your odds of winning an IPO allotment hereon.

How to increase your chances of getting an IPO Allotment? Watch This!

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