How to Secure Confirmed Allotment in Upcoming Indian Subsidiary IPOs

With several Indian companies planning to list their subsidiaries, investors holding shares of parent companies like Bajaj Finserv, Hero MotoCorp, and Tata Motors can enhance their chances of securing allotment in these upcoming IPOs. Here’s how you can position yourself to benefit.

1. Understanding the Parent-Subsidiary Connection

In many IPOs, companies reserve a portion of shares specifically for existing shareholders of the parent company. For instance, if Hero FinCorp (subsidiary) launches an IPO, Hero MotoCorp shareholders (parent) may receive preferential allotment.

2. The Importance of Holding Parent Company Shares

To qualify for the shareholder reservation category in a subsidiary IPO, you need to hold shares of the parent company. This not only increases your allotment chances but also sometimes offers a discount on the IPO price. Here’s how to take advantage:

• Record Date: Ensure you hold shares of the parent company before the record date specified in the IPO prospectus. Even holding a single share may qualify you.
• Reserved Quota: A separate quota in the IPO is set aside for shareholders, giving you an edge in oversubscribed offers.

3. How to Apply in the Shareholder Category

When applying for the IPO, follow these steps to ensure you benefit from the shareholder quota:

• Step 1: Review the IPO document to confirm the shareholder reservation.
• Step 2: Use the Demat account holding your parent company shares to apply under the shareholder category.
• Step 3: Submit the IPO application within the subscription period.

This ensures you’re eligible for preferential allotment under the shareholder category.

4. Research Before You Invest

While shareholder allotment offers advantages, always evaluate the fundamentals of the subsidiary. Investigate its financial health, industry trends, and synergy with the parent company to make informed decisions.

5. Upcoming IPOs to Watch

Here’s a list of major upcoming IPOs and their parent companies:

• Bajaj Finserv (Parent) – Bajaj Housing Finance (Subsidiary)
• Hero MotoCorp (Parent) – Hero FinCorp (Subsidiary)
• NTPC (Parent) – NTPC Green (Subsidiary)
• Tata Motors (Parent) – Tata EV (Subsidiary)

Key Factors to Know

1. Apply Early During the IPO Window

Timing is important, though IPOs are typically allotted based on a random lottery system. Submitting your application early can sometimes help ensure it gets processed without any last-minute technical glitches, especially on high-demand IPOs.

2. Avoid Large Applications

While it may seem tempting to apply for a large number of shares, IPOs are often oversubscribed. When oversubscription occurs, applicants who request fewer shares (like one lot) tend to have a higher chance of getting an allotment because of the way the lottery system works. Submitting multiple small applications instead of one large one can be more effective.

3. Submit Multiple Applications Using Different Accounts

If possible, you can submit applications in the names of different family members or different Demat accounts (if you have several). Make sure these applications are done from different PAN (Permanent Account Number) cards as only one application per PAN is allowed.

4. Apply Through Different Brokerage Platforms

Some investors believe that applying through different brokerage platforms (banks, brokers, or third-party apps) increases visibility and processing chances. This allows you to spread your applications and avoid any technical issues tied to a specific platform.

5. Consider Applying via UPI for Retail Investors

The Securities and Exchange Board of India (SEBI) has mandated UPI (Unified Payments Interface) as a payment option for IPOs. This streamlined process often results in quicker processing, and it helps retail investors stay competitive during the IPO.

6. Leverage Shareholder Quotas (Parent-Subsidiary IPOs)

If the IPO belongs to a subsidiary company, holding shares of the parent company before the record date can increase your chances. Many IPOs reserve a portion of shares for existing shareholders of the parent company under the “shareholder quota.” Examples include parent companies like Bajaj Finserv, Hero MotoCorp, and Tata Motors.

7. Use ASBA for Safer and Faster Application

Always apply using the ASBA (Application Supported by Blocked Amount) facility, which is mandatory for all IPOs. This feature blocks the application amount in your bank account rather than debiting it immediately. It’s a safer and more efficient way to apply, reducing issues with payment gateways.

8. Ensure No Errors in Application

Double-check your application for any mistakes, such as wrong PAN number, incorrect Demat account number, or errors in bank details. Even a minor error can lead to your application being rejected.

9. Apply in the Retail and NII Categories

Retail investors (those investing up to ₹2 lakhs) and Non-Institutional Investors (NII, who invest more than ₹2 lakhs) are categorized separately. If you have a higher budget, applying as an NII can sometimes offer better allotment chances due to fewer applicants.

10. Monitor IPO Subscription Status

Regularly monitor the IPO subscription status on platforms like the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE). This helps you gauge the demand and adjust your strategy accordingly, especially if there’s a higher demand in certain categories (retail, institutional, etc.).

11. Keep Your Demat and Bank Account Active

Make sure your Demat and bank account are active and properly linked to avoid any technical rejections during the IPO process. Also, ensure you have sufficient funds in your bank account to cover the application amount.