An IPO is more than a listing-day event. A sound research process studies the company, the offer and the price being asked before forming a view.
Understand the business
Review how the company earns revenue, its competitive position, customer concentration, industry conditions and the durability of its business model.
Read the offer, not only the headlines
Separate fresh issue proceeds from an offer for sale. Examine how funds will be used, promoter holdings after the issue and material risks disclosed in the offer documents.
- Revenue and profit quality
- Cash flow and debt
- Valuation versus listed peers
- Use of proceeds
- Material business risks
Evaluate listing scenarios
Demand indicators and market sentiment can change quickly. IPO research should examine both opportunity and downside scenarios across allotment, listing and post-listing price behaviour.