By ipomarket.in Editorial Team · Last reviewed: 2026-07-09
Disclaimer: This article is for informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the offer document carefully and consult a SEBI-registered investment advisor before investing.
Every few weeks a new IPO grabs headlines, and the same questions follow: Is it worth a look? What is the grey market saying? Should the price band worry me? Chasing rumours is a poor way to answer any of that. A better approach is to work through the company's own disclosures in a disciplined order.
This guide lays out a 10-step framework you can apply to any upcoming mainboard IPO in India. It is built around the one document that matters most: the offer document. We will use the National Stock Exchange (NSE) IPO, which filed its draft papers in June 2026, as a running example where useful.
Start with the DRHP, not the GMP
The Draft Red Herring Prospectus (DRHP) is the company's first detailed public disclosure, filed with SEBI when it seeks approval for an IPO. It is available on the SEBI website, the stock exchange platforms and the company's own site. Later, a Red Herring Prospectus (RHP) is issued closer to the issue with the price band added, followed by the final prospectus at listing.
If you want a fuller walk-through of the document itself, see our guide on what a DRHP is and how to read it.
With that in hand, here is the order we recommend.
The 10-step framework
1. Read the core prospectus sections first
Do not read the DRHP cover to cover on the first pass. Prioritise the sections that carry the most signal for a retail investor: the business overview, risk factors, objects of the issue, financial statements, promoter details, litigation and peer comparison. These tell you what the company does, what could go wrong, where your money goes, and how it compares with listed rivals.
2. Assess valuation against peers
A business can be excellent and still be a poor investment if it is priced too high. Compare valuation metrics such as the P/E (price-to-earnings) ratio, P/B (price-to-book) ratio, debt-to-equity ratio and return on equity (ROE) against listed peers in the same industry. Professional analysts also lean on tools like PEG, EV/EBITDA, EV/revenue, discounted cash flow and sum-of-the-parts, but for most retail investors a clear-eyed peer comparison on a handful of ratios is a solid start.
3. Evaluate management and promoter quality
Promoter quality deserves special attention. Look at the promoter's background and past ventures, whether any shares are pledged, the pattern of related-party transactions, and any pending litigation. A strong track record with clean disclosures is a comfort; a history of governance issues is a red flag no valuation can offset.
4. Understand the use of proceeds
Read the objects of the issue carefully. Investors generally prefer companies that direct capital toward growth: capacity expansion, debt reduction, working capital or acquisitions. Money raised only to let existing shareholders exit does nothing for the company's balance sheet.
5. Distinguish fresh issue from offer for sale
This point deserves its own step. In a fresh issue, the company issues new shares and receives the money. In an offer for sale (OFS), existing shareholders sell their holdings and the company receives nothing. A pure OFS is not automatically bad, but it tells you the fundraising is about liquidity for insiders, not fresh capital for the business.
6. Analyse the risk factors honestly
The risk factors section is often the most useful part of the DRHP. Companies frequently disclose dependence on a single customer, supplier, product, geography or regulator. Any of these concentrations can hurt earnings after listing. Read them as the company's own admission of what could go wrong, not as boilerplate.
7. Track institutional and subscription data
Closer to the issue, watch institutional participation and how the book builds across the qualified institutional buyer (QIB), non-institutional investor (NII) and retail categories. Our explainer on subscription status across QIB, NII and retail breaks down what strong or weak demand in each bucket signals.
8. Assess growth strategy and competitive position
Step back from the numbers and ask how the company plans to grow, and whether its position is defensible. Consider industry performance and broader market conditions. A company riding a structural tailwind with real moats is very different from one competing on price in a crowded field.
9. Treat GMP as a secondary signal only
Grey Market Premium (GMP) is the price at which IPO shares change hands informally before listing. It is not regulated by SEBI, NSE or BSE, it can swing quickly, and it reflects sentiment far more than fundamentals. A high GMP does not guarantee a profitable listing. Use it, if at all, as one small input after you have done the real work. For context on how it functions and its limits, see what IPO GMP is and how it works.
10. Note post-listing compliance
Once listed, a company must follow SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, which set corporate governance and disclosure norms. A company already run to that standard is likely to have fewer nasty surprises as a listed entity.
The document hierarchy: DRHP to RHP to prospectus
Understanding which document you are reading matters, because the details change as the IPO progresses.
| Stage | Document | What is added |
|---|---|---|
| Initial filing | DRHP | Business, financials, risks, objects |
| Closer to issue | RHP | Price band and issue dates |
| At listing | Final prospectus | Final allotment and issue details |
A DRHP-stage IPO has no confirmed price band, no dates and no official GMP. Treat any such figures floating around as speculation until the RHP arrives.
Some regulatory context worth knowing
To list on the mainboard, a company must broadly meet SEBI's eligibility norms, which include at least ₹3 crore in net tangible assets in each of the last three years and average operating profit of at least ₹15 crore in any three of the last five years. It must also present three full financial years of restated financial statements under Ind AS, plus a stub period if the last audited year is more than six months old.
Under the March 2025 ICDR amendments, the earlier separate pre-issue and price band advertisements have been consolidated into a single advertisement that must be published at least two working days before the IPO opens. The end-to-end journey for a mainboard IPO typically runs 12 to 18 months, with roughly 9 to 12 months of preparation before the DRHP is even filed.
A real example: the NSE IPO
The NSE IPO is a useful live case because it is at the DRHP stage, which is exactly when this framework applies.
- Filing: NSE filed its DRHP with SEBI on 17 June 2026.
- Structure: It is a pure OFS. Proceeds go entirely to selling shareholders, so NSE itself receives no capital. Major sellers reportedly include State Bank of India and MS Strategic Mauritius.
- Size: Market estimates put the issue in the region of ₹25,000–30,000 crore, which would make it among the largest IPOs in Indian history. These figures are estimates and are not confirmed until the RHP.
- Valuation: Some analysts have modelled a P/E in the range of 38x to 43x on FY26 earnings under an assumed price band, but no official band exists yet.
- GMP: Because it is still at the DRHP stage, there is no official GMP.
Applying the framework, three points stand out for scrutiny: it is a pure OFS (step 5), it reportedly follows a year of declining earnings (step 2), and its largest profit centre sits in an area of regulatory attention (step 6). None of these is a verdict. They are simply the questions the disclosures push you to ask. You can track filings like this on our NSE IPO 2026 page and the broader upcoming IPOs list.
Putting it together
Analysing an IPO is less about predicting the listing pop and more about understanding what you would own. Read the DRHP in priority order, check valuation against peers, scrutinise the promoter, understand where the money goes, and take risk factors at face value. Leave GMP for last. The framework will not make every decision easy, but it will keep you anchored to disclosed facts rather than noise.
FAQ
Where can I find the DRHP for an upcoming IPO?
The DRHP is available on the SEBI website, the NSE and BSE platforms, and usually the company's own website. It is the first detailed public disclosure a company files when seeking IPO approval.
Is a high GMP a reliable sign of a good IPO?
No. GMP is an unregulated, informal indicator that reflects short-term sentiment and can change quickly. A high GMP does not guarantee a profitable listing. It should be treated as a secondary signal at best, after you have reviewed the fundamentals.
What is the difference between a fresh issue and an OFS?
In a fresh issue, the company issues new shares and receives the proceeds, which it can use for growth or debt reduction. In an offer for sale (OFS), existing shareholders sell their shares and the company receives none of the money. The NSE IPO, for example, is a pure OFS.
Which financial ratios should I compare across peers?
Start with the P/E ratio, P/B ratio, debt-to-equity ratio and ROE, comparing each against listed companies in the same industry. These give a quick read on whether an IPO is reasonably priced relative to comparable businesses.
Does a DRHP filing mean the IPO dates are fixed?
No. At the DRHP stage there is no confirmed price band or issue date. Those are added later in the RHP. Any dates circulating before the RHP should be treated as speculation.
Last reviewed: 2026-07-09.