Checklist: What to Check Before Buying an IPO
- Company Fundamentals
- What does the company do? Understand its core business.
- Is it profitable? Check its revenue, profit/loss trends, and margins.
- How does it make money? Evaluate the sustainability of its business model.
- Reason for IPO
- Is the company raising funds to grow, or are early investors just exiting?
- Check if the IPO includes a Fresh Issue (money goes to the company) or Offer for Sale (OFS) (money goes to selling shareholders).
- Valuation
- Compare the IPO’s price-to-earnings (P/E) or EV/EBITDA ratios with listed peers.
- Is the IPO overvalued, fairly priced, or a bargain?
- Promoter & Management Background
- Who is running the company? Do they have a good reputation?
- Are there any legal or regulatory issues?
- Financial Statements
- Study the last 3 years of balance sheet, P&L, and cash flow.
- Revenue and profit growth
- Debt-to-equity ratio
- Return on Equity (ROE)
- Operating cash flows
Profitability is key—but so is cash flow and efficient capital use.
- Industry Outlook & Competition
- Is the sector growing or facing headwinds?
- Who are the main competitors?
- Does the company have a competitive edge (like tech, scale, brand, or patents)?
- IPO Grading / Expert Reviews
- Read IPO reviews by analysts and rating agencies.
- Check their subscribe/avoid recommendation.
- See the subscription status (especially QIB & HNI interest).
- Anchor Investor & Institutional Participation
- Listing Day Strategy
- Decide whether you want to hold long-term or aim for listing gains.
- IPOs with strong demand and limited float can see big listing day pops—but not always.
