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How the IPO studies are written

Each study describes one company from the offer document it filed for its IPO: the draft red herring prospectus (DRHP), an updated draft, or the red herring prospectus (RHP) once it exists, together with the abridged prospectus filed alongside it.

Sources

  • The offer document as posted on the NSE website, and nothing else. No outside estimates, news reports or third-party data are added.
  • Where the document is silent, the study says so instead of filling the gap.

Citations

  • Every figure carries the page it was read from, written as (DRHP p.N) or (AP p.N) for the abridged prospectus. Page numbers are the PDF pages of the filing.
  • Arithmetic that newboard does itself, such as a total or a ratio, is marked as our arithmetic with the pages it came from.

What a study does not contain

  • No view on the shares, no price target, no rating, no score and no ranking.
  • No forecast by newboard. Where the company states a target or a plan, it is reported as the company's statement.
  • Sections about the price band, subscription and allotment appear only once the company has announced them.

Key figures

Each study ends with a fixed table of figures (growth, valuation at the upper end of the price band, the issue, concentration, the balance sheet, the anchor book and items worth reading), each with its page. The IPO page repeats it as a box and the share card prints six of them. Where a figure compares cleanly across issues (a growth rate, a margin, a P/E, a share of the issue), newboard also keeps it as a number so an issue can be placed within the issues it has studied on the same board, with the number of issues stated.

The same table carries two more groups. "Before the IPO" gives the first and latest year of revenue, profit, receivable days and promoter remuneration, every bonus issue and share split, the price of any pre-IPO placement and of the last allotment before the issue, and any change of auditor. "Who is involved" names the industry (one of a fixed list of 34), the promoters, the selling shareholders and the pre-IPO investors holding 1% or more, as the document prints them. Funds, companies, trusts and individuals are named on the issue's page.

Checks

A check is a factual condition with one fixed threshold, read from the key figures: for example, the offer for sale is more than half the issue, or operating cash flow in the latest year is below half of profit after tax. The IPO page lists the checks an issue meets with the numbers behind each. A check is run only when the study gives the figures it needs, and the page says how many could be run.

  • Offer for sale is most of the issue: The offer for sale is more than 50% of the issue, by value at the upper band.
  • Profit grew much faster than revenue: Profit CAGR over the record is at least 20 points above revenue CAGR, and at least 1.5 times it.
  • Operating cash flow negative: Operating cash flow in the latest full year is below zero.
  • Cash flow under half of profit: Operating cash flow in the latest year is positive but below 50% of profit after tax.
  • Revenue depends on few customers: The largest customer is 25% or more of revenue, or the top ten are 75% or more.
  • Other income a large part of profit: Other income is 25% or more of profit before tax in the latest year.
  • P/E well above the peers named: P/E at the upper band (post-issue shares) is 50% or more above the median P/E of the peers the prospectus names.
  • ROCE under 10%: ROCE in the latest year is below 10%.
  • Cases against promoters: The prospectus lists one or more outstanding cases against the promoters.
  • Receivable days rose: Receivable days rose by 30 or more between the first and latest year of the record.
  • Pre-IPO placement well below the band: A pre-IPO placement price is 30% or more below the upper end of the price band.
  • Working capital over 150 days: Working-capital or cash-conversion days are 150 or more in the latest year.
  • Net debt over 3× EBITDA: Net debt / EBITDA is 3× or more before the issue.

The checks are not a score. They are not added up, weighted or ranked, an issue that meets several is not rated lower, and one that meets none is not rated higher. Each states a condition that the study then explains in full.

Subscription and the bid book

  • Shares bid and applications per category come from NSE's bid book for the issue, with the exchange's own "as on" time, read every 15 minutes while bidding is open.
  • For SME issues that list only on BSE, the figure is the total from BSE's demand schedule (shares bid for at or above the floor price, against the shares BSE lists as the issue size), read on the same timetable. BSE does not publish a split by category or a count of applications for these while bidding is open.
  • Times subscribed is shares bid divided by the shares offered to that category; the anchor portion is outside the book. Shares offered come from the exchange's post-anchor issue parameters.
  • NSE publishes application counts for SME issues; for mainboard issues it does not, and the page says so.

The chance of an allotment

Where a category is oversubscribed and allotted by a draw of lots (mainboard retail and the two non-institutional bands, and individual investors in SME issues), each successful application gets the minimum application and no more. The chance is therefore the number of minimum applications the category can fill divided by the number of applications received.

  • Minimum applications available = shares reserved for the category ÷ the minimum application: one lot for mainboard retail; the smallest number of lots worth more than ₹2 lakh (and more than ₹10 lakh) at the upper end of the band for the two non-institutional bands; the minimum stated for SME individual investors.
  • Where applications are published, the chance is written as 1 in N. Where they are not, shares bid ÷ the minimum application is the most applications there can be, so the figure is a floor, written "at least 1 in N".
  • The common shortcut of 1 ÷ times subscribed counts shares, not applications, and understates the chance whenever people apply for more than the minimum.
  • Invalid and duplicate bids are removed before the draw, so the actual ratio is usually better. The registrar's basis of allotment, when published, is the result.
  • It is arithmetic on the bid book. It says nothing about the shares.

Timeline

Bidding dates, closing times and the UPI mandate cut-off are the exchange's. Allotment (T+1), refunds and demat credit (T+2) and listing (T+3) are working days after bidding closes under SEBI's T+3 timetable, using the exchange's trading holidays; the exchange's own notice is final when it differs. Anchor lock-in ends 30 days from allotment on half the anchor shares and 90 days on the rest.

Anchor investors

Names, shares and amounts are read from the company's anchor allocation report on the exchange and printed as written. A report read only in part (scanned pages) is not reproduced; the page links the report instead. The type (mutual fund, insurer, foreign portfolio investor and so on) is read from the name alone and is "other" where the name does not say.

Past listings

Listing-day open and close against the issue price are the exchange's figures, shown from the listing day on. They are counts of what happened to those issues and say nothing about any other. newboard does not show grey-market premiums.

Corrections

If a figure does not match its page, write to hello@newboard.in with the page and the line. Corrections are made in the study and dated.

All IPO studies