How Research Analysts Evaluate IPOs: A SEBI-Compliant Framework (2026)
IPO season brings a flood of client questions, and a flood of bad takes built on grey-market gossip. A Research Analyst's job is to cut through it with a repeatable framework: read the offer document, test the numbers, value the issue honestly against listed peers, and write a factual note that helps a client decide for themselves. Here is a framework that holds up, and stays inside the SEBI content rules.
Not investment advice. A workflow guide for SEBI-registered Research Analysts. Nothing here is a recommendation on any specific issue. Apply the mandatory disclosures and content rules to your own research.
Why a framework beats a hot take
The pull during an IPO is to react to momentum: the subscription numbers, the grey-market premium, the WhatsApp forwards. None of that tells you whether the business is any good or whether the price is fair. A framework forces you to answer the only two questions that matter, is this a good company and is this a fair price, before you let the noise in. It also protects you, because reasoning from the offer document is defensible and reasoning from GMP is not.
The five-step read
Start with the offer document
Read the DRHP and RHP, not the summary articles. Note the objects of the issue (is the money going into the business, or to selling shareholders?), the promoter and post-issue shareholding, and the risk-factors section, which is where the company is required to be honest about what could go wrong.
Check the numbers and their quality
Look at the revenue and profit trend over the disclosed years, margins, debt, and cash flow, not just the headline growth. A profit that is not backed by cash, or a single blockbuster year just before the issue, is a flag. Adjust for one-offs before you draw any conclusion.
Value it against listed peers
Put the issue price on the same basis (P/E, P/B, EV/EBITDA as appropriate) as comparable listed companies. An IPO priced at a steep premium to established peers has to justify it with growth or quality. The basis-for-price section of the RHP is the companyโs own argument; test it against the market.
Read the qualitative signals
Anchor-investor quality, the spread between fresh issue and offer-for-sale, use of proceeds for debt repayment versus growth, related-party dealings, and any pending litigation or regulatory issues in the risk factors. These shape the story the numbers cannot tell you alone.
Write it factually
Headline the facts, lay out the strengths and the risks, show your valuation reasoning, add your disclosures and any holding, and give your view as reasoning rather than a guaranteed outcome. A client should understand why you think what you think, and be able to disagree.
The grey market trap
The single biggest way analysts get an IPO note wrong, and into trouble, is leaning on the grey market premium. It is unofficial, unregulated, easily manipulated, and presenting it as a reason to apply edges into exactly the speculative, returns-implying framing SEBI penalises. Your note can acknowledge it exists, as an unofficial signal with no standing, but your reasoning has to rest on the fundamentals and the valuation. If your case for an issue collapses without the GMP, you did not have a case.
Keeping the cadence without drowning
The operational problem with IPO season is volume and timing: several issues open in the same week, each with a short window, on top of the results and filings already hitting your client book. This is where a research desk earns its keep. The IPO calendar sits next to the corporate actions and filings you already track, the dates surface before they pass, and a factual first draft of the note comes back in seconds for you to do the real work on, the valuation and the view. You stay the analyst; the desk keeps you from missing the window.
FAQ
Can a SEBI Research Analyst publish IPO recommendations?
A Research Analyst can publish research on a public issue, including a reasoned view, as long as it carries the mandatory disclosures, discloses any interest or holding, and follows the content rules. What you have to be careful about is the line between reasoned research and a guaranteed-return or hype framing, which SEBI treats harshly. Lay out the facts and your reasoning; do not promise listing gains.
Where do the numbers for an IPO come from?
The primary source is the offer document: the DRHP (draft red herring prospectus) and the RHP (red herring prospectus). They contain the financials, the objects of the issue, the risk factors, the promoter and shareholding details, and the basis for the price. Anything material in your note should trace back to the offer document or another primary source, not to grey-market chatter.
Should an IPO note mention grey market premium (GMP)?
Be very cautious. The grey market is unofficial and unregulated, and presenting GMP as a reason to apply can stray into the kind of speculative, returns-implying framing SEBI penalises. If you mention it at all, frame it as an unofficial market signal with no regulatory standing, and never as the basis of a recommendation. Your analysis should stand on the fundamentals and the valuation, not the GMP.
How does Aktai help with IPO coverage?
Aktai tracks the IPO calendar alongside the corporate actions and filings that affect your client book, so the dates do not slip past you, and it can draft a factual note from a filing for you to review and sign. It does not form the investment view or tell anyone to apply; you remain the registered analyst who reads the offer document, does the valuation work, and makes the call. Aktai handles the surfacing, the drafting and the record.