Key Aspects To Check Before Bidding An IPO
Before applying for an IPO, it’s better not to go just by the buzz around it. Take a little time to do your research. To learn about the company's operations, revenue, management, and future plans, read the DRHP. It also helps to compare the company’s valuation with others in the same industry and carefully read the risk factors mentioned in the document.
Along with this, keep track of IPO subscription numbers and Grey Market Premium (GMP) trends. These can give you a fair idea of how other investors are reacting to the issue and what the overall sentiment looks like.
For retail investors, platforms like Finnpick make this whole process easier by offering real-time subscription data, GMP updates, and detailed IPO analysis for all the issues that are currently open for bidding.
Key factors investors usually review
Strength and clarity of the business model
Growth trends in the company’s sector
Revenue, profit records, and debt position
Promoter background and governance quality
IPO pricing compared with listed peers
Market sentiment and subscription demand
Research and reports shared by brokers
DRHP (Draft Red Herring Prospectus)
A Draft Red Herring Prospectus (DRHP) is the first document a company submits to SEBI when it plans to launch an IPO. It offers details about the company, like what it does, its financial performance, the risks involved, and its future plans.
At this point, things like the price band and the exact number of shares haven't been finalised yet. SEBI reviews the DRHP in detail to ensure that all information provided by the company is clear, accurate, and in line with regulatory norms. After SEBI’s approval, the company submits the final document, known as the Red Herring Prospectus (RHP).
If you are considering buying an IPO, you should look at the DRHP on either the SEBI website or the merchant banker's website. A careful reading can provide you useful information about the company's business plan and finances, as well as assist you in finding possible risks before you decide to invest.
Business and management
Before investing, ensure you clearly understand the company’s core business model, its primary revenue streams, major clients, and competitive advantages. Avoid allocating funds for businesses whose operations or value propositions you cannot easily articulate in simple terms. Furthermore, take a close look at the promoters and management team, their background, track record, and whether there are any past or ongoing legal or regulatory issues. For example, Hero FinCorp benefits from the Hero Group's established auto financing expertise, avoiding the risks seen in promoter litigation during Zetwerk's IPO process.
Financial Reports
Examine multi‑year trends in revenue growth, margins, profitability, cash flows, and return ratios like ROE (Return On Equity) and ROCE (Return On Capital Employed); stable or improving trends are preferable.
IPOs like E to E showed low debt and high ROCE from infra contracts, and Modern Diagnostic & Research Centre had steady cash flows from testing volumes, aligning with post-pandemic healthcare trends. Look at leverage (debt‑equity), working capital intensity, and contingent liabilities; very high leverage or weak cash flows despite profits are red flags.
Valuation and peers
Compare P/E, P/B, EV/EBITDA, and price‑to‑sales with listed peers in the same sector, adjusting for growth and profitability.
For example,
IREDA IPO Valuation.
Issue Price: ₹30-32 (listed at ₹135, strong gain).
P/E (FY23 annualised): 16.6x vs. sector median: ~20x. P/B: 2.3x vs. peers 3-4x. EV/EBITDA: ~12x, reflecting efficient green lending ops
Avoid IPOs where valuations are significantly richer than better‑quality listed peers without clear justification in growth, moat, or profitability
Check promoter background and governance
Stable leadership inspires confidence. Review promoter experience, shareholding, past compliance track record, and any regulatory actions.
IPO GMP
IPO GMP (Grey Market Premium) and live subscription status serve as sentiment indicators for demand and potential listing gains before official trading begins. GMP shows unofficial premiums over the issue price in unlisted markets, while subscriptions track real-time IPO subscriptions across IPOs on NSE/BSE.
GMP is the difference between the grey market premium and the IPO issue price (e.g., if the IPO price is Rs 100 and GMP is Rs 30, then the estimated listing price is Rs 130), signalling an expected high GMP listing like Gabion Technologies' 20–30%.
You can track the GMP in FINNPICK for every IPO on an hourly basis, along with detailed IPO analysis and IPO Live Subscription.
IPO Live Subscription
The live IPO subscription status shows how much interest there is from different types of investors (QIB, NII, and retail) while bidding, which helps understand market feelings and improve. High oversubscription signals strong interest and potential listing gains, while low levels warn of risks.
FINNPICK gives the live IPO subscription data every hour. You can also apply for an IPO with any broker on our website.
Risks Investors Should Keep in Mind for 2026 IPOs.
IPO investing can look exciting during strong market phases. At the same time, every public issue carries risk. Understanding these risks helps you make steady, informed decisions rather than emotional ones. Study risk factors (business, regulatory, sectoral, and governance) and align with your strategy. Apply only if the downside in a bad listing is tolerable, and you are clear whether you want listing gains or long‑term holding.
Market risk: Share prices can move sharply after listing. Global events, interest rate changes, and domestic market sentiment may affect the stock price even if the company performs well.
Valuation risk: Some IPOs list at high valuations. If growth does not match expectations, there can be limited upside or even price correction after the listing.
Business performance risk: Revenue may slow down, competition may rise, or costs may increase. Companies that are new to public markets also face pressure to deliver consistent quarterly results.
Liquidity and allotment risk: Retail demand can be very high. You may not receive an allotment even if you apply. In smaller IPOs, selling after listing can be difficult when volumes are low.
Regulatory and compliance risk: Listed companies must follow strict disclosure rules. Any gaps in governance, reporting, or compliance may impact investor trust.
Comparing Brokers Before You Apply
Different brokers provide different platforms, charges, and IPO tools. Choosing the right broker is not only about low pricing. Investors also benefit from stable platforms, clear IPO sections, and reliable support. A well-designed IPO dashboard makes it easier to review upcoming issues, apply, track allotment, and trade after listing.
Step-by-Step Process to Apply for an IPO in India
Applying for an IPO in India is a simple online process when your trading and demat account is already active. Most investors now apply through UPI or their broker platform. The usual flow looks like this:
Log in to your trading or IPO portal
Select the IPO and enter bid details
Choose the price or apply at the cut-off price
Confirm UPI mandate or payment block
Track status until allotment
Shares get credited before listing if you are allotted
A stable broker platform makes this process smoother, especially during peak IPO demand. If you plan to invest in 2026 IPOs, it helps to open an account early or compare brokers to find a platform that supports easy IPO bidding, research access, and reliable execution.
