The upcoming IPO gives investors a chance to own a piece of a company before its stock begins trading on an exchange. But an IPO application should not be made on the basis of market attention or subscription figures alone. Company & issue terms, risks, application process to be reviewed IPO investment A simple checklist can help investors to know what they are applying for

1. Understand the company and the business

Begin with the company’s core business. Check out what it sells, who its customers are, how it makes money, and which industry it works in. Read the Red Herring Prospectus, or RHP, for information on operations, products, markets, promoters and key risks.

Is revenue dependent on a few clients, one region, one supplier or one product line? These details help explain how the business operates.

2. Financial performance assessment

Do your research on the firm’s accounts before applying for an upcoming IPO. Review revenue, profit or loss, cash flow, debt, assets and liabilities for each year:

The mean is -0.89 + 0.06. For example, increasing revenue may not tell the entire story if debt levels are also rising or operating cash flow is weak. Look at the numbers over the years . Look at the pattern .

3. Verify promoters & management

Check out the promoters and key management background. Check out their experience, ownership, related party transactions and any material legal or regulatory matters disclosed in the prospectus.

You can't judge management by a figure. Read these disclosures and its operating history.

4. Check the reason for the company to raise funds

The RHP explains the utilisation of the IPO proceeds. A new issue may be for expansion, debt retirement, new equipment, working capital, acquisitions, or for other stated purposes.

An offer for sale, or OFS, is something else. Existing shareholders sell their stocks, and the company doesn’t get that money. Knowing the mix of fresh issue and OFS helps readers to understand the structure of the offer.

5. Read the prospectus for the risks

All IPOs carry risk. The prospectus details risks relating to the company, the industry, legal, customers, suppliers, regulation, competition and financial issues.

Beware of pending cases, high levels of debt, customer concentration, dependence on key staff, related party dealings or limits on supply of raw materials. These points may affect the operations.

6. Valuation and price band check

In a book-built IPO, investors place bids within a defined price band. Benchmark the company’s earnings and other financial metrics against the offer price.

Where appropriate, you can also benchmark valuation ratios such as price-to-earnings against listed peers within the same industry. That doesn’t give you an idea of how your listing will perform. It just gives context to the initial price.

7. Verify lot size and funds needed

Every IPO has lot size Lot size is the minimum shares allowed in one bid. You multiply the lot size by the bid price and then you get an estimate of how much you need.

Keep enough cash in the associated bank account. In ASBA, money remains blocked in the account until allotment. If shares are allotted, the amount needed is debited. Otherwise the block is released.

8. Check dates and application details

Review the open date, closing date, price band, lot size, allotment schedule and proposed listing date. Please also make sure that your PAN, demat, bank account, UPI ID are correct.

SEBI says IPO applications can be made thru ASBA including thru UPI-based applications wherever applicable. Wrong information may lead to rejection.

9. Consider subscription data as one signal.

Subscription numbers indicate the demand during the offer period, but they don't say anything about business quality or future share performance. Use them as one data point, not as a replacement for the prospectus, financial review or terms of the issue.

10. Track the issue on a reliable platform

Investors can follow an impending IPO on the exchange websites, offer documents and registered broking platforms.

You can check the details of open and upcoming IPOs and apply via Bajaj Broking’s app or website. Its IPO section provides issue details and also helps in application thru lot selection and UPI Mandate approval. Investors should read the offer document before Investing in IPO's.

Conclusion

Know the business, financials, management, use of funds, risks, valuation, lot size, dates and payment process before filing for an upcoming IPO. Don't read just headlines or demand data, read the RHP. A structured review can help investors understand the terms and risks before submitting an application.