IPO Simplified organises evidence about an IPO into six areas. Each area gets one of four descriptive labels, assigned by the fixed rules below. The rules are applied automatically to the data shown on each IPO page; this page is generated from the same code, so the published rules and the applied rules are always the same.
There is no overall score. We do not add labels up, weight them or turn them into a rating, because any such weighting would be arbitrary and could be mistaken for a recommendation.
Rules by area
Business quality
A business that depends on one customer or product, or earns thin margins, has less room for error when conditions change.
What is evaluated
- What the company sells and how it earns money (from the offer document)
- Customer or product concentration disclosed as a risk
- Latest full-year profit margin
Label rules
- Insufficient data
- No business description from a cited source is available.
- Needs attention
- A material concentration or dependence risk is disclosed AND the latest profit margin is below 5% or negative.
- Positive evidence
- No material concentration/dependence risk was found in the reviewed sections AND the latest profit margin is 10% or higher.
- Mixed evidence
- Any other combination.
Financial health
Profits on paper only help shareholders if the business also generates cash and is not overloaded with debt.
What is evaluated
- Profit after tax in each full financial year
- Change in profit margin from the first to the latest year
- Operating cash flow in the latest year
- Borrowings relative to net worth (debt-to-equity)
Label rules
- Insufficient data
- Fewer than two full financial years of revenue and profit are available.
- Needs attention
- The company made a loss in the latest year, OR debt-to-equity is above 2x, OR two or more of the checks below are negative.
- Positive evidence
- Profitable in every year, operating cash flow positive in the latest year, margin did not fall by more than 2 percentage points, and debt-to-equity is below 1x.
- Mixed evidence
- Any other combination.
Valuation
The price you pay matters as much as the quality of the business. Paying much more than similar companies needs a clear reason, such as faster growth.
What is evaluated
- P/E at the upper price band, using latest full-year diluted EPS (pre-issue)
- Median P/E of listed peers named in the offer document
- Profit margin and revenue growth versus the same peers
Label rules
- Insufficient data
- EPS is missing or negative (P/E is not meaningful), or fewer than two peers with a disclosed P/E are available.
- Needs attention
- The IPO P/E is more than 25% above the peer median AND the company is not growing revenue at least 5 percentage points faster than the peer median.
- Positive evidence
- The IPO P/E is at least 15% below the peer median AND the company's margin is not more than 2 percentage points below the peer median.
- Mixed evidence
- Any other combination (including a premium that is partly explained by faster growth).
Growth prospects
IPO prices often assume growth will continue. Past growth is not a guarantee, but slowing growth is a reason to ask harder questions.
What is evaluated
- Revenue compound annual growth rate (CAGR) across available full years
- Whether growth slowed sharply in the latest year
- Growth drivers described in the offer document
Label rules
- Insufficient data
- Fewer than two full financial years of revenue are available.
- Needs attention
- Revenue CAGR is below 5%, or revenue shrank over the period.
- Positive evidence
- Revenue CAGR is 15% or higher AND latest-year growth is not less than half of the prior year's growth.
- Mixed evidence
- Any other combination.
Material risks
Offer documents list risks the company itself considers important. Reading them is the single best way to avoid surprises.
What is evaluated
- Risk factors in the DRHP/RHP: concentration, litigation, related-party dealings, debt, dependence, regulation
- Whether each risk is described as material in the reviewed sections
Label rules
- Insufficient data
- No offer document has been reviewed for this IPO.
- Needs attention
- Three or more material risks were found in the reviewed sections.
- Positive evidence
- No material risks were found in the reviewed sections (this does not mean the IPO is risk-free).
- Mixed evidence
- One or two material risks were found.
IPO structure & use of proceeds
In an offer for sale the company receives nothing; existing shareholders are cashing out. Knowing who gets the money tells you what the IPO is for.
What is evaluated
- Split between fresh issue (money to the company) and offer for sale (money to selling shareholders)
- Whether the uses of fresh-issue money are stated with amounts
- Change in promoter shareholding
Label rules
- Insufficient data
- Issue size, fresh issue or offer-for-sale amounts are unavailable.
- Needs attention
- 75% or more of the issue is an offer for sale, OR promoter holding falls by 15 percentage points or more while shares are also being sold in an offer for sale.
- Positive evidence
- At least half the issue is fresh capital, the uses of proceeds are stated with amounts, and neither attention trigger applies.
- Mixed evidence
- Any other combination.
Missing data and sources
Every figure stores its value, unit, period, source, verification status and last-update time. Missing values are shown as "Data unavailable" and never estimated. If a rule needs a missing value, the label is "Insufficient data". Uncited claims appear only when explicitly marked "Hypothesis: needs verification".
Source priority: (1) SEBI offer documents (DRHP, RHP, prospectus); (2) NSE and BSE announcements; (3) company filings and annual reports; (4) licensed data providers where necessary.
AI explanations
Where enabled, an AI model can write a plain-English explanation. It receives only the cited facts shown on the page, must cite them by reference, must separate facts from interpretation, and is instructed not to give verdicts. Output that cites unknown facts or contains an investment verdict is discarded and replaced by the rule-based explanation. AI never changes a label or a figure.
Limitations
The thresholds (for example, 25% above the peer median P/E) are editorial judgements chosen to be simple and explainable, not statistically validated predictors of returns. They will be reviewed as the product matures. Labels should be read as prompts for further reading, not conclusions.