Offer documents & financials

How to Read IPO Financials in an RHP

A practical walkthrough of the restated financial statements in an IPO offer document: revenue, profit, margins, debt, cash flow and red flags to check.

By Niva Market Watch Editorial · Published 30 Sep 2026

The financial statements in an IPO's offer document tell you how the business has actually performed, as opposed to how it is described. This guide explains what is in the financial section of an RHP, which numbers to look at, and the questions they help answer. It does not tell you what a “good” number is — that depends on the industry and the price being asked.

What the RHP contains

Restated financial statements for the last three financial years, plus a stub period (for example, six months) if the most recent year-end is more than a few months old. “Restated” means past years have been adjusted to consistent accounting policies and audit qualifications, so they are comparable.
Consolidated figures, which include subsidiaries. These are usually the ones to use.
Management's Discussion and Analysis (MD&A), which explains changes in revenue and costs.
Key performance indicators (KPIs) in the Basis for Issue Price section, with definitions.
Other financial information such as return on net worth, net asset value per share and EBITDA.

Summary tables on IPO websites — including ours — are a starting point. Always check units (₹ lakh or ₹ million or ₹ crore) and periods in the RHP itself.

The income statement: growth and profitability

Line	What to look at
Revenue from operations	Growth over three years. Is it steady or driven by one unusual year? What share comes from the top customers?
EBITDA and EBITDA margin	Operating profit before depreciation, interest and tax. Is the margin stable, rising or falling?
Other income	Interest, gains on investments and one-offs. If other income is a large part of profit, the core business earns less than the headline figure suggests.
Finance costs	Interest on borrowings. High finance costs relative to operating profit indicate heavy debt.
Profit after tax (PAT)	The bottom line, and the basis for EPS and P/E. Watch for exceptional items.

For a stub period, compare with the same period of the previous year, not with a full year.

The balance sheet: strength and funding

Net worth (equity): what shareholders own. Return on net worth (RoNW) = PAT ÷ average net worth.
Borrowings: total debt, and the debt-to-equity ratio. Check whether the fresh issue will repay debt (see Objects of the Issue).
Trade receivables and inventories: if these grow much faster than revenue, cash may be getting stuck in the business.
Contingent liabilities: guarantees, disputed taxes and claims not on the balance sheet, disclosed in the notes.

The cash-flow statement: is profit turning into cash?

Compare cash flow from operations with profit after tax over the three years. A company whose reported profits are consistently well above its operating cash flow may be booking sales it has not yet been paid for, or building inventory. Also look at capital expenditure (cash used in investing) — a capital-intensive business needs ongoing investment to grow.

Valuation numbers you will see

EPS (earnings per share) and P/E (price ÷ EPS). The RHP usually gives P/E at the lower and upper ends of the price band, based on the latest full-year EPS. Post-issue EPS is lower if there is a fresh issue, because profit is shared over more shares.
Price-to-book: price ÷ net asset value per share.
Market capitalisation at the upper band: shares after the issue × price.

The Basis for Issue Price section compares these with listed peers chosen by the company. Check whether the peers are genuinely comparable in size and business mix.

Common warning signs to investigate

A sharp jump in revenue or profit in the latest year only, just before the IPO.
Profit growing while operating cash flow falls or stays negative.
Receivables or inventory days lengthening year after year.
Heavy dependence on one or two customers, or large related-party sales.
Auditor qualifications or emphasis-of-matter paragraphs.
Negative net worth, or losses in a business described as mature.

None of these automatically disqualifies a company; each is a question the RHP should answer.

How our IPO pages show financials

Where we have a financial summary for an issue, the IPO page shows it with period-over-period percentage changes, without labelling growth as good or bad, and links to the RHP for units and full statements. For many issues we do not yet hold financial data, and the page says so rather than estimating.

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