10 IPO Red Flags: Protect Your ₹15,000 Bid

IPOs look exciting but many are risky bets. Before you apply, check the company's debt, promoter background, and why it needs the money — 10 warning signs can save your investment.

Here's what happened: SEBI approvals for IPOs have a fixed validity window, pushing a wave of companies to list quickly before permissions expire — increasing the risk of rushed, under-scrutinised offerings.. Retail investors apply for IPOs based on grey market premiums and social media buzz rather than reading the DRHP, exposing themselves to companies with weak fundamentals or poor governance.. Several recent IPOs listed at discounts of 20–40% within weeks of debut, erasing thousands of rupees from retail investors who relied on hype rather than financial due diligence..

What you should do: Download the DRHP from SEBI's website and read 'Objects of the Issue' — if most money goes to an OFS or debt repayment, skip or reduce your bid size.. Check the promoter's background and promoter shareholding pledge percentage on the BSE/NSE IPO page before applying — pledging above 30% is a serious warning sign.. Compare the company's PE ratio at IPO price to listed peers in the same sector — if it's 2x or more expensive than competitors, the 'listing gains' story is already priced in..

Check the 'Auditor's Report' section of the DRHP for any 'emphasis of matter' or qualifications — auditors flag concerns here that the headline financials bury completely.