The Offer Documents

2.1 — Priya downloads a document with no price in it

Priya hears an IPO is coming and downloads the offer document straight away, hunting for the price. She can't find it anywhere. Not a number. Just a strange little symbol, [●], sitting in exactly the spot where the price should be.

She assumes the download is broken, or the company is hiding something. Neither is true. She's just caught the document at a stage where the price genuinely doesn't exist yet.

Every Indian IPO gets filed three times, in order — and only two of those three ever contain a price at all.

2.2 — That little symbol means something specific

It sits where the price band would go. Where the issue size would go. Where the proceeds would go. Not because the company is holding anything back — because those figures literally don't exist yet. They get set after SEBI's review, based on real demand from institutions, sometimes months later than the document Priya was staring at.

Even the name explains it, once you know: a "red herring" prospectus is called that because it carries an explicit warning that key information is still missing. The draft is that same document, before even the price band exists.

2.3 — The chapter where the company argues for its own price

Every offer document contains a section called Basis for Offer Price. It's the single most useful chapter in the whole thing — and the most consistently misread.

It is the ISSUER'S argument for the price it wants. Not an independent valuation. Not a regulator's opinion. Not a fairness check by anyone neutral. The company itself, explaining why it believes its own shares are worth what it's asking.

It usually contains recent years' earnings per share, a weighted average of them, a return-on-net-worth figure, and a list of listed companies the issuer considers comparable. Here's what ATC Energies actually printed.

Look at the weights. The newest year counts three times as much as the oldest. That's a standard, defensible convention — recent performance IS more relevant. It also means a strong final year carries the whole average, and the dip to ₹4.83 in FY2023 gets quietly diluted by design.

2.4 — The peer group the issuer picked — for itself

The same section names listed companies the issuer considers comparable, and prints their numbers right beside its own. This is exactly where a healthy dose of scepticism pays off, because the ISSUER chooses that list.

A peer average of 31 times earnings makes almost any price look reasonable by comparison. But that "average" is built from exactly two companies, hand-picked by the party asking you for money. Worth asking what a two-company average is really proving — and which comparable companies quietly didn't make the cut.

Module 2 chapter 2 made the same point from the opposite direction, on Reliance's own peer group, where three of seven companies had no P/E at all and any "industry average" silently dropped them. Same lesson, both directions: always ask who's actually inside the average, and who quietly isn't.

2.5 — That 56.99% return on net worth — worth a second look

One figure in that table deserves more scrutiny than it usually gets, because it's exactly the kind of number that shuts an argument down when it should open one up.

A weighted-average return on net worth of 56.99% is genuinely extraordinary. Module 2 chapter 3 already showed why a very high return on equity is a reason to check the denominator, not a reason to get excited — it can mean a truly exceptional business, or it can mean an unusually small equity base.

A company about to raise fresh capital has, almost by definition, a small equity base right now. The moment the issue closes, that base grows by whatever was raised — and the same profit, divided by a much bigger number, produces a much lower return. A pre-issue return like this isn't something you should expect to survive the IPO. The issue itself changes the maths.

None of which means the company misrepresented anything. The number is true, correctly labelled, and describes the company before the money arrives. It's simply not a preview of the company you'd actually be buying into.

2.6 — Where this sits on EquityTale

Every issue page carries the offer documents themselves, so the source is always one click away, with the Basis for Offer Price figures clearly labelled as whose argument they actually are.

Where a section hasn't been extracted, the page says so rather than leaving a blank that reads like an absence of content. Some offer documents arrive as zip archives or scanned pages with no text layer, and those can't be read automatically.

Priya, wiser now, keeps that DRHP bookmarked and checks back weeks later, once the RHP has finally landed with an actual price band attached. And the thing worth carrying forward: an issue still stuck at draft stage genuinely has almost nothing to show. That's the filing being honest about itself — and the next chapter deals with a set of dates that aren't in any filing at all, because they have to be worked out by hand.