Things to keep in mind before participating in the 2026 IPO Rush
Close to 240 companies are in line now in the second half of 2026 to IPO, including Jio, PhonePe, NSE, OYO and more. With big names surging on all our investing apps, it’s tempting to participate as well, along with everyone. However, with this rush intensifying now, there are a few things retail investors like us should keep in mind before participating
Most of us don't have time to read a 500-page RHP. Here's a prompt you can feed to any AI along with the document:
“Attached is the RHP for [company]. I'm a retail investor deciding whether to apply, so answer only from this document and write "not disclosed" instead of guessing. Give me: the fresh issue vs offer for sale split, what the fresh money is being used for, three years of revenue, profit and operating cash flow side by side, the P/E at both ends of the band against listed peers, the number of pending legal proceedings and the ten risk factors most likely to cost me money.”
I’ll now go through each of the points mentioned in the above prompt below -
1) Look at the offer structure - fresh issue versus offer for sale?
The cover of the RHP shows how much of the issue is new shares (money to the company) vs. existing shares being sold, i.e. OFS - Offer For Sale (money to current shareholders). This matters because if it is mostly OFS, you are buying someone’s exit. The people selling these shares have held them for years, know the business better than you, and decided this price is good to exit (this information signals something for you).
2) Use of proceeds
If there is a fresh issue, the RHP has a section called Objects of the Issue. This section tells you exactly what the company plans to do with the money. A milestone like ‘repayment of borrowings’ fixes a balance sheet, which isn't bad, but it doesn't fund growth either. Paytm raised roughly ₹18,300 crore in 2021, of which about ₹8,300 crore was fresh issue, much of it earmarked for strengthening the ecosystem and general corporate purposes, nothing you could put a date against. Manipal Health's first objective was repayment of outstanding borrowings. These are signals
3) Read three years of financials, with cash flow next to profit
Companies choose when they file, so there's a natural incentive to file right after a good year. If revenue growth or margin improvement shows up only in the year before filing, you may be looking at one good year presented as a trend. Put operating cash flow next to reported profit while you're there. A company can book a sale before the customer pays, so profit on paper isn't money in the bank, and cash flow is much harder to dress up. Manpasand Beverages reported strong profit growth for years while the cash never quite matched.
4) Compare the valuation against peers
Take the price at the top of the band, work out the P/E (share price divided by earnings per share, a rough measure of how expensive a stock is relative to its profits), and compare it against two or three listed companies in a similar business.
There is a section called Basis for the Offer Price where the company argues for its own valuation. It is required to give you the EPS (earnings per share) for the last three years and the P/E at both ends of the price band, and it carries a mandatory table comparing the company against named listed peers
5) Read the risk factors section
This is going to be boring to read, but it is the crucial part of the document where SEBI requires a company to disclose what could go wrong. Look for pending litigation, tax disputes, regulatory proceedings, auditor qualifications. A recent example is OYO - in its updated draft filed in Jun’26 has almost 100 risk factors and discloses 170+ pending legal proceedings.
6) Decide your goal before you apply
Are you applying to sell on listing day, or to own this business for years? Pick one, and write down either the price you will sell at or the horizon you will hold for. Zomato listed in 2021 at ₹76, was loss-making, and fell to around ₹45 through 2022, roughly 40% below the issue price. The company then turned profitable, renamed itself Eternal, and the stock trades around ₹327 today. That is about 4.3 times the issue price in five years.
7) Sizing, blocked money and taxes
Lastly, the retail cap is ₹2 lakh per PAN per application. In an oversubscribed issue, allotment is a lottery. When you apply, the money gets blocked in your bank account through a UPI mandate until allotment. It is not debited, but you cannot use it. If you have EMIs, an insurance premium or school fees landing in that window, ensure you plan finances around it.
One thing to remember is to always be skeptical. In this IPO rush, the companies pick the timing, price band, and the story that goes around it. They will naturally choose a moment when the odds sit in their favour. This isn't good or bad; it's just how the system is designed. It's only worth remembering who is deciding which part of the game before you decide your part in it as an investor.
Overall, the IPO rush is also a queue, with many of the companies approved by SEBI, and many are also awaiting approval. As a retail investor, as tedious as it is to do the research, it is knowledge that will work in your favour. Many of the points I mention are now even seamlessly recorded in the investment apps you use, so it doesn’t take too long to do this research.
PS: This framework also stands true if you are an employee and your company is going for an IPO.
