The Offer Document is an extremely important document in an Initial Public Offering. Since it runs into several pages, it would be a tedious task to read the entire document. On the other hand skimming through the document means you could miss out on important issues pertaining to the IPO.
1) Cover Page of an IPO
This is as important a page like any, in the IPO offer document. On this page you would fine important things pertaining to credit rating, lead managers, registrars to the issue and so on.
The IPO grading, risks to the IPO and credit rating are the most important things to read and analyse.
2) Risk Factors in an IPO
Clearly, this is the most important thing you should look for in the offer document. This would include pending litigation and any adverse rulings that could be risk factors. Industry issues and various other risks that the management envisages. The management of a company has to be careful to ensure that they do not conceal anything and are as transparent as possible when it come to highlighting the risk factors.
3) Look at the introduction
It would be good to also read through the introduction and examine the industry the company is operating in. Also, how the equity capital would change, tax benefits and basis for the issue price.
4) Financial Statement in the IPO Document
This is another area that cannot be ignored. Particularly try to examine the kind of loans and debt on the company's books. Try to study if there has been a positive cash flow in the last several years etc.
5) Legal and other information
Look for pending litigations, legal disputes that could have a bearing on the performance of the company. Ones that are not very major can well be ignored. Also, look at litigations and legal disputes against subsidiary companies.
6) Other disclosures
There would be various other disclosures that the company would have to make. This would include any prohibition from the Securities and Exchange Board of India, changes in auditors in the last three years, details of all money raised through the capital market before etc.
Clearly, the offer document is the single most important document in an IPO. Disclosures have become more stringent than ever before and mechanisms are more transparent. It's a good idea to make the best use of it, before you invest your hard earned money.