Basis for issue price

The section of an Indian offer document in which the company justifies its price band, showing its own earnings per share, return on net worth and the multiples of the listed peers it has chosen.

At a ₹950 issue price against ₹15.50 of earnings per share, the offer is priced at 61.3 times.

Two things make the basis for issue price unusually useful. The company chose the peer set, so it represents the most flattering comparison available. And the multiple is stated explicitly, so the reader doesn't have to compute it.

If the issue looks expensive against the company's own chosen peers, that alone settles the first pass.

It also gives the company's own return on net worth and its earnings per share for the last three years, restated on a consistent basis. Setting those against the implied multiple is all a first-pass valuation needs. A company earning 14% on net worth and asking 61 times earnings is being priced for a transformation, and the offer document has to explain what that transformation is. If the explanation is a market-growth statistic from a paid research report, with nothing about the company itself, the analysis is finished.

Use the peers anyway, even though the company chose them.