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 this section unusually useful. The peer set was chosen by the company, so it represents the most flattering comparison available, and the multiple is stated explicitly rather than left for the reader to compute.

If the issue looks expensive against the company's own chosen peers, the analysis is finished.

The company chose the peers. Use them anyway.

The section 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 the whole of a first-pass valuation: 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. Where the explanation is a market-growth statistic from a paid research report rather than something about the company, the analysis is finished.