How is IPO grading different from an investment recommendation?
Investment recommendations are expressed as buy, hold or sell and are based on a security specific comparison of its assessed fundamentals factors (business prospects, financial position etc.) and market factors (liquidity, demand supply etc.) to its price. On the other hand, IPO grading is expressed on a five-point scale and is a relative comparison of the assessed fundamentals of the graded issue to other listed equity securities in India. As the IPO grading does not take cognizance of the price of the security, it is not an investment recommendation. Rather, it is one of the inputs to the investor to aiding in the decision making process. All other things remaining equal, a security with stronger fundamentals would command a higher market price.
