Deven Choksey’s IPO Playbook: Spot Valuations, Read DRHPs, Assess Risks

Before Applying for an IPO, Start With the Business and Its Price

A disciplined IPO review weighs the offer document, valuation and selling shareholders—not just the prospect of listing gains.

Treat the prospectus as a decision tool, not paperwork

With IPOs attracting strong investor interest, Choksey, managing director of DRChoksey FinServ, advised retail applicants to look beyond listing-day performance and assess the underlying business. Speaking at the Smart Arena segment of the Business Standard BFSI Insight Summit 2026, he pointed to draft and final offer documents as a source of information that investors should use before applying. These documents can run to hundreds of pages, making it important to read selectively but thoughtfully.

His first checks are straightforward: understand the size of the issue, what the company does and how its business works, its financial performance, and the risks disclosed in the prospectus. Investors can then put those details in context by considering the company’s addressable market and the industry it operates in. The aim is not simply to collect information, but to decide whether the business and its risks are understandable.

Separate trading returns from an investment case

Choksey acknowledged that some investors treat IPOs as trading opportunities, tracking grey market premiums and seeking listing gains. He cited figures suggesting average gains of around 17% for IPO traders, with issues raising less than ₹1,000 crore recording gains of around 19-20%. Those figures describe past trading outcomes cited at the session; they are not a guarantee of future returns or a substitute for assessing an individual offer.

The distinction matters because a hoped-for listing pop and the value of a company over time are different questions. Publicity and fear of missing out can make it harder to judge the offer on its merits. Investors should decide whether they are trading or investing, and avoid letting market excitement stand in for a view on the business and price.

An OFS can change what investors need to examine

A fresh issue and an offer for sale have different purposes: in an OFS, existing shareholders sell their holdings. Choksey said that, among 104 IPOs up to the time of the session, around 32 included an OFS. Of more than ₹1.5 trillion raised through IPOs and OFS combined, approximately 60% came through offers for sale.

An OFS is not automatically a warning sign; Choksey distinguished promoter stake monetisation from financial investors, including private equity investors, exiting through an IPO. His caution was sharper when financial investors sell at stretched valuations. He cited five companies with substantial OFS activity over the previous five years where investors collectively saw wealth erosion of around ₹95,000 crore to ₹1 lakh crore after listing. These examples underline the need to scrutinise both the selling shareholders and the price, rather than treating every OFS alike.

Use AI to sharpen questions and compare peers

AI tools can filter lengthy documents and make research faster, Choksey said, but their usefulness depends on the investor asking informed questions. A basic understanding of the company helps investors interpret what a tool returns instead of accepting an answer without context.

He also cautioned against using valuation in isolation. Investors should identify what differentiates the business, compare it with listed peers and consider whether the offer price reflects those characteristics. There is no universal rule for choosing a new IPO over an existing competitor: the decision depends on the business, its distinct strengths and the valuation on offer.

Key Highlights

• Read the offer documents for the business model, financial performance and disclosed risks.
• Assess issue size, addressable market and industry context before applying.
• Do not treat cited IPO trading gains as a forecast for future listings.
• Check whether an OFS involves promoter selling or financial investors exiting, and assess the valuation.
• Use AI to filter information, while relying on your own understanding to frame questions.
• Compare the IPO with listed peers based on business strengths as well as price.

Investor Note: An IPO application should follow an assessment of the company, its offer structure and its valuation—not just market buzz or anticipated listing gains. If the business or the reasons behind shareholder sales are unclear, investors may want to take more time before committing money.