IPO grading and price estimation of IPO

Abstract

Our objective is to understand the root cause of this information asymmetry and use of F moael to extract t he growth rate expectation implicit in the rice of IPO. We use the financial information available for public in pre-IPO prospectus of company to estimate the expected growth rate and benchmark it against the industry. This implicit growth rate expectation also provides the cash flow the company needs to generate in future years to justify the asking price. Using the data from prospectus provides the most cost efficient and most widely available source of information to do the calculation.