« Top Headlines » Open DEMAT Account in 24 hrs  The Government of India has strengthened MSME protection through strict payment rules, ensuring that Micro & Small Enterprises receive timely payments from buyers. Under the MSME Development Act (MSMED Act), 2006, buyers must make payments within:  ITR Refund Delays in India: Why They Happen & How to FastTrack Your Refund in 2025  ITR Refund Delay: From Bank Errors To Department Checks, 5 Big Reasons Your Refund Gets Stuck  Income Tax Slabs 2025: New Vs Old Regime; Which One Is Better For You For FY2025-26?  Seamless Integration: How Tally Prime Connects Businesses to the Digital Economy  Govt to notify new ITR forms, Income Tax Act 2025 rules by January 2026: CBDT chief  Digital Efficiency for MSMEs: The Tally Prime Advantage  5 Ways Tally Prime Reduces Cost and Boosts Productivity for Startups  Result of the Information Systems Audit [ISA] Assessment Test held on 8th November 2025 is likely to be declared on late evening (around 9 pm) of 16th November 2025.  Income Tax: What is revised I-T return which you can file till the end of the calendar year?  Creating Vouchers Directly from Bank Statements in Tally Prime A Complete Step-by-Step Guide «  Healthcare: The price of well-being... Taxman calls on global auto firms... » A job half done September, 07th 2006 What the rating agencies are doing now is only half the job. The job left unfinished is that of appraising the price of an IPO it is not enough to appraise the company alone. -------------------------------------------------------------------------------- There is no point in impliedly saying that the company is good but you decide for yourself whether the price it is asking for its shares is reasonable or not. -------------------------------------------------------------------------------- There have been quite a few ratings done by accredited rating agencies ever since the Securities and Exchange Board of India (SEBI) pioneered and ushered in the optional regime for rating IPOs (initial public offerings). The rating agencies are appraising the IPOs on a scale of five but stopping well short of going the whole hog. It is all fine to say that a company has got a rating of four. The investors' purpose, however, will not be served unless they are also told whether they should go ahead and subscribe to the IPO at the price asked for. Ambiguous signals In the event, what the rating agencies are doing now is only half the job. The job left unfinished is that of appraising the price it is not enough to appraise the company alone. By leaving the issue of price unappraised, as it were, the signal given is ambiguous. Investors have had no option, much less a say, thus far in the matter of pricing of an IPO with the price already having been discovered in a price discovery exercise called book-building in which only the qualified institutional buyers (QIBs) and high net worth individuals (HNIs) are allowed to participate. While it would admittedly be difficult to give them a say in this process by the very nature of things, the least SEBI can do to comfort them is to mandate the compulsory rating of IPOs and take this forward by ordaining the rating agency to comment on the offer price as well with a clear-cut recommendation to the retail investor to go ahead or not at the asking price. A five out of five rating, for example, does not ipso facto justify a mind-boggling premium of, say, 20 times the face value. There is no point in impliedly saying that the company is good but you decide for yourself whether the price it is asking for its shares is reasonable or not. Comment on offer price The reason why SEBI has refrained from mandating comment on the offer price is perhaps to spare the raters the blushes in case the market does not bear out the rating agencies on the price front given the fact that the price quoted in the bourses is not only a function of fundamentals of the company but also of the demand-supply equation for its shares at a given point of time. Be that as it may, it still does not justify the `incomplete' recommendations, if one may say so, of the rating agencies which refrain from taking a call on the offer price. What the rating agencies can perhaps do is to comment on the price subject to the rider that it is based on the fundamentals of the company, industry and economy alone. For good measure, they should be allowed to save their skin by saying that, more often than not, more than the fundamentals it is the demand-supply equation that tilts the scales in favour of or against a particular scrip. S. Murlidharan (The author is a Delhi-based chartered accountant.)