IPO Valuation Explained
Understanding valuation metrics and analysis techniques
IPO valuation determines fair price for company shares. Key metrics include P/E ratio (Price-to-Earnings), comparing price band to company earnings. P/B ratio (Price-to-Book) relates price to book value. EV/EBITDA compares enterprise value to earnings before interest, taxes, depreciation. Dividend yield shows expected returns. Price-to-Sales ratio analyzes price relative to revenue. Compare IPO metrics to peer companies for relative valuation. DCF (Discounted Cash Flow) model projects future earnings and discounts to present value. Analyze historical growth rates, margins, and capital intensity. Assess management quality and competitive positioning. Market conditions and investor sentiment affect final pricing. RHP discloses detailed valuation ranges and comparison data. Conservative investors may apply discount to valuation for margin of safety.