Sebi calls for sharper IPO disclosures on risk factors, valuation rationale

Chairman Pandey says gaps in disclosures not only undermine investor understanding but can also prolong fund-raising timelines

Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Thursday called for more sharper disclosures in IPO (initial public offering) offer documents, particularly around risk factors, valuation rationale, objects of the issue, and utilisation of proceeds.

 

Speaking at the 14th Annual Convention of the Association of Investment Bankers of India (AIBI), Pandey said gaps in disclosures not only undermine investor understanding but can also prolong fundraising timelines due to repeated regulatory queries.

 

“Disclosures on capital structure must clearly explain past capital raisings, preferential allotments and changes in control — especially those close to the IPO,” Pandey said. “We also expect greater clarity on the business model, with transparent explanations of revenue and cost drivers,” he added.

 

The Sebi chairman noted that the regulator continues to see recurring shortcomings in offer documents that reduce transparency for investors. He also urged companies to strengthen the Management Discussion and Analysis (MD&A) section, saying it should move beyond descriptive narration and instead explain the key internal and external drivers of performance.

 

“Our inspections show that due diligence is not always independent and, at times, relies excessively on issuer undertakings… Projections, particularly for working capital and capex, must be independently verified, and supporting documents should be maintained for all material statements,” Pandey said.

 

The Sebi chairman also flagged the mismatch often seen between valuations in the unlisted market and prices discovered during IPO book-building.

 

Responding to a question on the surge in unlisted market activity, Pandey said, “Pre-listing and post-listing are different worlds. There are a large number of unlisted companies, and how we deal with this is something we need to explore, in consultation with the Ministry of Corporate Affairs.”

 

Pandey’s remarks come amid a strong IPO cycle. India has emerged as the world’s largest IPO market by number of issues and the third-largest by value, with 311 IPOs raising ₹1.7 trillion in the first nine months of 2025-26 (M9FY26).

 

Overall equity mobilisation has crossed ₹3.8 trillion while debt issuances have raised ₹6.8 trillion, according to Sebi data.

 

Sebi’s internal estimates indicate that a further ₹1.5 trillion of fundraising is currently in the pipeline.

 

Pandey said the regulator will soon roll out a pan-Indian programme on corporate bonds to enhance issuer and investor awareness.

 

Sebi is also working to deepen participation in real estate investment trusts (Reits) and infrastructure investment trusts (InvITs).

 

“We are engaging institutional investors to increase participation in Reits and InvITs, coordinating with the Ministry of Finance to accelerate public asset monetisation, and working with Insurance Regulatory and Development Authority of India, Pension Fund Regulatory and Development Authority, and Employees' Provident Fund Organisation to facilitate greater participation from entities under their supervision,” he said.