This is how I read an offer document, not a view on any particular issue. I do not write "apply" or "avoid", and I do not publish target prices.
The order I read in
- Object of the issue. How much is fresh capital and how much is an exit for existing holders.
- Financials, three years. Revenue, margins, and whether profit is cash or accrual.
- Working capital cycle. Receivable days moving in the wrong direction is the most common warning I find.
- Related party transactions. Small print, large consequences.
- Promoter holding, before and after. And what is pledged.
- Risk factors. Skim for the specific ones, ignore the boilerplate.
- Litigation and regulatory matters. Size relative to net worth.
- Valuation basis. Compared against listed peers on the same measure, not a flattering one.
What I compute
Revenue growth, operating margin trend, debt to equity, return on capital employed, and receivable days. Five numbers, one spreadsheet row per company, so I can compare issues over time rather than judging each one in isolation.
What makes me stop reading
A working capital cycle stretching while revenue grows, promoter pledges without a clear explanation, or profits appearing in the year before filing and nowhere before that.