Our 5 Recommendation Levels
Every IPO on IPO Cracker receives a recommendation based on a composite score from 0 to 100. The higher the score, the stronger the positive signal. Here are the five levels:
| Recommendation | Score Range | What It Means |
|---|---|---|
| Strong Subscribe | 80 – 100 | Multiple strong signals across GMP, subscription, valuation, and financials |
| Subscribe | 60 – 79 | Generally positive indicators; most factors look favourable |
| Neutral | 40 – 59 | Mixed signals; some factors are positive while others are weak or unavailable |
| Avoid | 20 – 39 | Most indicators are weak; higher risk compared to peers |
| Strong Avoid | 0 – 19 | Significant red flags across multiple factors |
4 Key Factors We Analyze
Our scoring system looks at four independent factors that together paint a comprehensive picture of an IPO's prospects.
1. Market Sentiment (GMP)
The Grey Market Premium reflects how much demand exists for an IPO in the unofficial market before listing. We look at:
- GMP as a percentage of issue price — A higher GMP relative to the issue price signals stronger demand
- GMP trend direction — A rising GMP over recent days is more bullish than a declining one
A positive and rising GMP suggests strong market enthusiasm, while a negative or falling GMP may signal caution.
2. Subscription Demand
During the bidding period, we track how many times the IPO is subscribed across investor categories:
- Total subscription multiple — An IPO subscribed 50x has far more demand than one at 2x
- QIB (institutional) interest — When large institutional investors like mutual funds and banks participate heavily, it is often a strong signal of quality (Mainboard IPOs)
- NII (HNI) interest — For SME IPOs, which typically have no QIB tranche, strong NII participation is used as the institutional quality signal instead
SME vs Mainboard thresholds: SME IPOs routinely achieve 100–500x subscription due to their much smaller issue sizes (₹10–50 Cr). We apply higher thresholds for SME IPOs so that a 100x SME subscription is not treated the same as a 100x Mainboard subscription.
3. Valuation
Is the IPO fairly priced compared to similar listed companies? We evaluate:
- P/E ratio vs industry average — If the IPO is priced at a discount to its industry peers, it offers better value
- Absolute P/E — When peer data isn't available, we assess whether the P/E ratio is reasonable on its own
A company priced at 20x earnings when its industry trades at 30x is generally more attractive than one priced at a premium.
4. Financial Health
Strong fundamentals point to a sustainable business. We look at four key metrics from the company's financials:
- Revenue growth — Is the company's top line growing year-over-year?
- Profit margin — What percentage of revenue turns into profit?
- Return on equity (ROE) — How efficiently does the company generate returns for shareholders?
- Debt-to-equity ratio — Is the company's debt at a comfortable level?
How the Score Works
Here's how the four factors combine into a single recommendation:
- Each factor is scored independently from 0 to 100 based on the criteria above
- Factors are combined using weights: GMP (35%), Subscription (30%), Valuation (20%), and Financial Health (15%)
- Special adjustments are applied before combining:
- Negative GMP dampener — When the grey market price is negative, the subscription score is reduced before the composite is calculated. A mildly negative GMP (0% to −10%) reduces the subscription score by 30%; a strongly negative GMP (below −10%) reduces it by 50%. This reflects a key insight: grey market participants have real money at risk, so when they are pricing an IPO below its issue price, even heavy retail subscription demand should carry less weight. High subscription in the presence of a negative GMP often reflects retail enthusiasm rather than genuine value conviction.
- Missing data is handled gracefully — if data for a factor isn't available yet (e.g., subscription data before the IPO opens), the remaining factors carry proportionally more weight
- The composite score (0–100) maps to one of the five recommendation levels shown above
This approach means the recommendation automatically becomes more reliable as more data becomes available during the IPO lifecycle.
Data Completeness Badge
On each IPO detail page, you'll see a data completeness badge alongside the recommendation. This tells you how much data is available:
- 75% – 100% — Most or all data available. The recommendation is well-supported
- 50% – 74% — Partial data. The recommendation is reasonable but could change as more data arrives
- Below 50% — Limited data. Treat the recommendation with caution; key factors are still missing
Early in an IPO's lifecycle (before bidding opens), fewer data points are available. As the IPO progresses through its Open and Closed phases, more data flows in and the recommendation becomes more robust.
Important Disclaimers
- Always do your own research (DYOR) — Read the DRHP/RHP, understand the business model, and consult a financial advisor if needed
- GMP is unofficial — Grey market data is sourced from informal networks and is not regulated by SEBI
- Subscription data changes — Numbers update throughout the bidding period; final figures may differ significantly from early readings
- Financials are from DRHP — Company financials are based on prospectus disclosures and may not reflect the most recent quarter
- Past performance ≠ future results — A high score doesn't guarantee listing gains, just as a low score doesn't guarantee losses