This article attempts to understand the IPO grading system and analyzes the related issues like rationality of equity grading disconnection between offer price and assigned grading post issue events like M&As and emphasizes on the ongoing research in this direction.

In the recent past Initial Public Offering (IPO) scam has shaken the confidence of millions of investors in the Indian capital market. IPO scam came to light in 2005 when Securities and Exchange Board of India (Sebi) discovered huge rigging in allotment of YES Bank and IDFC shares. This scam compelled Sebi to examine all IPO related systemic issues in order to strengthen the capital market and restore the lost confidence of the investors in general and the retail investors in particular. Though this scam was of smaller magnitude as compared to other scams it has undoubtedly put a question mark on Sebi's superiority as a proactive regulator of the capital market.

Sebi detected serious irregularities in IPO viz. multiple share applications allotment procedures financing of IPOs by fraudulent financers opening of benami dematerialized accounts and the role of Depository Participants (DPs) etc. in the entire process of IPOs. It was apparent that the ultimate sufferers were the retail investors who were deprived of allotment of IPO shares since few scamsters had cornered the market. The story goes on and Sebi has taken stringent actions to protect the interest of small investors and came up with a set of fresh recommendations.

Portfolio Organizer Magazine, Capital Market Reforms, Initial Public Offering, IPO, Securities and Exchange Board of India, SEBI, Credit Rating Agencies, CRAs, Investor Education and Protection Fund, IEPF, Decision Making Process, Quality Management, Financial Services India Ltd, Mergers and Acquisitions, M&As.