Archive · 7 Oct 2026
India’s IPO Boom Renews Debate Over Mandatory Offer Ratings
Many companies in India are selling shares to the public through IPOs.
This has brought back a question: should IPOs have to receive ratings?
Ratings were once required, but that system was dropped.
One problem was that people judged the ratings by whether shares gained value in the market, instead of by the company’s fundamentals.
Ratings are now optional.
The article says no company is choosing to get one.
It suggests companies may worry that a poor rating could discourage investors.
The article raises the idea of bringing mandatory ratings back.
India’s continuing IPO boom has renewed calls to consider mandatory ratings for public offers.
IPO ratings existed before and were initially mandatory.
The earlier rating system was abandoned after it was judged by market gains rather than fundamentals.
Ratings are now optional, and the article says no issuer currently seeks one.
The article suggests issuers may avoid ratings because they fear a negative signal.
- Who
- Companies issuing IPOs in India and those considering whether IPO ratings should be mandatory.
- What
- The continuing IPO boom has renewed debate about requiring ratings for public offers.
- Where
- India
- Why
- The IPO boom has prompted reconsideration of ratings, which are currently optional and, according to the article, unused by issuers.
Arguments for mandatory ratings
Concerns about ratings
Whether to require ratings
Arguments for mandatory ratings
The IPO boom strengthens the case for reviving mandatory ratings of public offers.
Concerns about ratings
The article notes that the earlier system was abandoned because ratings were judged by market gains rather than company fundamentals.
Issuer participation
Arguments for mandatory ratings
A mandatory system would not depend on issuers choosing to seek a rating.
Concerns about ratings
Ratings are currently optional, and issuers may avoid them for fear of receiving a negative signal.
- Current status
- IPO ratings are optional.
- Issuer uptake
- The article says no issuer currently seeks an IPO rating.
- Earlier policy
- Ratings existed previously and were initially mandatory.
- Reason for abandoning earlier system
- It was judged on market gains rather than fundamentals.
- Issue raised
- Whether mandatory IPO ratings should be revived.
- Possible issuer concern
- Issuers may fear that a rating could send a negative signal.