The pricing of an IPO issue is determined by the issuing company in consultation with the merchant bankers.
How is the price of an issue determined?
Pricing in any IPO is arrived at after considering many factors including the valuation of the company, target capital to be raised, etc. This is genrally based on the potential demand for the company’s securities and other key parameters like the PE ratio, the debt-equity ratio, EPS, net worth, etc. These parameters are also compared to the company’s peers to arrive at the right base price.
