What is IPO grading?

The grade provided to the initial public offering (IPO) of equity shares or any other securities that may be converted into or exchanged for equity shares at a later date by a Credit Rating Agency registered with SEBI is known as IPO grading.

Grades are scores of stocks on the basis of their size, liquidity and exchange compliance. This classification is in a way a guarantee that these companies follow the basic listing requirements such as reporting results on time, and making proper disclosures.

In India both BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) classifies stocks. More or less the classification of stocks is apparently similar on both platforms. Mainly there are seven grades of stocks namely, A, B, T, S, TS & Z. All other stocks which fail the characteristics of any one of these grades are kept in “others .”