Filing an IPO requires rigorous compliance, especially under SEBI’s updated guidelines. Hyderabad businesses must transition into public limited entities and meet stricter governance structures, including independent directors and mandated audit committees. Financially, an SME IPO now requires an EBITDA of at least one crore rupees in two of the three preceding years, closing the net-worth route for loss-making firms. Furthermore, the use of proceeds must be fully quantified and certified. Lorvet Advisory Services guides issuers through these stringent legal, financial, and disclosure frameworks well in advance, ensuring a seamless, error-free submission to regulators.
For a Hyderabad business that has spent years building revenue and margins, the decision to go public feels like a finish line. In reality it is the start of the most scrutiny-heavy phase the company will ever face. An IPO is not won on the day the issue opens; it is won in the months of compliance work that precede the filing. SEBI has tightened the rules considerably over the past year, and a company that treats compliance as a last-minute formality risks delay, rejection or worse. Strong IPO advisory services exist precisely to turn that risk into a managed process, and this checklist sets out what a Hyderabad business needs to have in order.
The framework is the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended through 2025 and 2026. The amendments matter, because several long-standing assumptions about SME and pre-IPO readiness have changed.
Get the Legal Structure Right First
Before any financial criterion, the company’s legal form has to be correct. A company must convert to a public limited company before filing its Draft Red Herring Prospectus. This is not a paperwork detail; it changes the governance environment entirely.
Once public, the company must meet board composition requirements, including independent directors, constitute an audit committee and other mandated committees, and operate under far stricter disclosure discipline. Exchanges now examine incorporation documents, shareholding patterns and statutory compliance closely at the IPO stage. A further trap catches entities that were recently an LLP or proprietorship: under the 2025 amendments, such entities must complete one full financial year after conversion before they can file. For many Hyderabad founders running businesses in tech, pharma or manufacturing, this single rule can move the timeline by a year if not planned for early.
Confirm You Meet the Eligibility Criteria
The eligibility bar has been raised, and the headline change is profitability. For an SME IPO, the company must now show operating profit, EBITDA, of at least one crore rupees in at least two of the three financial years preceding the application. This replaced the older test, which a loss-making company could satisfy through equity infusion, so the route to listing through paper net worth alone is closed.
Other thresholds remain critical. Post-issue paid-up capital must not exceed twenty-five crore rupees for the SME route; above that, the company belongs on the mainboard. A three-year operating track record and audited financials for those years are mandatory. Verifying that the company genuinely clears each of these, on audited numbers, is the first hard checkpoint in any credible IPO advisory services engagement.
Tighten Governance and the Use of Proceeds
SEBI’s 2025 and 2026 changes placed heavy emphasis on what the money is for and how its use is watched. Every stated use of IPO proceeds must be quantified and certified; vague language such as “working capital requirements” without figures is no longer acceptable.
General corporate purposes are now capped at the lower of fifteen percent of fresh issue proceeds or ten crore rupees. Crucially, IPO proceeds cannot be used to repay loans from promoters or related parties. SEBI has also mandated a monitoring agency for SME issues above fifty crore rupees, reporting quarterly to the audit committee and the exchange on actual utilisation, with any deviation from stated objects requiring shareholder approval by postal ballot. A Hyderabad business must therefore design its objects of the issue with this scrutiny in mind from the outset.
Prepare the Offer Structure and Disclosures
The structure of the offer itself carries rules that have tightened, and the disclosure burden is significant. The Offer for Sale component, where existing shareholders sell, is now capped at fifty percent of pre-IPO promoter holding, and the minimum number of allottees was raised to two hundred.
Disclosure is where many filings stumble. The DRHP must fully disclose material litigation, regulatory actions in the last five financial years, and any promoter or director who is a wilful defaulter, on the cover page. Inconsistent financials, qualified audit reports or unclear use of proceeds are among the most common grounds for SEBI raising objections. Promoter shareholding must also be in dematerialised form, with the mandated portion locked in. Getting these disclosures complete and consistent before filing is far cheaper than answering SEBI queries after.
Know the 2026 Procedural Reliefs
Not every recent change tightened the screws; some help issuers, and a well-advised company uses them. In April 2026, SEBI allowed issuers to revise the fresh issue size by up to fifty percent, up or down, without refiling the DRHP, subject to prior approval, where previously anything beyond twenty percent forced a refiling.
SEBI also extended the validity of observation letters expiring between April and September 2026 by six months, giving companies caught in volatile markets more room to time their launch. For a Hyderabad business planning its issue around uncertain conditions, these reliefs add useful flexibility, but only to a company that is otherwise fully compliant. They are a cushion, not a shortcut, which is the distinction Lorvet stresses with every issuer it advises.
The Practical Takeaway
Pre-IPO compliance under SEBI’s current regime is demanding and unforgiving of shortcuts. The legal conversion, the profitability test, the governance build-out, the certified use of proceeds and the disclosure discipline each have to be in place before filing, and the 2025 and 2026 amendments have raised the bar on all of them. A Hyderabad business that starts this work twelve months ahead, with proper IPO advisory services guiding the sequence, enters the process with confidence. One that leaves it late discovers the cost in delay and rejection. The work of Lorvet Advisory Services is to make sure every box is ticked before SEBI ever sees the file.
