Capstone Final 2011 Apr (1)

8/6/2019 Capstone Final 2011 Apr (1)

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ANALYSIS OF PRICING TRENDS OF IPO

LAUNCHED BETWEEN 2002 and 2009(NSE)

Submittedto Lovely Professional University

In partial fulfillment of the requirements for the award of degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by:

Ankit Chauhan 1090 RR1901B43

Priyanka Thakur 10902175 RR1901B44

Kanika Grover 1090 RR1901B47

Shelly 10901200 RR1902A03

Supervisor:

Name of the Faculty Advisor

Designation

DEPARTMENT OF MANAGEMENT

LOVELY PROFESSIONAL UNIVERSITY

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PHAGWARA

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the Synopsis titled ANALYSIS OF PRICING TRENDS OF IPO

LAUNCHED BETWEEN 2002 and 2009 (NSE) carried out by Ms. Priyanka Thakur,

D/o______________________________has been accomplished under my guidance &

supervisionas a duly registered MBA student of the Lovely Professional University, Phagwara.

Her Synopsis represents his original work and is worthy of consideration for making a research

project in the next term.

___________________________________

(Name & Signature of the Faculty Advisor)

Date:

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LAUNCHED BETWEEN 2002 and 2009 (NSE) carried out by Ms. Shelly,





___________________________________


Date:

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LAUNCHED BETWEEN 2002 and 2009 (NSE) carried out by Ms. Kanika Grover ,





___________________________________


Date:

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LAUNCHED BETWEEN 2002 and 2009 (NSE) carried out by Mr. Ankit Chauhan,

S/o______________________________has been accomplished under my guidance & supervision

as a duly registered MBA student of the Lovely Professional University, Phagwara.

His Synopsis represents his original work and is worthy of consideration for making a research


___________________________________


Date:

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DECLARATION

I, "Priyanka Thakur, hereby declare that the work presented herein is genuine work done

originally by me and has not been published or submitted elsewhere for the requirement of a

degree program. Any literature, data or works done by others and cited within this synopsis has

been given due acknowledgement and listed in the reference section.

_______________________

(Students name & Signature)

Date:__________________

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DECLARATION

I, " Kanika Grover, hereby declare that the work presented herein is genuine work done




_______________________


Date:__________________

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DECLARATION

I, " Shelly, hereby declare that the work presented herein is genuine work done originally by me

and has not been published or submitted elsewhere for the requirement of a degree program. Any

literature, data or works done by others and cited within this synopsis has been given due

acknowledgement and listed in the reference section.

_______________________


Date:__________________

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DECLARATION

I, " Ankit Chauhan, hereby declare that the work presented herein is genuine work done




_______________________


Date:__________________

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ACKNOWLEDGEMENT

This report bears the imprint of many people, the staff of Lovely Professional University, without

the support and guidance of whom we would not have got the opportunity to successfully

complete this project.

We wish to express my deep and profound sense of gratitude to our project advisor from college

Mr Danish Khanna for her guidance and constructive support in the completion of this study.

I take this opportunity to express my deep gratitude to all the other teachers of Lovely

Professional University. Also, I am indebted for the rich guidance, knowledge and suggestionsprovided by Ms. Neha who took sincere efforts and illustrated the Financial Concepts as well as

the application of various analytical tools with their vast knowledge in the field, which helped me

a lot in completing this project effectively.

Last but not the least we also thank all those people who helped me indirectly during the course of

our project which helped in its completion in an effective and efficient manner.

April 2011

Place: - Jalandhar

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EXECUTIVE SUMMARY

The project is related to know the pricing trends of IPO from 2002-2009. Before going further

first of all brief description about IPO. IPO is the selling of securities to the public in the primary

market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale

of its existing securities or both for the first time to the public. An IPO is the first sale of the

corporations common shares to investors on the public stock exchange. The main purpose for the

IPO is to raise capital for the corporation. Instead of it, there are also many reasons like Debt

Refinancing, expansion, diversification, modernization, brand acquisitions etc. along with

advantages there are certain disadvantages also like increased regulatory monitoring, cost of

maintain investor relations, involves substantial expenses. When the companies are going for the

IPOs, then there are certain eligibility norms which the every company should fulfill:

- An unlisted company may make an offer only if they have net tangible assets of at least

Rs 3 crores in each of preceding 3years,

- Company should have a distributable profits,

- Company should have a net worth of at least 1 crores.

The need of the study is to aware the Investors regarding the investment so that they can make

money wisely. It will be helpful for making decisions in the future. Objective of the study is to

study the pricing trends of IPOs in India and the factors affecting the same. Factors cover in this

study is demand for an IPO & Delay in listing. To analyze the pricing trends of IPOs of the last

eight years, therefore our scope is limited to eight years from 2002 to 2008. Therefore, the main

limitation of our study is the limited period and this data is from NSE only. We take only NSE

because NSE is the first stock exchange where the shares are traded in dematerialized form.

To analyze the pricing trends from 2002-2009, we have done research. We use descriptive

research as we are doing the analyze of the past data. We use secondary sources for collection of

our data. Secondary sources which are used is Internet, Research Papers, articles, journals etc. In

our research it includes all the 253 IPOs which is issued in National Stock Exchange from 2002 to

2009. We are using three variables Demand of IPO, Delay in Listing and Price of Issue i.e.

underpriced or overpriced. In these, demand of IPO and Delay in Listing are the Independent

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Variables and Pricing of the issue is dependent variable. Tools which are used is Ms Excel,

Regression, SSPS, MiniTab.

Hypothesis:-

1. H(0) There is a relation between IPO under pricing, demand for IPO & delay in listing

2. H(1) there is no relation between demand for IPO and Delay in listing

By using MS excel, first of all we have calculated returns of the IPOs for the first day, tenth day

and from first to tenth day. Lets suppose for calculating the return for the first day formula used

is: return of 1st

day closing price / closing price. And then calculate the delay in listing. By

calculating these, we come to know the whether the IPO is underpriced or overpriced.

In this study we come to know that most of the IPOs are underpriced, because most of the returns

from 1st to 10th is in negative. This shows that IPOs are underpriced. When the demand is high, It

means that demand of the issue is high but it is priced low which depicts that IPO is underpriced.

Out of 253, 131 IPOs are underpriced. This shows that IPOs are underpriced. When we come to

know that IPOs are underpriced, then we calculate degree of underpriced by applying the formula:

Deg_underpricing = (Pclosing on listing day Poffer)/ Poffer

Where, P is the price of the stock

REGRESSION MODEL:-

Regression model to be estimated then is,

Degree Underpricing = B0+ B1(Listing Delay) + B2(Demand)+ e

Where, e is the error team with the distribution N (0,1)

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The regression equation clearly tells that listing delay has much more impact on degree of pricing

of the issue as compared to demand for the IPO. Similarly it is clear from the model that listing

delay has direct relation and impact on degree of pricing whereas demand is negatively relates to

degree of pricing.

Another important parameter driving the under pricing negatively is the listing delay. Also we

have found that out of 243, only 134 companies are under price i.e. 56% companies are

underpriced indicating that most of companies keep their price lower than their intrinsic value to

make IPO successful.

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TABLE OF CONTENTS

CHAPTER PARTICULARS PAGE No.

1. INTRODUCTION

1.1 INITIAL PUBLIC OFFERING 10

1.2 FOLLOW ON PUBLIC OFFERING 10

1.3 REASONS FOR GOING PUBLIC 10-11

1.4 ADVANTAGES OF GOING PUBLIC 12

1.5 DISADVANTAGES OF GOING PUBLIC 12-13

1.6 ELIGIBILITY NORMS FOR IPO 13

1.7 PRICING 14

1.8CONCEPT OF UNDERPRICING 14-17

2. NEED AND OBJECTIVES

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2.1 NEED OF THE STUDY 19-20

2.2 OBJECTIVES 20

2.3 SCOPE OF THE STUDY 20

3. REVIEW OF LITERATURE 22-26

4. RESEARCH METHODOLOGY4.1 RESEARCH METHODOLOGY 28

4.2 RESEARCH PLAN 28

4.3 RESEARH DESIGN 28

4.4 RESEARCH TOOLS 28-31

4.5 DATA COLLECTION

4.6 HYPOTHESIS32

5. ANALYSIS AND INTERPRETATION 34-52

6.FINDINGS, RECOMMENDATIONS, CONCLUSION and

LIMITATIONS

7.

8.

6.1 FINDINGS

6.2 CONCLUSIONS

6.3 LIMITATIONS

6.4 RECOMMENDATIONS

BIBILIOGRAPY

APPENDIX.

54

54

54-55

55

57-58

60-87

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CHAPTER I

INTRODUCTION

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INTRODUCTION

A company can raise capital through issue of shares and debentures. The various types of issues

are:-

Public issue

Right issue

Bonus issue

Private placement

There can be two types ofpublic issue:-

Initial public offer (IPO)

Follow On public Offer (FPO)

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INITIAL PUBLIC OFFER

An initial public offer is the selling of securities to the public in the primary market. It is when an

unlisted company makes either a fresh issue of securities or an offer for sale of its existing

securities or both for the first time to the public. This paves way for listing and trading of the

issuers securities. The sale of securities can be through book building and normal public issue.

An IPO is the first sale of the corporations common shares to investors on the public stock

exchange. The main purpose for the IPO is to raise capital for the corporation. While IPOs are

effective at raising capital, being listed on the stock exchange imposes heavy regulatory

compliance and reporting requirements

An initial public offer occurs when security is sold to the general public, with the expectation that

liquid market will develop. Most companies are starting out by raising equity capital from a small

number of investors, with no liquid market existing if these investors wish to sell their stock. If a

company prospers and need an additional equity capital, at some point the firm generally finds it

desirable to go public by selling stock to large number of diversified investors.

FOLLOW-ON PUBLIC OFFER

Further public issues are issued by companies and corporate bodies whose shares are already

being traded in the capital market and they are issuing fresh shares either to fund the expansion of

existing business or to invest into the business activities.

REASONS FOR GOING PUBLIC:

1. Financing of the increased working capital requirement.

2. Raising funds to finance capital requirement programs like expansion, diversification,

modernization etc.

3. Debt refinancing.

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4. Financing acquisitions like a manufacturing unit, brand acquisitions, tender offers for

share of another firm.

ADVANTAGES OF GOING PUBLIC

1. Facilitates future funding by means of subsequent public offering.

2. Enables Valuation of company.

3. Provides liquidity to existing shares.

4. Increase visibility and reputation of the company.

5. Command better pricing than placement with few investors.

6. Enables the company to offer its shares as purchase consideration or as an exchange for

the shares of another company.

7. Enabling cheaper access to capital.

8. Exposure, prestige and public image.

9. Attracting and retaining better management and employees through liquid equity

participation.

10. Facilitating acquisitions

11. Creating multiple financing opportunities: equity, convertible debt, cheaper bank loans,

etc.

12.Increased liquidity for equity holder

DISADVANTAGES OF GOING PUBLIC

1. Involves substantial expenses like significant legal, accounting and marketing costs.

2. Need to make continuous disclosures.

3. Listing fees and documentation.

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4. Cost of maintaining investor relations.

5. Takes substantial amount of management time and efforts.

6. Increased regulatory monitoring.

7. Risk that required funding will not be raised.

8. Public dissemination of information which may be useful to competitors, suppliers and

customers.

ELIGIBILITY NORMS FOR IPO

An unlisted company may make an initial public offering (IPO) of equityshares only if

The company has net tangible assets of at least Rs. 3 crores in each of the preceding 3

Full years (of 12 months each), of which not more than 50% is held in monetary assets.

The company has a track record ofdistributable profits in terms of Section 205 of the

Companies Act, 1956, for at least three (3) out of immediately preceding five years.

The company has a net worth of at least Rs. 1 crore in each of the preceding 3 full Years

(of 12 months each).

In case the company has changed its name within the last one year, at least 50% of the

revenue for the preceding 1 full year is earned by the company from the activity

Suggested by the new name.

The aggregate of the proposed issue and all previous issues made in the same financial

Year in terms of size (i.e., offer through offer document + firm allotment + promoters

Contribution through the offer document), does not exceed five (5) times its pre-issue Net worth

as per the audited balance sheet.

Alternative routes

Recognizing that many good companies, for one reason or the other, may not be able to

comply with all the eligibility norms, two other alternative routes are available to such

companies:

Alternative I:

i) Issue shall be through book building route, with at least 50% to be mandatory allotted toQIBs.

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ii) The minimum post issue face value capital shall be rs.10 crores.

OR

Alternative II:

i) The project is appraised and participated to the extent of 15% by FIs/Scheduled

commercial banks of which at least 10% comes from the appraiser(s).

ii) The minimum post- issue face value capital shall be Rs. 10 crores or there shall be a

compulsory market-making for at least 2 years. In addition to satisfying the aforesaid

eligibility norms, the company shall also satisfy the criteria of having at least 1000

prospective allottees in its issue.

PRICING

Before establishment of SEBI in 1992, the quality of disclosures in the offer documents was very

poor. The main drawback of free pricing was the process of pricing of issues. The issue

price was determined around 60-70 days before the opening of the issue and the issuer had no

clear idea about the market perception of the price determined.

In Book Building the price is determined on the basis of demand received or at price above or

equal to the floor price.

The Allotment Process through Book-building:

Step1-The Company will 'discover' its price

Earlier, the company determined a fixed price for the stock issue. The issue was

marketed to the general public through advertisements and a media campaign.

Today, companies prefer a book building process. Book-building is the process ofprice discovery. That means there is no fixed price for the share. Instead, the company issuing

the shares comes up with a price band. The lowest price is referred to as the floor and the highest,

the cap. Bids are then invited for the shares. Each investor states how many shares s/he wants and

what s/he is willing to pay for those shares (depending on the price band). The actual price is then

discovered based on these bids.

Step2-Players of the game

The classes of investors can bid for the shares:

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Qualified Institutional Buyers: QIBs include mutual funds and Foreign Institutional

Investors. At least 50% of the shares are reserved for this category.

Retail investors: Anyone who bids for shares under Rs 1,00,000 is a retail investor. At

least 25% is reserved for this category.

The balance bids are offered to high net worth individuals and employees of the company.

Individuals who apply for the IPO put in their bids. The process is transparent. One can check on

the issue subscription at the BSE and NSE Web Sites. After evaluating the bid prices, the

company will accept the lowest price that will allow it to dispose the entire block of shares.

That is called the cut-off price.

The process can be illustrated with an example:

Number of shares issued by the company = 100.

Price band = Rs 30 - Rs 40.

If individuals have bid for prices as follows:

7 BID NUMBER OF SHARES PRICE PER SHARES (Rs)

1 20 40

2 10 38

3 20 37

4 30 36

5 20 35

6 20 33

7 20 30

The shares will be sold at the Bid 5 price of 20 shares for Rs 35.

Why?

Because Bidders 1 to 5 are willing to pay at least Rs 35 per share.

The total bids from Bidders 1 to 5 ensure all 100 shares will be sold (20 + 10 + 20 + 30

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+20). The cut-off price is therefore Bid 5's price = Rs 35.

Concept of under pricing

Generally, it has been found that investors, who purchase IPOs on the offering day, experience

high returns on the first trading day, indicating that these shares may have been priced at the time

of their offering to the public at values much below their intrinsic value. The phenomenon is

known as under pricing.

Under pricing of issue represents the first day returns generated by the firm, calculated as:

Closing Price Offer price/ Offer price

An issue is under (over) priced if the price received by the issuer in the primary market is lower

(higher) than the price of the same securities in the secondary market.

Under pricing of IPOs is a universal phenomenon! Loughran, Ritter and Rysquist (1994) has

been summary of the equally weighted average initial returns on IPOs in a number of countries

around the world in the form of an illustrative table, which has been updated till April 13, 2001

( as shown in Table 1) . It provides the cross-sectional variation in under pricing, ranging from a

low of 4.2% in France to a high of 388% in China. Under pricing is ubiquitous but the amount of

under pricing varies across countries. They have contended that differences in under pricing might

result from differences in institutional arrangements.

Making a firm public is significant turning point in the life of a firm with serious wealth

implications for the existing shareholders. The success of the public listing depends, among other

factors, on the ability to determine an offer price. This is a difficult process. Thus, if the firms

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shares are overvalued, their sale to the public will fail; if it succeeds, it will entail a transfer of

wealth from the new shareholders to the old ones.

In case the new shares are undervalued the old shares will relinquish a claim on the firms cash

flows at a price below its fair value. To avoid certain uncertainties involved in the public sale of

their securities, firms retain underwriters who undertake the risk of pricing and selling the new

securities. The conditions under which new securities are offered to the public and the role of

underwriter are both affected by the regulatory and institutional environment of local IPO market.

SEBI Guidelines about Pricing

A company eligible to make a public issue may freely price its equity shares. An eligible

Infrastructure company and public or private sector bank can also freely price their equity shares,

as specified by SEBI and RBI respectively from time to time.

Price Band

Issuer company can mention a price band of 20% (cap in the price band should not be more than

20% of the floor price) in the date before filing of the offer document with ROCs.

IPO Activity in NSE

Table 5.2: IPO Activity in NSE (over a considered time period)

YEAR NUMBER OF IPO

2000 9

2001 2

2002 2

2003 5

2004 15

2005 40

2006 65

2007 942008 36

2009 21

The table gives the frequency of the book- built IPOs in India with respect to the year of issue and

the issue size. As it is evident from the table that the number of IPOs listed on National Stock

Exchange were quite less from the year 1999 to 2003 as compared to the number listed on from

the year 2004 to 2007. There were twenty IPOs in total from 1999 to 2003 whereas year 2004

alone witnessed the listing of twenty IPOs. Afterwards the IPOs number has followed anincreasing trend up to 2007. and the growth rate from the year 2004 to 2007 is 38.8%.whereas the

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growth rate from the year 1999 to 2003 has a negative growth rate of 53.33%.So we may say that

the time frame from the year 1999 to 2003 represents a cold issue marketfor the NSE while the

time frame from 2004 to 2007 represents the hot issue market.

CHAPTER II

NEED AND

OBJECTIVES

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NEED OF THE STUDY:

This research is mainly related with pricing of the IPOs. IPOs refer to equity stocks issues when a

corporation first initiates public trading of its shares. The study will depict the true picture of

degree of pricing of IPOs, the relation of the pricing trends with variables affecting them as

IPOs are one of the most invested avenues.

Initial public offerings in India are usually underpriced. A stock issue is

deemed to be underpriced if the closing price on the first day of listing is higher than the IPO

price. Even though the book building methodology is an improvement over fixed price IPOs,

issues continue to be significantly underpriced.

OBJECTIVE:

To study the pricing trend of IPOs issued at NSE between 2002 & 2009.

To study impact of demand for IPO and pricing trend.

To study impact of delay in listing and pricing trend.

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SCOPE OF THE STUDY

This project is mainly to know the pricing trends of IPO between 2002 & 2009. Thats why in the

scope it included all the issues of NSE between 2002 & 2009. The study is related to all those IPO

issues.

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CHAPTER III

REVIEW OF

LITERATURE

REVIEW OF LITERATURE:

Blum (1973) examined the issues of relative performance of the over-the-counter market with the

initial common stock offerings, under pricing, and the risk involved thereof. The total period had

been covered by the study w.e.f Jan 19, 1965 to June 30, 1970 with a random sample of 400

initial common stock offerings. The market returns and risks associated with these 400 issues

have been calculated for 16 time periods, ranging from one week to one year after the offering

date. The study conducted so far suggests that the investment bankers have either underpriced or

pushed in the after-market those IPOs in which they held greatest financial interest.

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Barons M (1982) in his model explains the contracting mechanism when the investment banker

has better information than the issuer about the IPO market. Since the issuer cannot monitor the

investment banker without cost, in order to incentivize the investment banker, the issuer lets the

investment banker under price the issue (optimal delegation). Baron uses the term, delegation is

contracting to model the situation in which an issuer not only needs the services of the

investment banker for distribution of the IPO, but also needs his advice for setting the offer price.

Rock S (1986) in his model discusses firm commitment offerings. He showed that those investors

who are more informed (than the firm as well as other investors) about high under pricing offers

(high first rate return) are able to get a higher allocation share than uninformed investors in such

issues. On the other hand, these informed investors withdraw issues which are overpriced

(negative first day returns), leaving the uninformed investors with the winners curse problem,

which means that they get all the shares that they ask for, but these shares are worthless in terms

of first day returns. In such a scenario, the uninformed investors would not participate in any issue

fearing the winners curse problem. Hence, in order to attract such investors and fully sell its

issue, the firm must under price its IPOs.

Benveniste S (1989) model is for book building and predicts that under pricing is necessary to

acquire true information from the more informed investors. Thus, those issues which are offered

on the higher side of a price band mentioned in the book building will be more underpriced than

the others.

Pagano et. Al (1998), in their study of Italian firms, find that firms going public are not seeking

money for growth but are rebalancing their account after high investment and growth. The post-

IPO period sees a reduction in leverage as well as investment. They state that going public is a

conscious choice that some firms make, while some others prefers to remain private.

Wang K (1998) researched that differences in under pricing for initial public offerings (IPOs)

brought to market in Hong Kong, Singapore, and the United States. It intends to determine

whether IPO pricing accuracy in Hong Kong is facilitated by the development and disseminationof pre-deal research. Pre-deal research can enhance IPO pricing accuracy; the overall finding

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should be useful to regulators in Hong Kong and Singapore as they continue to evaluate the extent

to which pre-deal research should be allowed and other IPO related policy making.

Chemmanur (1993) presents an information-theoretic model of IPO pricing in which insiders sell

stock, in both the IPO and the secondary market, have costly private information about

performance of the firm. High value firms, which know that they are going to pool with the low-

value firms, induced outsiders to engage in information production by under pricing, which

compensates outsiders for the cost of producing information. So under pricing results from

insiders inducing information production in order to have a more precise valuation of their firm in

secondary market.

Madhusoodanan and Thiripalraju (1997) analyze the Indian IPO market for the short term as

well as long term under pricing. They also examine the impact of the issue size on the extent of

under pricing in these offerings and the performance of the merchant bankers in pricing these

issues. The study indicates that, in general, the under pricing in the Indian IPOs in the short run is

higher than the experiences of other countries. In the long-run too, Indian offerings have given

high returns compared to negative returns reported from other countries. The study also reveals

that none of the merchant bankers showed any better pricing capabilities.

Sarig and Wohl (1998) analyze in the given article The Demand for Stocks: An Analysis of

IPO Auctions that demand schedules are relatively flat around the auction clearing price. The

average elasticity is 37. The elasticity is low when the return distribution contains a large unique

component. We also find a significant average abnormal return of 4.5% on the first trading day

and a positive correlation between the abnormal return and the elasticity of demand.

HenslerD.(1998) in his study over/ under pricing of Initial Public Offerings explained why

the issue is under or overpriced and the main reason which they find is lawsuit avoidance . The

main purpose of this article to show the simple model that lawsuit avoidance hypothesis can

explain not only under pricing but also overpricing. The theory herein suspects explicit treatment

of the litigation costs versus offering revenues arguments used in those models in favor of a

probability-of-lawsuit argument. There are two major contributions from this study. First, the

model predicts overpricing under the lawsuit avoidance hypothesis. Second, while other models30


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focus on the on-average under pricing phenomenon, the model herein presents a continum of

pricing which spans overpricing, under pricing, and pricing the IPO at its intrinsic value.

Wharton P (2001) in his article Who profits from IPO under pricing? explained what is the

main reason behind issues under pricing. In the Indian as well as in the foreign market IPOs are

underpriced and there is main reason behind that. In his studies he found that in U.S. IPOs are

underpriced on an average of 15%. Thus, at the end of the first day of trading, the stock price of a

company is typically 15 percent higher than the initial price set by the underwriter. Conventional

wisdom has held that the gap is inevitable given the risks in taking public a young company that

often has little or no track record. Robert E. hoskisson and three other universities concluded that

a concept used to sort out the interests of owners and managers and under pricing of IPOs occurs

because it is in the interests of some of the key players.

BoultanT. (2001)in their study IPOunder pricing and international corporate governance

is focused on IPO under pricing establishes that typical IPO stock rises above the initial offer

price after one trading day and hence issuing company get short term returns. But this IPO under

pricing studies varies internationally. Examining a sample of 4462 IPOs across 29 countries from

2000 to 2004, we find that IPOs in all countries are underpriced, with a mean first-day return near

28%. Under pricing varies dramatically across countries. The standard deviation of mean under

pricing across countries is approximately 13.6%. Some variation results from differences in firmand deal characteristics, such as the offer size, current market conditions, the issuer's industry, and

whether the firm is backed by a high-reputation underwriter. Most importantly, however, we find

that under pricing is higher for firms going public in countries with corporate governance systems

that strengthen the position of investors relative to insiders.

Ritter and Welch (2002) examined three main aspects i.e. why firms go public, why they reward

first day investors with considerable under pricing and how IPOs perform in the long run. The

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study explains the Life cycle theories and Market timing theories. This study presents both

theoretical and empirical evidence for short run and long run underperformance of IPOs and

shows that the under pricing is sensitive to methodology and to the time period being chosen.

Second, Fama-French Multifactor regressions could produce odd results.

Lowry M (2003) stated in his research that IPO volume fluctuates substantially over time. The

aggregate capital demands of private firms, the adverse-selection costs of issuing equity, and the

level of investor optimism can explain these fluctuations. Firms' demands for capital and investor

sentiment are important determinants of IPO volume, in both statistical and economic terms.

Adverse-selection costs are also statistically significant, but their economic effect appears small.

Ljungqvist and Boehmer (2004) examine in the article On the Decision to Go Public:

Evidence from Privately-held Firms that there may be many reason why company go

publically?

1) More companies will go public when outside valuations are high or have

increased,

2) Companies prefer going public when uncertainty about their future profitability is

high,

3) Firms whose controlling shareholders enjoy large private benefits of control are

less likely to go public.

Brau and Fawcett (2004) describe in the article Initial Public Offerings: An Analysis of

Theory and Practice that by creating a survey on 330 CFOs it found that the primary motive of

a firm is acquisition for going public. Because majority feel that firms want to expand its business

so by raising capital through IPOs they can acquire another firm. But CFOs also have different

opinions about the IPO process depending on firm-specific characteristics and objectives. Also we

find that the main reason for remaining private is to preserve decision-making control and

ownership.

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Beverly and Marshall (2004) describe the hypothesis that the financial characteristics of the

issuing firm, along with the availability of alternative sources of financing, are important

determinants of the level of under pricing. While risk and its relationship to underpricing have

been examined in previous studies, liquidity risk is unique because of its special implications for a

firm's bargaining position with the underwriter. Consistent with my hypothesis, firms with greater

liquidity concerns at the IPO experience greater underpricing. On the other hand, firms with

higher levels of venture capital funding and/or debt financing are more fully priced.

Ghosh S. (2004) identify in the article IPO Underpricing in India that there are some factor

explaining IPO underpricing in an emerging economy. In this article we find a negative relation of

underpricing and volatility. This contradiction could be due to the investors' optimism during the

offer period and subsequent revision in prices (immediately after listing) with the availability of

new information during the long offer-listing period. The high average risk, significant negative

relation between risk and underpricing during the high volume period and insignificant relation of

the same during the cold period suggest that some of the issuers took the advantage of investors'

optimism to collect as much money as possible during the hot period.

Bhagmati J. (2005) in her study Why Bother About IPO Pricing explores that though book

building methodology is better than fixed pricing but still the issues are underpriced. The price

quoted on the last bid becomes the price at which demand is deemed to meet supply and all

bidders pay this price for their allotments. If the issue is oversubscribed, allocation is done on a

prorate basis providing for equitable treatment across investor categories. She summarized that

book building results in under pricing IPOs. Such pricing bias leads to a scramble for allotment.

Under these circumstances, no matter how vigilant or efficient the regulating agencies, it is

difficult if not impossible to stamp out wrong doing. This is particularly true in India as we do not

have national identity numbers and our justice system finds it difficult to secure convictions.

Consequently, we need to try out IPO auctions, on an experimental basis, as a way of improving

price discovery.

Demers. E. (2006) stated that the factors associated with IPO failures by developing an IPOfailure prediction model that includes accounting information as well as proxies for the role of

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information intermediaries and other IPO deal-related characteristics. The IPO long-run returns

anomaly persists for high failure risk firms.IPO failure forecasting models for each of the two

sectors. Those forecasts are negatively associated with one-year post-IPO abnormal returns.

S. Viswanathan (2006) This article examines the pricing of the initial public offerings (IPOs) that

follow insurance company demutualizations. Insurers that convert from mutual to stock form

typically cite the need for capital as a key motivation. Given that capital adequacy is a primary

regulatory objective for insurers; one would expect that for a given number of shares to be sold,

these firms would price their offerings to maximize proceeds. By examining the initial and long-

run stock returns for these conversion IPOs, the existence and degree of underpricing, as

characterized by large initial returns, can be determined. Attractive returns are sustained for both

groups of insurers during the first few years after IPO.

Edwards K. (2007) describe in the given article Short Selling in Initial Public Offerings that

short selling is a characteristic of the aftermarket and it is higher in IPOs with greater

underpricing. Short sellers do not appear to earn abnormal profits in the near term and our

findings are that it can be a factor for underpricing of an IPO. Short selling in IPOs is not as

constrained as suggested by the literature, implying that other factors may be responsible forunderpricing.

Lee G (2007) stated that financial intermediaries participating in the IPO process appear to play a

significant role in restraining earnings management. IPO is negatively related to the reputations of

underwriters and venture capital (VC) investors. We find strong evidence that more reputable

investment banks are associated with significantly less earnings management. Neither VC

investment, nor backing by more reputable VCs significantly restrains earnings management by

IPO issuers.

Vaidayanathan (2007) studies the price performance of IPOs in the NSE. The study suggests that

the demand generated for an issue during book building and the listing delay positively impact the

first day under pricing whereas the effect of money spent on the marketing of the IPO is

insignificant.

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CHAPTER IV

RESEARCH

METHODOLOGY

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RESEARCH METHODOLOGY

Research Design

It is a blue print for the fulfillment of objectives and answering questions. The research design

used in the study is descriptive research.

Descriptive research:

Descriptive research is that kind of research where the researcher has no control over the

variables. Reporter can only report what has happened or what is going to happen. But these

incidents cannot be changed by the researcher.

Sample Design

The following factors have to decide within the scope of sample design:

i. Sample Size: - It includes all the IPOs issued in National Stock Exchange between 2002

& 2009.

ii. Sample Unit: It indicates who is to be surveyed. In this study we cover all the IPOs of

National stock exchange.

iii. Sampling Technique: For the purpose of this research Convenient Sampling is being

used.

iv. Tools & Techniques :

a) MS- Excel

b) Regression

c) SPSS

d) Minitab

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Independent variable demand of IPO, delay in listing (time-period)

Dependent variable Degree of pricing of the issue.

Data Collection

In this study data is collected from following sources:

i) Secondary data:

Secondary data are those which have already been collected by someone else and which have

already been passed through the statistical process. In this case one is not confronted with the

problems that are usually associated with the collection of original data. Secondary data either is

published data or unpublished data. In this study secondary data is collected from web site of

NSE, articles, journals.

Methodology:

To test whether a stock has been priced at its intrinsic worth or not and to determine the

magnitude and degree of the deviations of market price of the stock from its offer price, returns

have been computed. If the returns are positive, the indication is that of under pricing whilenegative returns imply overpricing.

The initial return on IPOs has been computed as the difference between the closing price on first

day of trading and the offer price, divided by the offer price.

R_Ret. = P1 - Po * 100/ Po --------------------- (i)

Where R_Ret. = subscribers initial return (hereafter raw return)

P1 = closing price on the first day of tradingPo = Offer price

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HYPOTHESIS: -

1. H(0) There is no relation between degree of pricing of IPO with demand for IPO &

delay in listing.

2. H(1) There is relation between degree of pricing of IPO with demand for IPO & delay in

listing:-

The issues which are finally priced towards the higher end of the offer price band would

be underpriced more, as compared to issues which are finally priced towards the lower end

of the price band. The degree of under pricing is a function of the popularity of the IPO in

the market demand. If there is good demand in the market for an issue, then the merchant

banker fixes an offer price which is on the higher side of the price band available for

bidding. On the contrary, if there is low demand for an issue, then the offer price would be

fixed at the lower end of the band. The fixation of the price at the higher end of band is

likely to send a signal to the market about good demand for the issue and is likely to result

in a higher listing price as well as trading price on opening day of the listing of the stock.

The degree of under pricing is hypothesized to be positively correlated with listing delay.

This is because investors who face illiquidity because of long delay in listing would

demand more premiums in the first day of listing and may take positions likewise in the

market. Thus, the hypothesis examined is that a longer time to list increases the degree of

the under pricing of the firm.

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CHAPTER V

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ANALYSIS AND

INTERPRETATION

MODEL: -

INDEPENDENT VARIABLE:-

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1. Time- period: The listing delay of the firm from the last day of the offer to the day of

listing

(The degree of under pricing was measured as the ratio of difference in closing price on the day of

listing and offer prices to the offer price)

2. Demand: Demand for the issue

(Those issues whose final offer price was greater than mean of the price band were classified

as high demand issues;

While those with an offer price less than or equal to the mean of the band size were classified

as low demand issues)

DEPENDENT VARIABLE:

Degree of pricing of the Issue Whether the issue is underpriced or overpriced.

Name of the Issue Price Range Issue Price Demand Time(Day

s)

D. B. CORP LIMITED Rs. 185 - Rs. 212 212 High 22

GODREJ PROPERTIES LIMITED Rs. 490 - Rs. 530 490 Low 24

JSW ENERGY LIMITED Rs. 100 - Rs. 115 100 Low 26

MBL INFRASTRUCTURES

LIMITED

Rs. 165 - Rs. 180 180 High 41

COX AND KINGS (INDIA)

LIMITED

Rs. 316 - Rs. 330 330 High 21

ADANI POWER LIMITED Rs 90 - Rs 100 100 High 20

RAJ OIL MILLS LIMITED Rs 100 - Rs 120 120 High 20

EXCEL INFOWAYS LIMITED Rs 80 - Rs 85 85 High 17

MAHINDRA H & R INDIA Rs 275 - Rs 325 300 Low 20

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LIMITED

EDSERV SOFTSYSTEM LIMITED Rs 55 - Rs 60 60 High 21

PIPAVAV SHIPYARD LIMITED Rs 55 - Rs 60 58 High 21

OIL INDIA LIMITED Rs 950 - Rs 1050 1050 High 20

GLOBUS SPIRITS LIMITED Rs 90 - Rs 100 100 High 21

JINDAL COTEX LIMITED Rs 70 - Rs 75 75 High 21

NHPC Rs 30 - Rs 36 36 High 21

ASTEC LIFESCIENCES LIMITED Rs.77 To Rs.82 82 High 21

DEN NETWORKS LIMITED Rs. 195 To Rs.

205.

195 Low 15

INDIABULLS POWER LIMITED Rs.40 To Rs.45 45 High 25

THINKSOFT GLOBAL SERVICES

LIMITED

Rs.115 To Rs.125 125 High 21

CALCULATION OF DEGREE_UNDERPRICING

42
http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=6&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=7&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=6&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=7&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009


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Degree under pricing = (Pclosing on listing day Poffer)/ Poffer

Where, P is the price of the stock.

Graph showing degree of pricing of IPOs issued in 2009 at NSE.

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REGRESSION MODEL:-

Regression model to be estimated then is,

Degree pricing = B0+ B1(Listing Delay) + B2(Demand)+ e

Where, e is the error team with the distribution N (0, 1)

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

Demand 243 0 1 .83 .375

Listng_delay 242 11.00 511.00 23.9132 38.05909

Pricing 242 -.86 15.84 .0498 1.03576

Valid N

(listwise)242

As can be seen from table above, the degree of pricing in the sample is varying from -0.86% to

15.84% with the mean value of 0.0498%. The listing delay is 24 days on the average and varies

between 11 to 511 days.

The returns on the first day of trading were taken to calculate the degree of pricing. There were

only 4 firms (21%) in the sample which got listed at a discount to their offer price (overpricing),

whereas 15 firms (79%) in the sample got listed at a premium (under pricing) in year 2009. If we

look at over view 243 IPOs were issued at NSE between 2002 & 2009 from which 134 were

underpriced i.e approximately 56% of IPOs were underpriced.

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ESTIMATION OF THE REGRESSION EQUATION:

Based on the hypothesis and the variables defined earlier, the following regression equation is

estimated:

Degree Under pricing = B0+ B1(Listing Delay) + B2(Demand)+ e

Where e is the error term.

Coefficients

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig.B Std. Error Beta

1 (Constant) .387 .165 2.353 .019

Demand -.406 .176 -.147 -2.302 .022

Listing delay 3.830 .002 .000 .002 .998

a. Dependent Variable: Pricing

The regression equation is

Degree = 0.387 + 3.830 Listing delay - 0.406 Demand+ e

The variables are defined as follows:

Demand is a dummy variable which takes a value of 0 if the issue is offered close to the lower

band of the band and 1 otherwise; listing delay is the time in days between the day of close of the

offer and the day of listing.

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Model Summary

Mod

el R

R

Square

Adjusted R

Square

Std. Error

of the

Estimate

Change Statistics

R Square

Change

F

Change df1 df2

Sig. F

Change

1 .147a .022 .014 1.02872 .022 2.655 2 239 .072

a. Predictors: (Constant), Listng_delay, Demand

b. Dependent Variable: Pricing

S = 1.02872 R-Sq = 2.2% R-Sq(adj) = 1.4%

As can be seen from tables above, the regression model developed is itself significant, as the

probability of it being insignificant is 1.02, which is very close to zero. The R2 is 2.2%. The low

value could be because of wide heterogeneity in the firms considered in the sample.

The regression coefficients (orB coefficients) represent the independentcontributions of each

independent variable to the prediction of the dependent variable.The result shows that there is an

inverse relation in between delay in listing and the degree of pricing. If there is increase in 4%

change in delay in listing it will lead to 1% increase in degree of pricing.

Whereas relation between demand for the IPO and degree of pricing is direct i.e. if there is

increase in demand for the IPO degree of under pricing will also increase.

The regression equation clearly tells that listing delay has much more impact on degree of pricing

of the issue as compared to demand for the IPO. Similarly it is clear from the model that listing

delay has direct relation and impact on degree of pricing whereas demand is negatively relates to

degree of pricing.

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CHAPTER VI

FINDINGS,

CONCLUSION

AND

RECOMMENDATIONS

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FINDINGS:

First of all on applying regression model we came up with conclusion that degree of under pricing

has a relation with demand of IPO and listing delay. So, on the basis of this we have found that

null hypothesis (H0) is not accepted.

Whereas alternate hypothesis which states that there is relation between degree of IPO pricing

with demand for the IPO and delay in listing is accepted.

By the regression equation we can see that under pricing is inversely proportional to listing delay

or we can say that if listing delay (Time period in days from the last day of the offer to the day of

listing) is increased then degree of under pricing will get decreased and vice-versa.

On the other hand demand is directly proportional to the degree of under pricing by which we can

say that if demand is increasing then the degree of under pricing will be increasing.

CONCLUSION:

The study demonstrates that most of the IPOs are underpriced i.e. IPOs experience high returns

on the first trading day, indicating that these shares may have been priced at the time of their

offering to the public at values much below their intrinsic value. If the firms shares are

overvalued, their sale to the public will fail; if it succeeds, it will entail a transfer of wealth from

the new shareholders to the old ones.

Another important parameter driving the under pricing negatively is the listing delay. Also we

have find that out of 243, only 134 companies are in gains from IPOs get diffused within 10 day

of the listing of the firms.

LIMITATION OF THE STUDY

The main limitation of the study is inadequate data. The sources from where we collect data is

limited, we just refined up to which is available on the net. The basic differences of our study

from the others are they did face to face interaction for getting more information but in this we

cant do.

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RECOMMENDATIONS

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CHAPTER VII

BIBLIOGRAPHY

BIBLIOGRAPHY

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http://gupea.ub.gu.se/bitstream/2077/22748/1/gupea_2077_22748_1.pdf

52
http://www.law.yale.edu/documents/pdf/Intellectual_Life/Murphy_IPOOptions.pdfhttp://www.cgu.edu/include/drucker/JFE%20Forthcoming.pdfhttp://efmaefm.org/0EFMSYMPOSIUM/Canada010/papers/Local%20OligopoliesNov09.pdfhttp://efmaefm.org/0EFMSYMPOSIUM/Canada010/papers/Local%20OligopoliesNov09.pdfhttp://www.nhh.no/Admin/Public/DWSDownload.aspx?File=%2FFiles%2FFiler%2Finstitutter%2Ffor%2Fseminars%2Ffinance%2F2011_spring%2F240111.pdfhttp://www.nhh.no/Admin/Public/DWSDownload.aspx?File=%2FFiles%2FFiler%2Finstitutter%2Ffor%2Fseminars%2Ffinance%2F2011_spring%2F240111.pdfhttp://www.google.com/url?sa=t&source=web&cd=73&ved=0CCEQFjACOEY&url=http%3A%2F%2Fwww.williams.edu%2FEconomics%2FHonors%2F2006%2FAlexBalThesisMay13th06.pdf&ei=izyfTeelO4qqrAfrjJXxAg&usg=AFQjCNEDLa1XuwL0mOIGSoiwIYiv5Udygg&sig2=OSYmb7BpcjmnhhA7Qea27ghttp://www.google.com/url?sa=t&source=web&cd=73&ved=0CCEQFjACOEY&url=http%3A%2F%2Fwww.williams.edu%2FEconomics%2FHonors%2F2006%2FAlexBalThesisMay13th06.pdf&ei=izyfTeelO4qqrAfrjJXxAg&usg=AFQjCNEDLa1XuwL0mOIGSoiwIYiv5Udygg&sig2=OSYmb7BpcjmnhhA7Qea27ghttp://www.google.com/url?sa=t&source=web&cd=73&ved=0CCEQFjACOEY&url=http%3A%2F%2Fwww.williams.edu%2FEconomics%2FHonors%2F2006%2FAlexBalThesisMay13th06.pdf&ei=izyfTeelO4qqrAfrjJXxAg&usg=AFQjCNEDLa1XuwL0mOIGSoiwIYiv5Udygg&sig2=OSYmb7BpcjmnhhA7Qea27ghttp://www.google.com/url?sa=t&source=web&cd=73&ved=0CCEQFjACOEY&url=http%3A%2F%2Fwww.williams.edu%2FEconomics%2FHonors%2F2006%2FAlexBalThesisMay13th06.pdf&ei=izyfTeelO4qqrAfrjJXxAg&usg=AFQjCNEDLa1XuwL0mOIGSoiwIYiv5Udygg&sig2=OSYmb7BpcjmnhhA7Qea27ghttp://www.kier.kyoto-u.ac.jp/~osano/bachmann2005.pdfhttp://www.downloadit.org/free_files/Pages%20from%20Chapter%20746f546913ed8496015c3699848061768.pdfhttp://www.downloadit.org/free_files/Pages%20from%20Chapter%20746f546913ed8496015c3699848061768.pdfhttp://www.hausarbeiten.de/faecher/vorschau/76172.htmlhttp://goliath.ecnext.com/coms2/gi_0199-2648043/IPO-underpricing-a-meta-analysis.htmlhttp://bora.nhh.no/bitstream/2330/1690/1/Hesjedal%20Kristine%202007.pdfhttp://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID263810_code010509110.pdf?abstractid=263810http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID263810_code010509110.pdf?abstractid=263810http://gupea.ub.gu.se/bitstream/2077/22748/1/gupea_2077_22748_1.pdfhttp://www.law.yale.edu/documents/pdf/Intellectual_Life/Murphy_IPOOptions.pdfhttp://www.cgu.edu/include/drucker/JFE%20Forthcoming.pdfhttp://efmaefm.org/0EFMSYMPOSIUM/Canada010/papers/Local%20OligopoliesNov09.pdfhttp://efmaefm.org/0EFMSYMPOSIUM/Canada010/papers/Local%20OligopoliesNov09.pdfhttp://www.nhh.no/Admin/Public/DWSDownload.aspx?File=%2FFiles%2FFiler%2Finstitutter%2Ffor%2Fseminars%2Ffinance%2F2011_spring%2F240111.pdfhttp://www.nhh.no/Admin/Public/DWSDownload.aspx?File=%2FFiles%2FFiler%2Finstitutter%2Ffor%2Fseminars%2Ffinance%2F2011_spring%2F240111.pdfhttp://www.google.com/url?sa=t&source=web&cd=73&ved=0CCEQFjACOEY&url=http%3A%2F%2Fwww.williams.edu%2FEconomics%2FHonors%2F2006%2FAlexBalThesisMay13th06.pdf&ei=izyfTeelO4qqrAfrjJXxAg&usg=AFQjCNEDLa1XuwL0mOIGSoiwIYiv5Udygg&sig2=OSYmb7BpcjmnhhA7Qea27ghttp://www.google.com/url?sa=t&source=web&cd=73&ved=0CCEQFjACOEY&url=http%3A%2F%2Fwww.williams.edu%2FEconomics%2FHonors%2F2006%2FAlexBalThesisMay13th06.pdf&ei=izyfTeelO4qqrAfrjJXxAg&usg=AFQjCNEDLa1XuwL0mOIGSoiwIYiv5Udygg&sig2=OSYmb7BpcjmnhhA7Qea27ghttp://www.google.com/url?sa=t&source=web&cd=73&ved=0CCEQFjACOEY&url=http%3A%2F%2Fwww.williams.edu%2FEconomics%2FHonors%2F2006%2FAlexBalThesisMay13th06.pdf&ei=izyfTeelO4qqrAfrjJXxAg&usg=AFQjCNEDLa1XuwL0mOIGSoiwIYiv5Udygg&sig2=OSYmb7BpcjmnhhA7Qea27ghttp://www.kier.kyoto-u.ac.jp/~osano/bachmann2005.pdfhttp://www.downloadit.org/free_files/Pages%20from%20Chapter%20746f546913ed8496015c3699848061768.pdfhttp://www.downloadit.org/free_files/Pages%20from%20Chapter%20746f546913ed8496015c3699848061768.pdfhttp://www.hausarbeiten.de/faecher/vorschau/76172.htmlhttp://goliath.ecnext.com/coms2/gi_0199-2648043/IPO-underpricing-a-meta-analysis.htmlhttp://bora.nhh.no/bitstream/2330/1690/1/Hesjedal%20Kristine%202007.pdfhttp://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID263810_code010509110.pdf?abstractid=263810http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID263810_code010509110.pdf?abstractid=263810http://gupea.ub.gu.se/bitstream/2077/22748/1/gupea_2077_22748_1.pdf


53/80

CHAPTER VIII

APPENDIX

Company Name Price Range Issue

Price

(Rs.)

Date Of

Listing

First

Day

Price

10th

Day

Price

Return

For Day

1

Return

For Day

10

Return For

Day 1-10

Lis

De

B. CORP LIMITED Rs. 185 - Rs. 212 6-Jan-10 265.9 255.1 25.42% 20.33% -4.06% 2

53


54/80

212

GODREJ

PROPERTIES

LIMITED

Rs. 490 - Rs.

530

490 5-Jan-10 537.2

5

510.3 9.64% 4.14% -5.02% 2

JSW ENERGY

LIMITED

Rs. 100 - Rs.

115

100 4-Jan-10 100.8

5

117.2 0.85% 17.20% 16.21% 2

MBL

FRASTRUCTURES

LIMITED

Rs. 165 - Rs.

180

180 11-Jan-

10

206.5

5

233.5 14.75% 29.72% 13.05% 4

COX AND KINGS

NDIA) LIMITED

Rs. 316 - Rs.

330

330 11-Dec-

09

425.4 438.3 28.91% 32.82% 3.03% 2

ADANI POWER

LIMITED

Rs 90 - Rs

100

100 20-Aug-

09

100.1 101.45 0.10% 1.45% 1.35% 2

RAJ OIL MILLS

LIMITED

Rs 100 - Rs

120

120 12-Aug-

09

119.2

5

87.5 -0.63% -27.08% -26.62% 2

XCEL INFOWAYS

LIMITED

Rs 80 - Rs

85

85 3-Aug-

09

95.85 103.15 12.76% 21.35% 7.62% 1

AHINDRA H & R

INDIA LIMITED

Rs 275 - Rs

325

300 16-Jul-

09

317.4

5

366.8 5.82% 22.27% 15.55% 2

EDSERV

SOFTSYSTEM

LIMITED

Rs 55 - Rs

60

60 2-Mar-

09

137.7 34.15 129.50

%

-43.08% -75.20% 2

PIPAVAV

IPYARD LIMITED

Rs 55 - Rs

60

58 9-Oct-09 160.0

5

163.55 175.95

%

181.98

%

2.19% 2

L INDIA LIMITED Rs 950 - Rs

1050

1050 30-Sep-

09

1141.

2

1184.5

5

8.69% 12.81% 3.80% 2

GLOBUS SPIRITS

LIMITED

Rs 90 - Rs

100

100 23-Sep-

09

91 83.45 -9.00% -16.55% -8.30% 2

JINDAL COTEX

LIMITED

Rs 70 - Rs

75

75 22-Sep-

09

87.3 86 16.40% 14.67% -1.49% 2

NHPC Rs 30 - Rs 36 1-Sep-09 36.75 33.95 2.08% -5.69% -7.62% 2

54


55/80

36

ASTEC

LIFESCIENCES

LIMITED

Rs.77 To

Rs.82

82 25-Nov-

09

84 87.85 2.44% 7.13% 4.58% 2

DEN NETWORKS

LIMITED

Rs. 195 To

Rs. 205.

195 24-Nov-

09

163.4 173.95 -16.21% -10.79% 6.46% 1

INDIABULLS

OWER LIMITED

Rs.40 To

Rs.45

45 30-Oct-

09

39.5 34.1 -12.22% -24.22% -13.67% 2

THINKSOFT

LOBAL SERVICES

LIMITED

Rs.115 To

Rs.125

125 26-Oct-

09

164.4 215.55 31.52% 72.44% 31.11% 2

Issues

Of

2008

Company Name Price Range Issue

Price

(Rs.)

Date Of

Listing

First

Day

Price

10th

Day

Price

Return

For Day

1

Return

For Day

10

Return For

Day 1-10

Lis

De

ALKALI METALS

LIMITED

Rs 86 TO Rs

103

103 6-Nov-

08

173.4 185.8 68.35% 80.39% 7.15% 2

20 MICRONS

LIMITED

Rs 50 TO Rs

55

55 6-Oct-08 33.65 21.75 -38.82% -60.45% -35.36% 2

SURGERE MINES

MINERALS INDIA

LIMITED

Rs 263 to Rs

272

270 1-Sep-08 533.5

5

199.2 97.61% -26.22% -62.67% 1

USTRAL COKE &

OJECTS LIMITED

Rs 164 TO

Rs 196

196 4-Sep-08 225.9

5

267.65 15.28% 36.56% 18.46% 2

NU TEK INDIA

LIMITED

Rs 170 to Rs

192

192 27-Aug-

08

199.1

5

171.65 3.72% -10.60% -13.81% 2

VISHAL

INFORMATION

TECHNOLOGIES

Rs 140 to

Rs150

150 11-Aug-

08

194.6 294.1 29.73% 96.07% 51.13% 1

55
http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=6&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=6&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=7&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=7&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=5&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=6&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=6&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=7&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=7&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009http://www.nseindia.com/marketinfo/ipo/ipo_gen_registrar_info.jsp?id=8&yr=2009


56/80

LIMITED

BIRLA COTSYN

INDIA LIMITED

RS.12 TO

RS.14

14 30-Jul-

08

9.45 10.65 -32.50% -23.93% 12.70% 2

KSK ENERGY

VENTURES

LIMITED

RS.240 TO

RS.255

240 14-Jul-

08

191.7

5

185.9 -20.10% -22.54% -3.05% 1

OTUS EYE CARE

OSPITAL LIMITED

Rs 36 to Rs

38

38 11-Jul-

08

35.65 39 -6.18% 2.63% 9.40% 2

FIRST WINNER

INDUSTRIES

LIMITED

Rs 115 to Rs

125

125 8-Jul-08 89.2 125.3 -28.64% 0.24% 40.47% 2

ARCHIDPLY

INDUSTRIES

LIMITED

Rs 70 to Rs

80

74 4-Jul-08 50.7 38.2 -31.49% -48.38% -24.65% 1

SEJAL

RCHITECTURAL

GLASS LIMITED

Rs 105 to Rs

115

115 1-Jul-08 81.25 59.05 -29.35% -48.65% -27.32% 1

GOKUL REFOILS

AND SOLVENT

LIMITED

Rs 175 to Rs

195

195 4-Jun-08 182.0

5

232.7 -6.64% 19.33% 27.82% 2

KIRI DYES AND

CHEMICALS

LIMITED

Rs 125 to Rs

150

150 22-Apr-

08

158.9

5

168.7 5.97% 12.47% 6.13% 2

TITAGARHAGONS LIMITED

Rs 540 to Rs610

540 21-Apr-08

706.85

844.6 30.90% 56.41% 19.49% 2

Sita Shree Food

Products Limited

Rs 27 to Rs

30

30 7-Apr-08 43.7 59 45.67% 96.67% 35.01% 2

GAMMON

FRASTRUCTURE

OJECTS LIMITED

Rs 167 to Rs

200

167 3-Apr-08 158.1

5

163.5 -5.30% -2.10% 3.38% 2

RURAL Rs 90 to Rs 105 12-Mar- 121.3 110.2 15.52% 4.95% -9.15% 1

56


57/80

LECTRIFICATION

CORPORATION

LIMITED

105 08

V-GUARD

INDUSTRIES

LIMITED

Rs 80 to Rs

85

82 13-Mar-

08

75.95 66.2 -7.38% -19.27% -12.84% 2

GSS AMERICA

FOTECH LIMITED

Rs.400 to

Rs.440

400 7-Mar-

08

500.8 655.25 25.20% 63.81% 30.84% 2

Tulsi Extrusions

Limited

Rs.80 to

Rs.85

85 25-Feb-

08

140.8

5

72.55 65.71% -14.65% -48.49% 2

RB Infrastructure

evelopers Limited

Rs.185 to

Rs.220

185 25-Feb-

08

189.6

5

191.75 2.51% 3.65% 1.11% 2

SHRIRAM EPC

LIMITED

Rs.290 to

Rs.330

300 20-Feb-

08

286.5 255.2 -4.50% -14.93% -10.92% 2

Bang Overseas

Limited

Rs.200 to

Rs.207

207 20-Feb-

08

174.1 123.25 -15.89% -40.46% -29.21% 2

ONMOBILE

LOBAL LIMITED

Rs.425 to

Rs.450

440 19-Feb-

08

518.1

5

566.95 17.76% 28.85% 9.42% 2

KNR Construction

Limited

Rs.170 to

Rs.180

170 18-Feb-

08

154.9 145.95 -8.88% -14.15% -5.78% 2

CORDS CABLE

INDUSTRIES

LIMITED

Rs.125 to

Rs.135

135 13-Feb-

08

139.4

5

132.35 3.30% -1.96% -5.09% 2

Kumar Infraprojects

Limited

Rs.110 to

Rs.120

110 12-Feb-

08

103.3

5

100.45 -6.05% -8.68% -2.81% 2

ELIANCE POWER

LIMITED

Rs.405 to

Rs.450

450 11-Feb-

08

372.3 417.15 -17.27% -7.30% 12.05% 2

UTURE CAPITAL

HOLDINGS

LIMITED

Rs.700 to

Rs.765

765 1-Feb-08 909.8 834.9 18.93% 9.14% -8.23% 1

57


58/80

Issues Of 2007

Company

Name

Price

Rang

e

Iss

ue

Pri

ce

(Rs

.)

Date

Of

Listi

ng

First

Day

Price

10th

Day

Price

Retur

n For

Day 1

Retur

n For

Day

10

Retur

n For

Day 1-

10

Listi

ng

Dela

y

Dema

nd

Precision Pipes

and Profiles

Company

Limited

Rs.14

0 to

Rs.15

0

150 11-

Jan-

08

136.1 90.8 -

9.27%

-

39.47

%

-

33.28

%

22 high

MANAKSIA

LIMITED

Rs.

140

to Rs.

160

160 8-

Jan-

08

167.7 133.5 4.81% -

16.56

%

-

20.39

%

20 high

ARIES AGRO

LIMITED

Rs.

120

to Rs.

130

130 11-

Jan-

08

251.4 175.8 93.38

%

35.23

%

-

30.07

%

23 high

BRIGADE

ENTERPRISE

S LIMITED

Rs.

351

to Rs.

390

390 31-

Dec-

07

379.9 364.0

3

-

2.59%

-

6.66%

-4.18% 18 high

Transformers

And Rectifiers

(India) Limited

Rs.

425

to Rs.

465

465 28-

Dec-

07

729.2

5

760.5 56.83

%

63.55

%

4.29% 16 high

BGR ENERGY

SYSTEMS

LIMITED

Rs.

425

to Rs.

480

480 3-

Jan-

08

901.4

5

737.9

5

87.80

%

53.74

%

-

18.14

%

22 high

ECLERX Rs. 315 31- 449.6 353.5 42.75 12.24 - 24 high

58


59/80

SERVICES

LIMITED

270

to Rs.

315

Dec-

07

5 5 % % 21.37

%

JYOTHY

LABORATORI

ES LIMITED

Rs.62

0 to

Rs.69

0

690 19-

Dec-

07

794.0

5

861.1

5

15.08

%

24.80

%

8.45% 22 high

KAUSHALYA

INFRASTRUC

TURE

DEVELOPME

NT

CORPORATIO

N LIMITED

Rs.50

to

Rs.60

60 14-

Dec-

07

82.45 95.6 37.42

%

59.33

%

15.95

%

21 high

RENAISSANC

E

JEWELLERY

LIMITED

Rs.12

5 to

Rs.15

0

150 12-

Dec-

07

245.5 34.45 63.67

%

-

77.03

%

-

85.97

%

21 high

EDELWEISS

CAPITAL

LIMITED

Rs

725

to Rs

825

825 12-

Dec-

07

1510.

25

1416.

65

83.06

%

71.72

%

-6.20% 22 high

Mundra Port

and Special

Economic Zone

Limited

Rs.

400

to

Rs.44

0

440 27-

Nov-

07

962.9 1075.

4

118.8

4%

144.4

1%

11.68

%

20 high

EMPEE

DISTILLERIE

S LIMITED

Rs.

350

toRs.40

0

400 26-

Nov-

07

319.3

5

307.9 -

20.16

%

-

23.03

%

-3.59% 20 high

Religare

Enterprises

Limited

Rs.

160

to

Rs.18

5

185 21-

Nov-

07

525.3 508.0

5

183.9

5%

174.6

2%

-3.28% 20 high

BARAK

VALLEY

Rs.

37 to

42 23-

Nov-

55.3 51 31.67

%

21.43

%

-7.78% 22 high

59


60/80

CEMENTS

LIMITED

Rs.42 07

Supreme

Infrastructure

India Limited

Rs.

95 to

Rs.10

8

108 18-

Oct-

07

175.1 141.2 62.13

%

30.74

%

-

19.36

%

22 high

Koutons Retail

India Limited

Rs.

370

to Rs.

415

415 12-

Oct-

07

586.5 693.8

5

41.33

%

67.19

%

18.30

%

21 high

Consolidated

Construction

ConsortiumLimited

Rs.

460

to Rs.510

510 15-

Oct-

07

792.1 806.4

5

55.31

%

58.13

%

1.81% 24 high

Kaveri Seed

Company

Limited

Rs.

150

to Rs.

170

170 4-

Oct-

07

230.9

5

194.9 35.85

%

14.65

%

-

15.61

%

23 high

Dhanus

Technologies

Limited

Rs.

280

toRs.29

5

295 17-

Oct-

07

309.7

5

312.1 5.00% 5.80% 0.76% 35 high

Motilal Oswal

Financial

Services

Limited

Rs.

725

to Rs.

825

825 11-

Sep-

07

976.8

5

1063.

3

18.41

%

28.88

%

8.85% 19 high

Indowind

Energy Limited

Rs.

55 to

Rs.

65

65 14-

Sep-

07

113.6

5

112.8 74.85

%

73.54

%

-0.75% 21 high

Magnum

Ventures

Limited

Rs.

27 to

Rs.

30

30 20-

Sep-

07

49.4 31.5 64.67

%

5.00% -

36.23

%

21 high

60


61/80

SEL

Manufacturing

Company

Limited

Rs.

80 to

Rs.

90

90 21-

Aug-

07

144.7

5

167.8 60.83

%

86.44

%

15.92

%

21 high

Asian Granito

India Limited

Rs.

85 to

Rs.

102

97 23-

Aug-

07

94.2 108.9 -

2.89%

12.27

%

15.61

%

23 high

TAKE

Solutions

Limited

Rs.

675

to Rs.

730

730 27-

Aug-

07

927.8 991.5

5

27.10

%

35.83

%

6.87% 20 high

Central Bank ofIndia

Rs.85 to

Rs.

102

102 21-Aug-

07

115.3 134.45

13.04%

31.81%

16.61%

34 high

Omnitech

Infosolutions

Limited

Rs.90

to

Rs.10

5

105 14-

Aug-

07

163.4 126.5

5

55.62

%

20.52

%

-

22.55

%

20 high

Zylog SystemsLimited Rs.330 to

Rs.35

0

350 17-Aug-

07

427.5 430.5 22.14% 23.00% 0.70% 23 high

Omaxe Limited Rs.26

5 to

Rs.31

0

310 9-

Aug-

07

349.3

5

299.2 12.69

%

-

3.48%

-

14.36

%

20 high

Alpa

Laboratories

Limited

Rs.62

to

Rs.68

68 6-

Aug-

07

55.15 49.35 -

18.90

%

-

27.43

%

-

10.52

%

20 high

Simplex

Projects

Limited

Rs.17

0 to

Rs.18

5

185 3-

Aug-

07

273.7 261.0

5

47.95

%

41.11

%

-4.62% 21 high

Allied Digital

Services

Limited

Rs.17

0 to

Rs.19

190 25-

Jul-

07

330.1

5

318.4

5

73.76

%

67.61

%

-3.54% 21 high

61


62/80

0

Bharat Earth

Movers

Limited

Rs.10

20 to

Rs.10

90

107

5

5-

Nov-

03

1233.

3

1199.

5

14.73

%

11.58

%

-2.74% 20 high

Housing

Development

and

Infrastructure

Limited

Rs.43

0 to

Rs.50

0

500 24-

Jul-

07

559.3

5

499.6

5

11.87

%

-

0.07%

-

10.67

%

21 high

Roman Tarmat

Limited

Rs.15

0 to

Rs.175

175 9-

Jul-

07

319.2 290.4

5

82.40

%

65.97

%

-9.01% 20 high

DLF Limited Rs.50

0 to

Rs.55

0

525 5-

Jul-

07

569.8 643.4 8.53% 22.55

%

12.92

%

21 low

Vishal Retail

Limited

Rs.23

0 to

Rs.270

270 4-

Jul-

07

753.1 714.6 178.9

3%

164.6

7%

-5.11% 22 high

Nelcast Limited Rs.19

5 to

Rs.21

9

219 27-

Jun-

07

207.3

5

178.1

5

-

5.32%

-

18.65

%

-

14.08

%

19 high

Meghmani

Organics

Limited

Rs.17

to

Rs.19

19 28-

Jun-

07

26.6 25.75 40.00

%

35.53

%

-3.20% 21 high

Decolight

Ceramics

Limited

Rs.45

to

Rs.54

54 19-

Jun-

07

44.65 38.25 -

17.31

%

-

29.17

%

-

14.33

%

21 high

Time

Technoplast

Limited

Rs.29

0 to

Rs.31

5

315 13-

Jun-

07

480.9 618.9 52.67

%

96.48

%

28.70

%

21 high

Nitin Fire

Protection

Rs.17

1 to

190 5-

Jun-

484.8

5

382.6

5

155.1

8%

101.3

9%

-

21.08

18 high

62


63/80

Industries

Limited

Rs.19

0

07 %

Insecticides

(India) Limited

Rs.97

to

Rs.11

5

115 30-

May-

07

109.4

5

87.35 -

4.83%

-

24.04

%

-

20.19

%

19 high

Binani Cement

Limited

Rs.

75 to

Rs.

85

75 28-

May-

07

69.05 63.85 -

7.93%

-

14.87

%

-7.53% 18 low

MIC

Electronics

Limited

Rs.

129

to Rs.150

150 30-

May-

07

338.1

5

331.0

5

125.4

3%

120.7

0%

-2.10% 22 high

Fortis

Healthcare

Limited

Rs.

92 to

Rs.

110

108 9-

May-

07

100.1

5

92.3 -

7.27%

-

14.54

%

-7.84% 19 high

Advanta India

Limited

Rs.

600

to Rs.650

640 19-

Apr-

07

845.5 703.4

5

32.11

%

9.91% -

16.80

%

20 high

ICRA Limited Rs.

275

to Rs.

330

330 13-

Apr-

07

803.2

5

866.2 143.4

1%

162.4

8%

7.84% 21 high

Orbit

Corporation

Limited

Rs.

108

to Rs.

117

110 12-

Apr-

07

9.25 155.8 -

91.59

%

41.64

%

1584.3

2%

20 low

Abhishek Mills

Limited

Rs.

90 to

Rs.

100

100 19-

Mar-

07

91.25 56.4

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