EXECUTIVE SUMMARY
As we all know IPO – INITIAL PUBLIC OFFERING is the hottest
topic in the current industry, mainly because of India being a developing
country and lot of growth in various sectors which leads a country to
ultimate success. And when we talk about country’s growth which is
dependent on the kind of work and how much importance to which sector is
given. And when we say or talk about industries growth which leads the
economy of country has to be balanced and given proper finance so as to
reach the levels to fulfill the needs of the society. And industries which have
massive outflow of work and a big portfolio then its very difficult for any
company to work with limited finance and this is where IPO plays an
important role.
This report trying to help to find out IPO performance during 2010,
what are the companies which issued during this year. How and what are
the steps taken by the companies before going for any IPO and also the role
of (SEBI) Securities and Exchange Board of India the BSE and NSE , what
are primary and secondary markets and also the important terms related to
IPO. It gives us idea of how IPO is driven in the market and what are
various factors taken into consideration before going for an IPO. And it also
tells us how we can more or less judge a good IPO. Then we all know that
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scams have always been a part of any sector you go in for which are
covered in it and also few recommendations are given for the same. It also
gives us some idea about what are the expenses that a company undertakes
during an IPO.
IPO has been one of the most important generators of funds
for the small companies making them big and given a new vision in past
and it is still continuing its work and also for many coming years.
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INTRODUCTION TO IPO
IPO stands for Initial Public Offering and means the new offer of
shares from a company which was previously unlisted. This is done by
offering those shares to the public, which were held by the promoters or the
private investors prior to the IPO. In the case when other investors or
Promoter held the shares the stake holding comes down to the extent their
shares are offered to the public. In other cases new shares are issued to the
public and the shares, which are with the promoters stay with them. In both
cases the share of the promoters in the total capital comes down.
For example say there are 100 shares in a company and 50 of these
are offered to the public in an IPO then in such a case the promoter’s stake
in the company comes down from 100% to 50%. In another case the
company issues 50 additional shares to the public and the stake of the
promoter comes down from 100% to 67%.
Normally in an IPO the shares are issued at a discount to what is
considered their intrinsic value and that’s why investors keenly await IPOs
and make money on most of them. IPO are generally priced at a discount,
which means that if the intrinsic value of a share is perceived to be Rs.100
the shares will be offered at a price, which is lesser than Rs.100 say Rs.80
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during the IPO. When the stock actually lists in the market it will list closer
to Rs.100. The difference between the two prices is known as Listing Gains,
which an investor makes when investing in IPO and making money at the
listing of the IPO. A Bullish Market gives IPO investors a clear opportunity
to achieve long term targets in a short term phase.
What is an IPO
An IPO is the first sale of stock by a company to the public. A
company can raise money by issuing either debt or equity. If the company
has never issued equity to the public, it's known as an IPO.
Companies fall into two broad categories: private and public.
A privately held company has fewer shareholders and its owners don't have
to disclose much information about the company. Anybody can go out and
incorporate a company: just put in some money, file the right legal
documents and follow the reporting rules of your jurisdiction. Most small
businesses are privately held. But large companies can be private too. Did
you know that IKEA, Domino's Pizza and Hallmark Cards are all privately
held?
It usually isn't possible to buy shares in a private company. You can
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approach the owners about investing, but they're not obligated to sell you
anything. Public companies, on the other hand, have sold at least a portion
of themselves to the public and trade on a stock exchange. This is why
doing an IPO is also referred to a “going public”.
Public companies have thousands of shareholders and are subject to
strict rules and regulations. They must have a board of directors and they
must report financial information every quarter. In the United States, public
companies report to the Securities and Exchange Commission (SEC). In
other countries, public companies are overseen by governing bodies similar
to the SEC. From an investor's standpoint, the most exciting thing about a
public company is that the stock is traded in the open market, like any other
commodity. If you have the cash, you can invest. The CEO could hate your
guts, but there's nothing he or she could do to stop you from buying stock.
The first sale of stock by a private company to the public, IPO’s
are often issued by smaller, younger companies seeking capital to expand,
but can also be done by large privately-owned companies looking to
become publicly traded. In an IPO, the issuer obtains the assistance of an
underwriting firm, which helps it determine what type of security to issue
(common or preferred), best offering price and time to bring it to market.
IPO’s can be a risky investment. For the individual investor, it is tough to
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predict what the stock will do on its initial day of trading and in the near
future since there is often little historical data with which to analyze the
company. Also, most IPO’s are of companies going through a transitory
growth period, and they are therefore subject to additional uncertainty
regarding their future value.
Primary and Secondary markets
In the primary market securities are issued to the public and the
proceeds go to the issuing company. Secondary market is term used for
stock exchanges, where stocks are bought and sold after they are issued to
the public.
PRIMARY MARKET
The first time that a company’s shares are issued to the public, it is by
a process called the initial public offering (IPO). In an IPO the company
offloads a certain percentage of its total shares to the public at a certain
price.
Most IPO’S these days do not have a fixed offer price. Instead they
follow a method called BOOK BUILDIN PROCESS, where the offer price
is placed in a band or a range with the highest and the lowest value (refer to
the newspaper clipping on the page). The public can bid for the shares at
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any price in the band specified. Once the bids come in, the company
evaluates all the bids and decides on an offer price in that range. After the
offer price is fixed, the company allots its shares to the people who had
applied for its shares or returns them their money.
SECONDRY MARKET
Once the offer price is fixed and the shares are issued to the people,
stock exchanges facilitate the trading of shares for the general public. Once
a stock is listed on an exchange, people can start trading in its shares. In a
stock exchange the existing shareholders sell their shares to anyone who is
willing to buy them at a price agreeable to both parties. Individuals cannot
buy or sell shares in a stock exchange directly; they have to execute their
transaction through authorized members of the stock exchange who are also
called STOCK BROKERS.
Why Go Public?
Basically, going public (or participating in an "initial public offering"
or IPO) is the process in which a business owned by one or several
individuals is converted into a business owned by many. It involves the
offering of part ownership of the company to the public through the sale of
debt or more commonly, equity securities (stock).
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Going public raises cash and usually a lot of it. Being publicly
traded also opens many financial doors:
Because of the increased scrutiny, public companies can usually
get better rates when they issue debt.
As long as there is market demand, a public company can always
issue more stock. Thus, mergers and acquisitions are easier to do because
stock can be issued as part of the deal.
Trading in the open markets means liquidity. This makes it
possible to implement things like employee stock ownership plans, which
help to attract top talent.
Being on a major stock exchange carries a considerable amount of
prestige. In the past, only private companies with strong fundamentals could
qualify for an IPO and it wasn't easy to get listed.
The internet boom changed all this. Firms no longer needed strong
financials and a solid history to go public. Instead, IPOs were done by
smaller startups seeking to expand their businesses. There's nothing wrong
with wanting to expand, but most of these firms had never made a profit and
didn't plan on being profitable any time soon. Founded on venture capital
funding, they spent like Texans trying to generate enough excitement to
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make it to the market before burning through all their cash. In cases like
this, companies might be suspected of doing an IPO just to make the
founders rich. This is known as an exit strategy, implying that there's no
desire to stick around and create value for shareholders. The IPO then
becomes the end of the road rather than the beginning.
How can this happen? Remember: an IPO is just selling stock. It's all
about the sales job. If you can convince people to buy stock in your
company, you can raise a lot of money.
Getting In On an IPO
The Underwriting Process
Getting a piece of a hot IPO is very difficult, if not impossible. To
understand why, we need to know how an IPO is done, a process known as
underwriting.
When a company wants to go public, the first thing it does is hire an
investment bank. A company could theoretically sell its shares on its own,
but realistically, an investment bank is required - it's just the way Wall
Street works. Underwriting is the process of raising money by either debt or
equity (in this case we are referring to equity). You can think of
underwriters as middlemen between companies and the investing public.
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The biggest underwriters are Goldman Sachs, Merrill Lynch, Credit Suisse
First Boston, Lehman Brothers and Morgan Stanley.
The company and the investment bank will first meet to negotiate the
deal. Items usually discussed include the amount of money a company will
raise, the type of securities to be issued and all the details in the
underwriting agreement. The deal can be structured in a variety of ways.
For example, in a firm commitment, the underwriter guarantees that a
certain amount will be raised by buying the entire offer and then reselling to
the public. In a best efforts agreement, however, the underwriter sells
securities for the company but doesn't guarantee the amount raised. Also,
investment banks are hesitant to shoulder all the risk of an offering. Instead,
they form a syndicate of underwriters. One underwriter leads the syndicate
and the others sell a part of the issue.
Once all sides agree to a deal, the investment bank puts together a
registration statement to be filed with the SEC. This document contains
information about the offering as well as company info such as financial
statements, management background, any legal problems, where the money
is to be used and insider holdings. The SEC then requires a cooling off
period, in which they investigate and make sure all material information has
been disclosed. Once the SEC approves the offering, a date (the effective
date) is set when the stock will be offered to the public.
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During the cooling off period the underwriter puts together what is
known as the red herring. This is an initial prospectus containing all the
information about the company except for the offer price and the effective
date, which aren't known at that time. With the red herring in hand, the
underwriter and company attempt to hype and build up interest for the issue.
They go on a road show - also known as the "dog and pony show" - where
the big institutional investors are courted.
As the effective date approaches, the underwriter and company sit
down and decide on the price. This isn't an easy decision: it depends on the
company, the success of the road show and, most importantly, current
market conditions. Of course, it's in both parties' interest to get as much as
possible.
Finally, the securities are sold on the stock market and the money is
collected from investors.
As you can see, the road to an IPO is a long and complicated one.
You may have noticed that individual investors aren't involved until the
very end. This is because small investors aren't the target market. They don't
have the cash and, therefore, hold little interest for the underwriters. If
underwriters think an IPO will be successful, they'll usually pad the pockets
of their favorite institutional client with shares at the IPO price. The only
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way for you to get shares (known as an IPO allocation) is to have an
account with one of the investment banks that is part of the underwriting
syndicate. But don't expect to open an account with $1,000 and be showered
with an allocation. You need to be a frequently trading client with a large
account to get in on a hot IPO.
IPO – ADVANTAGES AND DISADVANTAGES
The decision to take a company public in the form of an initial
public offering (IPO) should not be considered lightly. There are several
advantages and disadvantages to being a public company, which should
thoroughly be considered. This memorandum will discuss the advantages
and disadvantages of conducting an IPO and will briefly discuss the steps to
be taken to register an offering for sale to the public. The purpose of this
memorandum is to provide a thumbnail sketch of the process. The reader
should understand that the process is very time consuming and complicated
and companies should undertake this process only after serious
consideration of the advantages and disadvantages and discussions with
qualified advisors.
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Advantages of going public
Increased Capital
A public offering will allow a company to raise capital to use for
various corporate purposes such as working capital, acquisitions, research
and development, marketing, and expanding plant and equipment.
Liquidity
Once shares of a company are traded on a public exchange, those
shares have a market value and can be resold. This allows a company to
attract and retain employees by offering stock incentive packages to those
employees. Moreover, it also provides investors in the company the option
to trade their shares thus enhancing investor confidence.
Increased Prestige
Public companies often are better known and more visible than
private companies, this enables them to obtain a larger market for their
goods or services. Public companies are able to have access to larger pools
of capital as well as different types of capital.
Valuation
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Public trading of a company's shares sets a value for the company
that is set by the public market and not through more subjective standards
set by a private valuator. This is helpful for a company that is looking for a
merger or acquisition. It also allows the shareholders to know the value of
the shares.
Increased wealth
The founders of the company often have the sense of increased
wealth as a result of the IPO. Prior to the IPO these shares were illiquid and
had a more subjective price. These shares now have an ascertainable price
and after any lockup period these shares may be sold to the public, subject
to limitations of federal and state securities laws.
Disadvantages of going Public
Time and Expense
Conducting an IPO is time consuming and expensive. A successful
IPO can take up to a year or more to complete and a company can expect to
spend several hundreds of thousands of dollars on attorneys, accountants,
and printers. In addition, the underwriter's fees can range from 3% to 10%
of the value of the offering. Due to the time and expense of preparation of
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the IPO, many companies simply cannot afford the time or spare the
expense of preparing the IPO.
Disclosure
The SEC disclosure rules are very extensive. Once a company is a
reporting company it must provide information regarding compensation of
senior management, transactions with parties related to the company,
conflicts of interest, competitive positions, how the company intends to
develop future products, material contracts, and lawsuits. In addition, once
the offering statement is effective, a company will be required to make
financial disclosures required by the Securities and Exchange Act of 1934.
The 1934 Act requires public companies to file quarterly statements
containing unaudited financial statements and audited financial statements
annually. These statements must also contain updated information regarding
nonfinancial matters similar to information provided in the initial
registration statement. This usually entails retaining lawyers and auditors to
prepare these quarterly and annual statements. In addition, a company must
report certain material events as they arise. This information is available to
investors, employees, and competitors.
Decisions based upon Stock Price
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Management's decisions may be effected by the market price of the
shares and the feeling that they must get market recognition for the
company's stock.
Regulatory Review
The Company will be open to review by the SEC to ensure that the
company is making the appropriate filings with all relevant disclosures.
Falling Stock Price
If the shares of the company's stock fall, the company may lose
market confidence, decreased valuation of the company may effect lines of
credits, secondary offering pricing, the company's ability to maintain
employees, and the personal wealth of insiders and investors.
Vulnerability
If a large portion of the company's shares are sold to the public, the
company may become a target for a takeover, causing insiders to lose
control. A takeover bid may be the result of shareholders being upset with
management or corporate raiders looking for an opportunity. Defending a
hostile bid can be both expensive and time consuming. Once a company has
weighed the advantages and disadvantages of being a public company, if it
decides that it would like to conduct an IPO it will have to retain a lead
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Parameters to judge an IPO
Good investing principles demand that you study the minutes of
details prior to investing in an IPO. Here are some parameters you should
evaluate:-
Promoters
Is the company a family run business or is it professionally owned?
Even with a family run business what are the credibility and professional
qualifications of those managing the company? Do the top level managers
have enough experience (of at least 5 years) in the specific type of business?
Industry Outlook
The products or services of the company should have a good demand
and scope for profit.
Business Plans
Check the progress made in terms of land acquisition, clearances
from various departments, purchase of machinery, letter of credits etc. A
higher initial investment from the promoters will lead to a higher faith in the
organization.
Financials
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Why does the company require the money? Is the company floating
more equity than required? What is the debt component? Keep a track on
the profits, growth and margins of the previous years. A steady growth rate
is the quality of a fundamentally sound company. Check the assumptions
the promoters are making and whether these assumptions or expectations
sound feasible.
Risk Factors
The offer documents will list our specific risk factors such as the
company’s liabilities, court cases or other litigations. Examine how these
factors will affect the operations of the company.
Key Names
Every IPO will have lead managers and merchant bankers. You can
figure out the track record of the merchant banker through the SEBI
website.
Pricing
Compare the company’s PER with that of similar companies. With
this you can find out the P/E Growth ratio and examine whether its earning
projections seem viable.
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Listing
You should have access to the brokers of the stock exchanges where
the company will be listing itself.
Understanding the role of intermediaries
Who are the intermediaries in an issue?
Merchant Bankers to the issue or Book Running Lead Managers
(BRLM), syndicate members, Registrars to the issue, Bankers to the issue,
Auditors of the company, Underwriters to the issue, Solicitors, etc. are the
intermediaries to an issue. The issuer discloses the addresses, telephone/fax
numbers and email addresses of these intermediaries. In addition to this, the
issuer also discloses the details of the compliance officer appointed by the
company for the purpose of the issue.
Who is eligible to be a BRLM?
A Merchant banker possessing a valid SEBI registration in
accordance with the SEBI (Merchant Bankers) Regulations, 1992 is eligible
to act as a Book Running Lead Manager to an issue.
What is the role of a Lead Manager? (pre and post issue)
In the pre-issue process, the Lead Manager (LM) takes up the due
diligence of company’s operations/ management/ business plans/ legal etc.
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Other activities of the LM include drafting and design of Offer documents,
Prospectus, statutory advertisements and memorandum containing salient
features of the Prospectus. The BRLMs shall ensure compliance with
stipulated requirements and completion of prescribed formalities with the
Stock Exchanges, RoC and SEBI including finalization of Prospectus and
RoC filing. Appointment of other intermediaries viz., Registrar(s), Printers,
Advertising Agency and Bankers to the Offer is also included in the pre-
issue processes. The LM also draws up the various marketing strategies for
the issue.
The post issue activities including management of escrow accounts,
co-ordinate non-institutional allocation, intimation of allocation and
dispatch of refunds to bidders etc are performed by the LM. The post Offer
activities for the Offer will involve essential follow-up steps, which include
the finalization of trading and dealing of instruments and dispatch of
certificates and demat of delivery of shares, with the various agencies
connected with the work such as the Registrar(s) to the Offer and Bankers
to the Offer and the bank handling refund business. The merchant banker
shall be responsible for ensuring that these agencies fulfill their functions
and enable it to discharge this responsibility through suitable agreements
with the Company.
What is the role of a registrar?
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The Registrar finalizes the list of eligible allottees after deleting the
invalid applications and ensures that the corporate action for crediting of
shares to the demat accounts of the applicants is done and the dispatch of
refund orders to those applicable are sent. The Lead manager co-ordinates
with the Registrar to ensure follow up so that that the flow of applications
from collecting bank branches, processing of the applications and other
matters till the basis of allotment is finalized, dispatch security certificates
and refund orders completed and securities listed.
What is the role of bankers to the issue?
Bankers to the issue, as the name suggests, carries out all the
activities of ensuring that the funds are collected and transferred to the
Escrow accounts. The Lead Merchant Banker shall ensure that Bankers to
the Issue are appointed in all the mandatory collection centers as specified
in DIP Guidelines. The LM also ensures follow-up with bankers to the issue
to get quick estimates of collection and advising the issuer about closure of
the issue, based on the correct figures.
Question on Due diligence
The Lead Managers state that they have examined various
documents including those relating to litigation like commercial disputes,
patent disputes, disputes with collaborators etc. and other materials in
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connection with the finalization of the offer document pertaining to the said
issue; and on the basis of such examination and the discussions with the
Company, its Directors and other officers, other agencies, independent
verification of the statements concerning the objects of the issue, projected
profitability, price justification, etc., they state that they have ensured that
they are in compliance with SEBI, the Government and any other competent
authority in this behalf.
Current issues
SEBI simplifies IPO process – New Companies to list in 12 days – Benefits
Securities and Exchange Board of India (SEBI) has been making significant
changes to the the stock market rules and proceedings for quite some time now and
especially on the Initial public offering (IPO) front.
First, it was Applications Supported by Blocked Amount (ASBA) process which
simplified IPO applying procedures and reduced hassles of money refunds. Now, the
Sebi has decided to reduce the time between public issue closure and listing to 12 days
from existing period of up to 22 days. And, this comes to effect on May 1, 2010.
This will greatly help to reduce the reduce instances of manipulation in the pre-
listing period. Several IPOs had created havoc before and after listing due to big grey
market plays. Market operators manipulate the IPO process using the long gap in the
listing process.
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Benefits:
1. When IPO Applied thru ASBA process, your whole IPO bid money stays in your bank account and continues to earn the interests till the IPO allotment status is out. After then, only the money for allotted shares will be debited. So, we don’t have to worry about the refunds from the IPO registrars for you have paid only the exact amount to the registrar.
2. With shorter IPO listing time, duration for which money locked-in your bank account is shorter. You would see the result of IPO allotments and listings in 12 days and the IPO money locked-in would be released sooner enabling us to apply for more IPOs than before. Also, SEBI believes this shorter duration can bring down the grey market manipulations of IPO listing prices.
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ISSUES
PublicIssues
RightIssues
Private Placement
Private Placement(For unlisted companies)
Preferential Issue(For Listed Companies)
Qualified Institutions Placement (Listed Cos.)
IPO (For Unlisted Companies) FPO (For Listed Companies)
Fresh Issue Offer for Sale Fresh Issue Offer for Sale
The classification of issues can be described as below:
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VARIOUS TYPES OF ISSUES
Classification
Issues can be broadly classified into Public Issue, Rights Issue and
Private Placement. Public issues can be further classified into Initial Public
offerings and further public offerings. In a public offering, the issuer makes
an offer for new market investors to join their shareholders family. The
issuer company makes detailed disclosures as per the SEBI (DIP)
Guidelines, 2000 in its offer document and offers it for subscription.
The significant features of each type of Issue are illustrated below:
Initial Public Offering
IPO 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 provides a listing and trading of the issuer’s
securities.
Rights Issue
It is when a listed company which proposes to issue fresh securities to
its existing shareholders as on a record date. The rights are normally offered
in a particular ratio to the number of securities held prior to the issue. This
route is best suited for companies who would like to raise capital without
diluting stake of its existing shareholders unless they do not intend to
subscribe to their entitlements. A private placement is an issue of shares or
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of convertible securities by a company to a select group of persons under
Section 81 of the Companies Act, 1956 which is neither a rights issue nor a
public issue. This is a faster way for a company to raise equity capital.
Private Placement
Private Placement of shares or of convertible securities by a listed
company is generally known by name of preferential allotment. A listed
company going for preferential allotment has to comply with the
requirements contained in Chapter XIII of SEBI (DIP) Guidelines
pertaining to preferential allotment in SEBI (DIP) guidelines which inter-
alia includes pricing, disclosures in notice etc., in addition to the
requirements specified in the Companies Act.
Further public offering
FPO is when an already listed company makes either a fresh issue of
securities to the public or an offer for sale to the public, through an offer
document. An offer for sale in such scenario is allowed only if it is made to
satisfy listing or continuous listing obligations.
Pricing of an IPO
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The pricing of an ipo is a very critical aspect and has a direst impact on
the success or failure of the ipo issue. There area many factors that need to
be considered while pricing an ipo and on attempt should be made to reach
an ipo price that is low enough to generate interest in the market and at the
sometimes, it should be high enough to raise sufficient capital for the
company.
The process for determining an optimal price for the ipo involves the
underwriting arranging share purchase commitments from leading
institutional investors.
Process
Once the final prospectus is printed and distributed to investors,
company arrangements meets with their investment bank to choose the final
offering price and size. The investment bank tries to fix an appropriate price
for the ipo depending upon the demand expected and the capital
requirements of the company.
The pricing of an ipo is a delicate balancing act as the investment
firms try to strike a balance between the company and the investors. The
lead underwriters is the responsibility to ensure smooth trading of the
company’s stock. The underwriter is legally allowed to support the pricing
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of a newly issued stock by either buying them in the market or by selling
them short.
Ipo , pricing differences
It is generally noted, that there is alarge difference between the price
at the time of issue of an ipo, and the price when they start trading in the
secondary market.
These pricing disparities occur mostly when an ipo is considered
“hot”, or in othere words, when is appeals to a large numbers of investors.
An ipo is “hot” when the demand for it far exceeds the supply.
The imbalance between demand and supply causes a dramatic rise in
the price of each share in the first day itself, during the early hours of
trading.
Under pricing and overpricing of IPOs
Under pricing:
The pricing of an IPO at less than its market value is reffered to as
“underpricing”. Under priced IPOs helps to generate additional interest in
the stock when it first becomes publically traded. This might result in
significant gains for investors who have been allocated share at the offering
price. However, under pricing also results in loss of significant amount of
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capital that could have been raised had the shares been offered at the higher
price.
Overpricing:
The pricing of an ipo at more than its market value is reffered to as
“overpricing”. Even “over pricing”, of shares is not as healthy option. If the
stock is offered at the higher price than what the market is willing to pay,
then it is likely to become difficult for the underwriters to fulfill their
commitment to sell shares. Furthermore, even if the underwriters are
successful in selling all the issued shares and the stocks falls in value of on
the first day itself of trading, then it is likely to lose its marketability and
hence, even more of its value.
Principal steps in an IPO
Approval of BOD : approval of BOD is required for raising capital from the public.
Appointment of lead managers: the lead manager is the merchant banker
who orchestrates the issue in consultation of the company.
Appointment of other intermediaries:
Co-managers and advisors
Underwriters
Bankers
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Broker and principal bankers
Registrars
Filing the prospectus with SEBI
The prospective or the offer document communicates information about
the company and the proposed security issue to the investing public. All the
companies seeking to make a public issue have to file their offer document
with SEBI. If SEBI or public does not communicate its observations within
21 days from the filing of the offer document, the company can proceed
with its public issue.
Filing of the prospectus with the registrar of the companies
Once the prospectus have been approved by the concerned stock
exchanges and the consent obtained from the banker, auditors, registrar,
underwriters and others, the prospective signed by the directors, must be
filed with the registrars of companies, with the required documents as per
the companies act 1956.
Printing and dispatch of prospectus : After the prospectus
is filed with the registrar of companies, the company should print the
prospectus. The quantity in which prospectus is printed should be sufficient
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to meet requirements. They should be send to the stock exchanges and
brokers so they receive them atleast 21 days before the first announcement
is made in the news papers.
Filing of initial listing application : Within 10 days of filing the
prospectus, the initial listing application must be made to the concerned
stock exchanges with the listing fees.
Promotion of the issue : The promotional campaign typically commences
with the filing of the prospectus with the registrar of the companies and
ends with the release of the statutory announcement of the issue.
Statutory announcement : The issue must be made after seeking
approval of the stock exchange. This must be published atleast 10 days
before the opening of the subscription list.
Collections of applications : The Statutory announcement specifies when
the subscription would open, when it would close, and the banks where the
applications can be made. During the period the subscription is kept open,
the bankers will collect the applications on behalf of the company.
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Processing of applications : Scrutinizing of the applications is done.
Establishing the liability of the underwriters : If the issue is
undersubscribed, the liability of the underwriters has to be established.
Allotment of shares : Proportionate system of allotment is to be followed.
Listing of the issue : The detail listing application should be submitted to
the concerned stock exchange along with the listing agreement and the
listing fee. The allotment formalities should be completed within 30 days.
SIGNIFICANCE OF IPO
Investing in IPO has its own set of advantages and disadvantages. Where on
one hand, high element of risk is involved, if successful, it can even result
in a higher rate of return. The rule is: Higher the risk, higher the returns.
The company issues an IPO with its own set of management objectives and
the investor looks for investment keeping in mind his own objectives. Both
have a lot of risk involved. But then investment also comes with an
advantage for both the company and the investors.
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The significance of investing in IPO can be studied from 2 viewpoints – for
the company and for the investors. This is discussed in detail as follows:
SIGNIFICANCE TO THE COMPANY:
When a privately held corporation needs additional capital, it can
borrow cash or sell stock to raise needed funds. Or else, it may decide to
“go public”. "Going Public" is the best choice for a growing business for
the following reasons:
The costs of an initial public offering are small as compared to the costs
of borrowing large sums of money for ten years or more,
The capital raised never has to be repaid.
When a company sells its stock publicly, there is also the possibility for
appreciation of the share price due to market factors not directly related to
the company.
It allows a company to tap a wide pool of investors to provide it with
large volumes of capital for future growth.
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SIGNIFICANCE TO THE SHAREHOLDERS:
The investors often see IPO as an easy way to make money. One of
the most attractive features of an IPO is that the shares offered are usually
priced very low and the company’s stock prices can increase significantly
during the day the shares are offered. This is seen as a good opportunity by
‘speculative investors’ looking to notch out some short-term profit. The
‘speculative investors’ are interested only in the short-term potential rather
than long-term gains.
Eligibility norms for making these issues:
SEBI has laid down eligibility norms for entities accessing thee
primary market through public issues. There is no eligibility norm for a
listed company making a rights issue as it is an offer to the existing
shareholders who are expected to know their company.
The main entry norms for companies making a public issue (IPO or
FPO) are summarized as under:
Entry Norm (EN 1):
The company shall meet the following requirements:
a) Net tangible assets of at least Rs. 3 crores for 3 full years.
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b) Distributable profits in at least three years.
c) Networth of atleast Rs. 1 crore in three years.
d) If change in name, atleast 50% revenue for proceding 1 year should be form the new activity.
e) The issue size does not exceed 5 times the pre-issue networth.
To provide sufficient flexibility and also to ensure that genuine companies
do not suffer on account of rigidity of the parameters, SEBI has provided
two other alternative routes to company not satisfying any of the above
conditions, for accessing the primary market, as under:
Entry Norm 11(EN 11)
a) Issue shall be through book building route, with at least 50% to be
mandatory allotted to the Qualified Institutional Buyers (QIBs).
b) The minimum post-issue face value capital shall be Rs. 10 crore or there
shall be a compulsory market-making for at least 2 years
OR
Entry Form 111 (EN 111)
a) The ‘project’ is appraised and participated to the extent of 15 % by
Fis/Scheduled Commercial Banks of which at leat 10% comes from the
appraiser(s).
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b) 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 allotters in its.
38
SEBI GUIDELINES
IPO of Small Companies: Public issue of less than five crores has to
be through OTCEI (Over the Counter Exchange of India) and separate
guidelines apply for floating and listing of these issues.
Public Offer of Small Unlisted Companies (Post-Issue Paid-Up
Capital upto Rs.5 crores) Public issues of small ventures which are in
operation for not more than two years and whose paid up capital after the
issue is greater than 3 crores but less than 5 crores the following guidelines
apply.
1. Securities can be listed where listing of securities is screen based.
2. If the paid up capital is less than 3 crores then they can be listed on the Over
The Counter Exchange of India (OTCEI)
3. Appointment of market makers mandatory on all the stock exchanges where
securities are proposed to be listed.
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Size of the Public Issue
Issue of shares to general public cannot be less than 25%of the total issue.
Incase of IT, Media and Telecommunication sectors, this stipulation is
reduced subject to the conditions that
1. Offer to the public is not less than 10% of the securities issued.
2. A minimum number of 20 lakh securities is offered to the public
3. Size of the net offer to the public is not less than Rs.30 crores.
Promoters Contribution
1. Promoters should bring in their contribution including premium fully before
the issue.
2. Minimum promoter’s contribution is 20-25% of the public issue.
3. Minimum lock in period for promoter’s contribution is five years.
4. Minimum lock in period for firm allotment is three years.
Collection Centers for Receiving Applications
1. There should be at least 30 mandatory collection centers, which should
include invariably the places where stock exchanges have been established.
2. For issues not exceeding Rs.10 crores the collection centers shall be situated
at:-
40
The 4 métropolitain centres vis. Mumbai, Delhi, Kolkata & Chennai
All such centres where stock exchanges are located in the region in which
the registered office of the company is situated.
Regarding allotments of shares
1. Net Offer the general public has to be atleast 25% of the total issue size for
listing on a stock exchange
2. It is mandatory for a company to get its shares listed at the regional stock
exchange where the registered office of the issuer is located.
3. In an issue of more than 25 crores the issuer is allowed to place the whole
issue by book-building.
4. Minimum of 50% of the Net Offer to the public has to be reserved for the
investors applying for less than 1000 shares.
5. There should be atleast 5 investors for every 1 lakh equity offered.
6. Quoting of PAN or GIR No. in application for the allotment of securities is
compulsory where monetary value of investment is Rs.50000/- or above.
7. Indian development financial institutions and Mutual Fund can be allotted
securities up to 75% of the issue amount.
8. A venture capital fund shall not be entitled to get its securities listed on any
stock exchange till the expiry of 3 years from the date of issuance of
securities.
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9. Allotment to categories of FIIs and NRIs/OCBs is upto maximum of 24%,
which can be further extended to 30% by an application to the RBI-
supported by a resolution passed in the General Meeting.
Timeframes for Issue and Post-Issue Formalities
1. The minimum period for which the public issue is to be kept open is 3
working days and the maximum for which it can be kept open is 10 working
days. The minimum period for right issue is 15 working days and the
maximum is 60 working days.
2. A public issue is effected if the issue is able to procure 90% of the total
issue size within 60 days from the date of the earliest closure of the public
issue.
3. In case of oversubscription the company may have he right to retain the
excess application money and allot shares more than the proposed issue,
which is referred to as “green-shoe” option
4. Allotment has to be made within 30 days of the closure of the Public issue
and 42 days in case of Rights issue
5. All the listing formalities of a Public Issue have to be completed within 70
days from the date of closure of the subscription list.
Dispatch of Refund Order
42
1. Refund orders have to be dispatched within 30 days of the closure of the
issue.
2. Refunds of excess application money i.e. non-allotted shares have to be
made within 30 days of the closure of the issue.
Other Regulations
1. Underwriting is not mandatory but 90% subscription is mandatory for each
issue of capital to public unless it is disinvestment where it is not applicable.
2. If the issue is undersubscribed then the collected amount should be returned
back
3. If the issue size is more than Rs500 crores, voluntary disclosures should be
made regarding the deployment of funds and an adequate monitoring
mechanism put in place to ensure compliance.
4. There should not be any outstanding warrants for financial instruments of
any other nature, at the time of the IPO.
5. In the event of the initial public offer being at a premium and if the rights
under warrants or other instruments have been exercised within 12 months
prior to such offer, the resultant shares will be not taken into account for
reckoning the minimum promoters contribution further, the same will also
be subject to lock-in.
6. Code of advertisement as specified by SEBI should be adhered to.
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7. Draft prospectus submitted to SEBI should also be submitted
simultaneously to all stock exchanges where it is proposed to be listed.
Restrictions on Allotments
1. Firm allotments to mutual funds, FII and employees are not subject to any
lock-in period.
2. Within 12 months of the public issue no bonus issue should be made.
3. Maximum percentage of shares, which can be distributes to employees
cannot be more than 5% and maximum shares to be allotted to each
employee cannot be more than 200.
INTRODUCTION TO CAPITAL MARKET
Capital market may be defined as a market of borrowings and lending
long term capital funds required by business firms. Capital market is the
market for financial assets that have long or indefinite maturity. In other
words it refers to all the facilities and the institutional arrangements for
borrowings and lending medium term and long term funds.
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The capital market is dealing with various financial instruments that
are used for raising capital resources in capital market are known as capital
market instruments.
The various capital market instruments used by corporate entities in India
for raising resources are as following:-
Preference shares:-
Shares that carry preferrencial rights in comparison with ordinary shares are
called preference shares. Preferential rights regarding payment of dividends
and the distributions of the assets of the company in the events of its
winding up in preference to equity shares.
There are six types of preference shares, which are as follows,
a) Cumulative preference shares
b) Non cumulative preference shares
c) Participating preference shares
d) Redeemable preference shares
e) Fully convertible cumulative preference shares
f) Preference share with warrants attached.
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Equity shares:
Equity share, also known as ordinary shares are the shares held by the
corporate intity. Since equity shareholders face greater risk and have no
specific preferencial rights. They are given larger shares in profit through
higher dividend then those given to preference share holders that the
company’s performance is excellent. Directors declare no dividends in case
there are no profits in subsequent year. Equity shareholders also enjoy the
benefit of ploughing back of undistributed profits kept as reserve and
surplus for the purpose of business expansion. Often part of these is
distributed to them as bonus shares. Such bonus shares are entitled to a
proportionate or full dividend in the succeeding year.
Debentures and bonds:
A document that either creates a debt of acknowledges it is known as
debentures. Accordingly, any documents that fulfill either of this condition
is a debenture. A debenture, issued under the common seal of the company
usually takes the form of certificate that acknowledges in debt ness of the
company.
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Importance of capital market
Absence of capital market serves as deterrent factor to capital
formation and economic growth. Resources would remain idle if finances
are not funneled through capital market.
It serves as an important sourse for the productive use of the economy’s
savings.
It provides incentives to saving and facilitates capital formation by offering
suitable rates of interest as the price of the capital.
It provides avenue for investors to invest in financial assets.
It facilitates increase in production and productivity in the economy and
thus enhances the economic welfare of the society.
A healthy market consisting of expert intermediaries promotes stability in
the value of securities representing capital funds.
It serves as an important source for technological up gradation in the
industrial sector by utilizing the funds invested by the public.
Primary market reforms:
Entry barrier for unlisted companies modified as dividend payment in
immediately preceding 3 years.
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A listed company required to meet the entry norm only if the post issue net
worth becomes morethan five times the pre-issue net worth.
Companies required making their partly paid-up shares fully paid up of
forfeiting the same, before making a public/right issue.
Unlisted company allowed to freely price its securities provided it has
shown net profit in the immediately preceding 3 years subject to its
fulfilling the exisiting disclosure requirements.
The promoter’s contribution for public issues made at 20% irrespective of
the issue size.
Written consent from share holders in regard to lock-in made compulsory
for securities to be offered for promoter’s contribution.
Appointment of registrar to an issue for rights issues made mandatory.
A provision made regarding disclosure of the share holding of the
promoters whose names figure in the paragraph on “promoters and their
background” in the offer document.
The SEBI (Registrars to an Issue and share Transfer Agents ) Rules and
Regulations 1993 have been amended to provide for an arm’s length
relationship between the issuer and the registrars to the issue. It has now
been stipulated that no Registrar to an Issue can act as such for any issue of
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securities made by any body corporate, if the Registrar to the issue and the
Issuer Company are associates.
With a view to facilitating rising of funds by infrastructure projects, SEBI
has allowed debt instruments ot be listed on the Stock Exchanges without
prior listing of equity. Corporate with infrastructure projects and Municipal
Corporations to be exempted from the requirements of Rule 19(2b) of
securities (contract) Regulation rules to facilitate public offer and listing of
its pure debt instruments as well as debt instruments fully or partly
convertible in to equity without the requirement of prior listing of equity but
subject to conditions like investments grade ratings.
Only body corporate to be allowed to function as Merchant Bankers
Multiple categories of merchant bankers to abolished and there shall be only
one entity viz., merchant banker, presentl, the Merchant Banker allowed to
perform underwriting activity but required to seek separate registration to
function as a portfolio manager under SEBI (portfolio manager ) Rules and
Regulations, 1993.
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RESEARCH METHODOLOGY AND DESIGN
STATEMENT OF THE PROBLEM:
There is much hype of IPOs nowadays. And while considering the
previous years, the number of companies which going for IPO is increased
during 2010. There are common phenomenons among the investors today
that the return on investing in IPO is not much. Event though investor has
the storm back the IPO and yearly there are huge application received from
the investor to invest in IPO. And we also heared about that the “coal India”
IPO, etc. so now the trend is changing.
Concider following graph:
2008 2009 20100
20
40
60
80
Series 1
One IPO that are listed in the last year have been trading at a higher
price when compare to the issue price call it a fundamentals playing out of
after the initial euphoria if you may. But, out 73 IPOs some of them are not
listed, they were withdrawn their IPO. The interesting news, was that, some
of the issues were oversubscribed, and some of the Issues got gain in their
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issue price. In short, out of 73 IPOs, 16 offers listed at higher price compare
to the issue price. The re-rating of stocks by the investors reported after the
initial hype of the public offer warns out.
Somehow, the IPO 2010 is better than previous year, and some of the
IPOs are doing well in the market even after the global crisis. There are
some IPOs whose trade price and the issue price differs significantly. Some
investors are getting more money and some are loosing. The most of IPOs
issued during the year 2010 are traded at the lower prices than their issue
price. So there is a need to know the performance of the IPO. This is the
study to know the performance of the IPO that are issued during the year
2010. The problem here is to know which IPO is doing well and which are
not.
However this study has taken up for the purpose to know:-
The IPO issued during the year 2010
The performance of the IPO during the year.
The investor’s information of the IPO during the year 2010
The economical impact on IPO due to the Market condition.
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JUSTIFICATION OF THE STUDY:-
The study highlights the performance of the IPO dusing the year
2010. It also deals the future prospects of IPO. It also reviews the
performance of different sector.
OBJECTIVES OF THE STUDY:
The objectives of the study is to know that
Study of the IPO issued during the year 2010
Study the overall performance of the IPO during the year 2010
Comparison of the issue price and the trade price in particular day.
The future prospect of IPO
Types of research
the research includes different options. They are,
1. Explorative Observational research
Fresh data can be gathered by observing the relevant actors and
settings. Under theis method the information is sought by way of
investigatos’s own direst observation withour asking from the respondents,
instead of asking for the brand of wrist watch used by the respondent, may
himself look at the watch the main advantage of this method is subjective
bias is eliminated, if the observation is done accurately. Secondly
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information obtained under this method related to what is currently
happening. It is not complicated either by past behaviours or future
intentions or attitudes. Thirdly, this mwthod is independent of reposdent’s
willingness to respond and as such is relatively less demanding of active
cooperation on the part of respondents. This method is particularly suitable
in studies which particularly deal with subjects who are not capble of giving
verbal reports of their feelings for one reason or the other.
2. Focus group research.
A focus group is a gathering of six to ten people who are invited to
spend a few hours with a skilled moderator to discuss a product, service,
organization, or other marketing entity. The moderator needs to be
objective, knowledgible on the issue and skilled in group dynamics.
Participants are normally paid a small sum for attending. The meeting is
typically held in pleasant surroundings and refreshments are served.
3. Survey research.
Surveys are best suited for descriptive research. Companies undertake
surveys to learn about people’s knowledge, beliefs, preferances, and
satisfaction, and to measure these magnitudes in the general population. A
company such as Mainstay might prepare its own survey instrument to
gather information it needs, or it might add questions to an omnibus survey
that carries the questions of several companies at much lower cost.
54
4. Experimental research.
The most scientifically valid research is experimental research. The
pupose of experimental research is to capture cause and effect relationships
by eliminating competing explanations of the observes findings to the
extent that the design and execution of the experiment eliminate alternative
hypothesis that might explain the results, research and HR managers can
have confidence in the conclusions. It calls for selecting matched groups of
subjects, subjecting them to different treatments, controlling extraneous
variable, and checking whether observed response differences are
satisfically significan. To ehte extent that extraneous factors are eliminated
of controlled, the observed effects can be related to variation in the
treatments.
Adopted Research Design:-
The research design that is adopted is both explanatory and
experimental research design.
The advantage behind adopting the explorative method is that is helps
on identifying the problems and is finding out the alternative solution to the
problem as herein referred to the effectiveness of the recruitment
campaign.
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The reason being it is also an experimental study is that is is the
testing of the attitude towards the hypothesis proposed and it is variable as
well as a study of the existing system.
Collection of Data:-
The data required for the study were obtained from,
1. Primary data
2. Secondary data.
The primary data are those data which are collected for the first time.
The primary data was collected through discussions and interviewing wit
some financial experts and bank officers. It includes the eminent
personalities dealing with IPO and some bank expert.
The secondary data and other related information published reports of
corporations like…
Websites
RBI Guidelines
SEBI Guidelines
Newspapers : Economic times, Business lines, Business standards
Text books
Business journals: Dalal street, capital market, ICFAI journals, etc.
56
Tools of Analysis:-
The tools which are used for this study are:
The interviews and discussions has been done with some financia
experts, and share brokers to know the performance of the IPO during the
year 2010.
This research study has been conducted by collecting the secondary
data from various sources like RBI bulletin, Websites, Business journals,
etc. about the FDIand interpreting the same with reference to the year 2010.
Sampling Plan :-
Sampling may be defined as the selection of some part of an
aggregate or totality on basis of which judgement or inference about the
aggregate or totality is made. A sample design is a definite plan for
obtaining a sample from a given population. It refers to a technique or the
procedure the researcher would adopt in selecting the items for the sample.
Since it is a research kind of study about performance of the ipo
issued during the year, 2010, I have taken the sample as the total of
population. I have taken all the 73 IPOs that are issued during the year
2010.
ANALYSIS OF DATA
57
Analysis of data has been done,
By taking all the IPO that are issued during the year 2010.
By taking the issue price of the data that are issued during the year 2010.
By taking the trade price pertaining to a particular day.
By comparing the gain or loss during the year 2010.
By relating the data to know which sectors IPO are doing well and how the trade price are changing significantly from the issue price.
Limitation of the study
For this study collecting of primary data with regards to the IPOs is very difficult. Getting the full fledged data on this topic is quite impossible.
The study contains most of the secondary data and analysis of the same.
The study has been taken to the performance of the IPO during the year 2010
It only judge the performance of the IPO based on the issue price and trade price. But there are so many reasons for the success of IPO.
It has not dealt with the cause behind on company is getting the huge success whether other suffers.
It does not deal with the speculation in the capital market.
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64
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List of IPOs issued during the year 2010
No IPOs name Total quantity issue price
1 Infinite computer solution ltd
189.8 165
2 Birla shloka edutech ltd. 24.78 503 jubilant food works ltd 328.72 1454 Vascon engineering ltd 199.8 1655 Syncom health works ltd 56.25 756 aqua logistics 150 2207 DB Reality ltd 1500 4688 EMMBI polyarns ltd 38.96 409 NTPC Ltd 8480.1 20110 ARSS infrastructure
projects ltd103 450
11 Hathway cables and datacom ltd
666 240
12 Texmo pipes and pdts ltd 45 9013 Man infra construction 141.75 25214 Rural electrification corp.
ltdxxxxx Xxxxx
15 United banak of india 324.98 6616 DQ entertainment
(international) ltd128.16 80
17 NMDC ltd 9930.45 37518 Pradip overseas ltd 116.6 11019 IL and FS transportation
network ltd700 258
20 Persistent systems 168.01 31021 Thamngamayil jewelry 28.79 7522 Shree ganesh jewellary
house371.02 260
23 Infrasoft technologies ltd 53.65 14524 Goenka diamond and
jewels126.51 135
25 Talwalkers better value fitness ltd
77.44 128
25 Nitesh estates ltd 450 5426 Tarapur transformers ltd 63.75 75
68
27 Mandhana industries ltd 107.9 13028 SJVN ltd 1064.74 2629 Jaypee infratech ltd 1650 10230 Tara health food ltd xxxxx Xxxxxx32 Standard chartered plc 2486.35 10433 Fatpipe network india ltd xxxxx Xxxxx34 Parabolic drugs ltd 200 11835 Aster silicates ltd 53.10 11836 Technofab engineers ltd 71.66 24037 Hindustan media venture
ltd270 166
38 Midfield industries ltd 59.85 13339 Engineers india ltd 959.65 29040 SKS micro fin ltd 1628.78 98541 Bajaj corp. ltd 297 66042 Prakash steelage ltd 68.75 11043 Gujarath pipavat ltd 500 4644 Indosolar ltd 357 2945 Tirupati ink ltd 51.5 4346 Eros international ltd 350 17547
Career point infosystem 115 310
48
Microsec financial services ltd
1628.78 985
49
Ramky infrastructure ltd 530 450
50
Orient green power co. ltd 900 47
51
Electrosteels ltd 248.07 11
52
Cantabile retail 105 135
53
VA TECH WABHAG ltd 125 1310
54
Tecprosystem ltd 267.91 355
55
Ashoka build con. Ltd 225 324
56
Sea TV networks ltd 50.20 100
57
Bedmutha industries ltd 91.8 102
69
58
Commercial engineers and bodybuilders
153 127
59
Obroi reality ltd 1028.61 260
60
BS Transcom ltd 190.45 248
61
Prestige estate project ltd 1200 183
62
Gyscoal alloys ltd 54.67 71
63
Coal india ltd 15199.44 245
64
Gravita India ltd 45 125
65
Powergrid corp. of India 2984.45 90
66
RPP infra 48.75 75
67
Moil ltd 1237.51 375
68
Claris life sciences 300 228
69
The shipping corp. of india ltd
1164.73 140
70
A2Z maintenance 675 400
71
Ravikumar distilleries 73.6 64
72
Punchab and sind bank 470.82 120
73
C mahendra export ltd 165 110
IPOs 2010, sector wise classification ( number of IPOs 2010)
70
constr
uction an
d engin
eerin
g
bankin
g and fi
anan
ce
power sec
tor
pharmasu
ticals a
nd life c
are steel
computer
mining and m
inerals
shipping a
nd tran
sport
media
jewell
ary
retail
and pack
ing
textiles
others02468
101214161820
sectors
num
ber o
f iss
ue
Conclusion :
Apart from previous years, Indian IPO market had a good energy, and that
showed us the result of increase in number of IPO issue, ie (in previous year
the number of IPO was 21.). The major part of IPOs were issued on
construction and engineering sector. But while taking the fund as yard stick,
mining and minerals was the most interested area.
Table 4.1
5.1.1 construction and engineering sector
71
Name of the issue Issue size
(RS.Cr)
open closes Offer offer price
Vascon engineering ltd 199.8 27-jan-2010
29-jan-2010
165
DB reality 1500 29- jan-2010
3-feb-2010
468
ARSS Infrastructure project ltd
103 8-feb-2010
11-feb-2010
450
Man infra construction ltd
141.75 18-feb-2010
22-feb-2010
252
IL & FS transportation networks
700 11-mar-2010
15-mar-2010
258
Nitesh estates ltd 450 23-apr-2010
27-apr-2010
54
Jaypee infra tech 1650 29-apr-2010
4-may-2010
102
Technofab engineers ltd 71.66 29-june-2010
7-july-2010
240
Engineers India ltd 956.65 27-july-2010
30-july-2010
290
Gujarath pipav port 500 23-aug-2010
26-aug-2010
46
Ramky infrastructure 530 22-sep-2010
27-sep-2010
450
VA tech wabag ltd 125 22-sep-2010
27-sep-2010
1310
Techpro systems 267.91 23- sep-2010
28-sep-2010
355
72
Asoka buildcon ltd 225. 24-sep-2010
28-sep-2010
324
Commercial engineers and bodybuilders co ltd
153 30-sep-2010
5-oct-2010
127
Oberoi reality ltd 1028.61 6-oct-2010
8-oct-2010
260
Prestige estates project ltd
1200 12-oct-2010
14-10-2010
183
RPP infra projects 48.75 18-nov-2010
22-nov-2010
75
Interpretation:
There are 18 companies who have come out for IPOs issues in this
industry sector. Jay pee infra had come up with highest offer. And
comparing other sectors, here is the place more IPOs issues are made during
the year 2010.
And some of industrial giants like prestige groups, DB reality, etc. are also
came to make their issues over here.
4.2 Banking and Finance sector
Name of issue Issue size(RS.Cr)
opens close Offer price
United bank of 324.98 23- 25- 66
73
India feb-2010
feb-2010
Standard chartered PLC
2486.35 25-may-2010
28-may-2010
104
SKS Micro financial services
1628 28-july-2010
2-aug-2010
985
Microsec fin. 147 17-sep-2010
21-sep-2010
118
Punjab and sind bank
470.82 13-dec-2010
16-dec-2010
120
Interpretation
In this sectors, the number of companies are which are came for IPO is
comparatively lesser than that previous sector. But the issue size were little
huge. Standard chartered PLC had come up with huge offer.
4.3 Power sectors
company Issue size(RS.cr)
opens close Offer price
NTPC Ltd 8480.1 3-feb-2010
5-feb-2010
201
74
Tarapur transformers 63.75 26-apr-2010
28-4-2010
75
SJVN ltd 1062.74 24-apr-2010
3-may-2010
26
Orient green power 900 21-sep-2010
24-sep-2010
47
BS transcom 190.45 6-oct-2010
13-oct-2010
248
Power grid 2984.45 9-nov-2010
12-nov-2010
90
A2Z maintenance 675 8-dec-2010
10-dec-2010
400
Interpretation
This is another place where huge issues were happened. NTPC, Power
grid corporation, SJVN ltd were come up with huge IPO issues. And here,
the 7 companies were issued for absorbing contributing 14356 crore rupees.
4.4 Pharmaceuticals sector and life care
company Issue size(Rs.cr)
opens closes
Offer price
Bajaj corp 297 2-aug-
5-sep-
660
75
2010 2010Syncom health care
56.25 27-jan-2010
29-jan-2010
75
Parabolic drugs 200 14-june-2010
14-june-2010
118
Claris life sciences
300 24-nov-2010
24-nov-2010
228
Interpretation:
Pharmaceuticals and life care sector is an another sector where more fund
essential. During 2010 around 4 companies were issued their IPOs in this
sector. Bajaj corp. Claris life sciences are the companies who made
comparatively huge issues.
4.5 Steel industry
company Issue size(Rs.cr)
open close Offer price
76
Prakash steelage
68.75 5-aug-2010
10-aug-2010
110
Electrosteels 248.07 21-sep-2010
24-sep-2010
11
Bedmutha industries
91.8 28-sep-2010
1-oct-2010
102
Gyscoal alloys 54.67 13-oct-2010
15-oct-2010
71
Interpretation:
Steel industry is an another industry where huge investment is needed.
The interesting fact here is, all steel sector companies were waiting till the
end of first half of the year. Electro steels and gyscoal alloys are the
companies which came up with comparatively huge IPOs from this sector.
77
4.6 Computer Hardware and Software sector
Company Issue size(Rs.cr)
open close Offer price
Infinite computer solutions
189.8 11-jan-2010
13-jan-2010
165
Birla shloka edutech
24.78 11-jan-2010
13-jan-2010
50
Persistent systems
168.01 17-mar-2010
19-mar-2010
310
Intrasoft tech. 53.65 23-mar-2010
26-mar-2010
145
Careerpoint 115 16-sep-2010
21-mar-2010
321.45
Interpretation:
Now the IT sector has been recovering from the effect of financial
crisis. Around 6 companies were initially offered, but from this Fatpipe
networks India withdrew their offer. Infinite computer solutions and
persistent systems were the companies who came up with
comparatively big offer from this sector.
\4.7 Mining and minerals
78
company Issue size(Rs.cr)
open close Offer price
NMDC ltd 9930.45 10-mar-2010
12-mar-2010
375
Coal India ltd 15199.44 18-oct-2010
21-oct-2010
245
Moil ltd 1237.51 26-nov-2010
1-dec-2010
375
Interpretation :
While taking the whole IPOs, this is the section where the huge issues
where made. Around 26366.89 crore Rupees was the total size of IPOs
which made in this particular sector. And coal India ltd issues were
oversubscribed.
4.8 Shipping and Transport corporation
79
company Issue size(Rs.cr)
open close Offer price
Aqua logistics 150 25-jan-2010
2-feb-2010
220
The shipping corp. of India
1164 30-nov-2010
3-dec-2010
140
Interpretation:
During 2010, only 2 companies were involved in this sector. Aqua
logistics and, The Shipping Corp. Of India were the companies which made
the IPOs. The Shipping Corp. of India was the company who made large
issue on this particular sector.
4.9 Media and entertainment sector
80
company Issue size(Rs.cr)
open close Offer price
Hathway cables and data com
ltd
666 9-feb-2010
11-feb-2010
240
DQ entertainment
128.16 8-mar-2010
10-mar-2010
80
Hindustan media venture
270 5-june-2010
7-june-2010
166
Eros international
media
350 19-sep-2010
21-sep-2010
175
Sea TV networks ltd
50.20 27-sep-2010
29-sep-2010
100
Interpretation:
Media sector has a good role in development of a nation. During
the year 2010, around 5 companies were come up with new issues.
Hatchway cables and data com ltd, Eros international are companies
which are made comparatively huge issues.
81
4.10 Jewelry sector
Company Issue size(Rs.cr)
open close Offer price
Thangamayil jewelry
28.76 18-jan-2010
20-1-2010
75
Shree ganesh jewelry house
371.02 19-mar-2010
23-mar-2010
260
Goenka diamond
126.51 23-mar-2010
28-mar-2010
135
C Mahendra exports
165 31-dec-2010
6-jan-2011
110
Interpretation:
This is an another major area of ivestment. Around 4 companies
were come up with their new issues during 2010. Shree Ganesh jewelry
was the company which made comparatively huge issues.
4.11 Retail and packing industry
Company Issue open close Off
82
size(Rs.cr)
er price
EMMBI polyarns
38.96 1-feb-2010
3-feb-2010
40
Midfield industries
59.85 19-jule-2010
21-july-2010
133
Cantabile retails 105.00 22-sep-2010
27-sep-2010
135
Interpretation:
Retail industries are the one of the growing sector in India. During
2010 around 3 companies were come up with IPO offer, among this
cantabile retails had offered 105.00 crore through IPO.
4.12 Textiles sector
Company Issue size(Rs.cr)
open close Offer price
Pradip overseas ltd
116 11-mar-2010
15-mar-2010
110
Mandhana industries
107.9 24-apr-2010
29-apr-2010
130
Interpretation:
83
This is an another sector where the few IPOs issues were made. Only
two companies were made their IPOs over here. Among this mandhana
Industries has made an IPO of 116.6 crore.
4.13 miscellaneous
Company Issue size(Rs.cr)
Open close Offer price
Jubilant food works
328.72 18-jan-2010
20-jan-2010
145
Texmo pipes and products
45 16-feb-2010
19-feb-2010
90
Talwalkers better value fitness ltd
77.44 21-apr-2010
23-apr-2010
128
Aster silicates 53.1 24-june-2010
28-june-2010
118
Indo solar ltd 357 13-sep-2010
15-sep-2010
29
Tirupati inks 51.50 16-sep-2010
19-sep-2010
43
Gravita india 45 1-nov-2010
3-nov-2010
125
Ravikumar distilleries
73.60 8-dec-2010
10-dec-2010
28.95
Interpretation:
84
The companies which are not involved in other sectors are grouped
as miscellaneous sectors. In this Around 9 companies were made IPOs,
tara health food were withdrawn their issue.
85
87
no
IPOs name Total fund issued
1 Infinite computer solution ltd 155.1652 Birla shloka edutech ltd. 45.503 jubilant food works ltd 328.724 Vascon engineering ltd 199.85 Syncom food works ltd 56.286 aqua logistics 1507 DB Reality ltd 15008 EMMBI polyarns ltd 38.969 NTPC Ltd 8480.1010 ARSS infrastructure projects ltd 10311 Hathway cables and datacom ltd 66612 Texmo pipes and pdts ltd 4513 Man infra construction 141.7514 Rural electrification corp. ltd XXX15 United banak of india 324.9816 DQ entertainment (international)
ltd128.16
17 NMDC ltd 9930.4518 Pradip overseas ltd 116.619 IL and FS transportation network
ltd700
20 Persistent systems 168.0121 Shree ganesh jewellary house 371.0222 Infrasoft technologies ltd 53.6523 Goenka diamond and jewels 126.5124 Talwalkers better value fitness ltd 77.4425 Nitesh estates ltd 45026 Tarapur transformers ltd 63.7528 Mandhana industries ltd 107.929 SJVN ltd 1062.7430 Jaypee infratech ltd 165031 Tara health food ltd 18532 Standard chartered plc 2486.3533 Fatpipe network india ltd XXX34 Parabolic drugs ltd 20035 Aster silicates ltd 53.1036 Technofab engineers ltd 71.6637 Hindustan media venture ltd 27038 Midfield industries ltd 59.8539 Engineers india ltd 959.6540 SKS micro fin ltd 1628.7841 Bajaj corp. ltd 29742 Prakash steelage ltd 68.7543 Gujarath pipavat ltd 50044 Indosolar ltd 35745 Tirupati ink ltd 51.5046 Eros international ltd 35047 Career point infosystem 11548 Microsec financial services ltd 147.549 Ramky infrastructure ltd 53050 Orient green power co. ltd 90051 Electrosteels ltd 248.0752 Cantabile retail 10553 VA TECH WABHAG ltd 12554 Tecprosystem ltd 267.955 Ashoka build con. Ltd 22556 Sea TV networks ltd 50.257 Bedmutha industries ltd 91.858 Commercial engineers and 153
sector Fund issuedConstruction and engineering 9854.13Banking and finance sector 5058.43Power sector 14356.59Pharmaceuticals and life care 853.25Steel industry 463.29Computer sector 600.24Mining and minerals 26366.89Shipping and transport 1314.73Media and entertainment 1464.36Jewelry sector 662.53Retail and packing sector 203.81Textiles sector 224.5miscellaneous 1216.36
Analysis and Interpretation
While comparing previous years, 2010 was the one which never
forgettable, around 74 companies were came for IPO, and some of them
were withdrew their issue, finaly around 70 companies made their issues.
Out of 70 around 18 companies were made their issues on engineering and
construction sector. While we taking the fund issued, mining and minerals
where the sector were more funds issued. Around 26366.89 crore were
issued on that particular sector.
Following table has shows clearly that, how much funds were involved
on various sector.
88
constr
uction an
d engin
eerin
g
bankin
g and fin.
power
pharmasu
ticals s
ector a
nd lifeca
reste
el
computer
relat
ed
mining and m
inerals
shipping a
nd tran
sport
media
jewell
ary
retail
and pack
ing
textiles
others0
5000
10000
15000
20000
25000
30000
Analysis and Interpretation:
the issue size refers to the company has issued that much share to the
company. The above histogram shows the comparison of issue size for
sector to sector. The issue size is the indicator how the companies has get
the fund from the public. From the historical data we can get that the issue
size is concentrated on some sectors like mining and minerals ,
construction, power ,etc. while taking other sectors, these areas has good
investement scope.
% of Gain or Loss =current price-issue price x 100
Issue price
89
Sector wise analysis
5.1 Comparison of issue price and current price.
5.1.1 construction and engineering sector
Name of the issue Issue price
Current price
%of gain or
loss
Vascon engineering ltd 165 97.88 -68.5DB reality 468 126.9 -268.7ARSS Infrastructure project ltd 450 519.65 +13.4Man infra construction ltd 252 132.40 -90.3IL & FS transportation networks 258 205.95 -25.27Nitesh estates ltd 54 20.05 -87.3Jaypee infra tech 102 54.45 -87.3Technofab engineers ltd 240 117.60 -104.0Engineers India ltd 290 279.7 -3.68Gujarath pipav port 46 51.75 +11.11Ramky infrastructure 450 256.15 -75.6VA tech wabag ltd 1310 1333.35 +1.75Techpro systems 355 299.3 -18.6Asoka buildcon ltd 324 255.4 -26.8Commercial engineers and bodybuilders co ltd
127 28.8 -340.9
Oberoi reality ltd 260 227.6 -14.2Prestige estates project ltd 183 125.5 -45.8RPP infra projects 75 53.9 -39.14
90
vasco
n
DB reali
tyARSS
man in
fra
IL & FS
Nitesh
estat
es
jaypee
technofab
engin
eers
india
gujar
ath pipav
ramky
VA Tech
wab
ag
techpro
asoka
CE and BB co
. ltd
oberoi
prestige
RPP infra
-400
-350
-300
-250
-200
-150
-100
-50
0
50
100
ANALYSIS AND INTERPRETAION:
During 2010, construction sector was the place where the most number of
IPOs made. Around 18 companies were came with new issue. From that,
only 3 companies got gain in their issue. Rest of that all are went to below
expectation. In short , that was really a huge loss. The gainers are pointed
below:
ARSS infra projects – 13 .4%
Gujarat pipav – 11.11%
VA tech – 1.75 %
91
5.1. 2 Banking and Finance sector
Name of issue Issue price
Current price
%of gain or loss
United bank of India 66 93.5 41.67Standard chartered PLC 104 112.55 8.22SKS Micro financial services 985 638.4 -
35.58Microsec fin. 118 40.1 -33Punjab and sind bank 120 99.75 -17.2
UBI Std Chartered SKS micro sec PSB
-80
-60
-40
-20
0
20
40
60
ANALYSIS AND INTERPRETATION :
In this sector, around 6 companies were came up with IPO, in that
only two were went to above expectation. All others are traded lower than
92
their issue price. UBI has achieved 41.64% of gain in their issue price, and
standard chartered PLC made 8.22% gain in their value. In short , this
sectors has achieved little better than construction sector.
5.1.3 Power sectors
Name of issue Issue price
Current price
%of gain or loss
NTPC Ltd 201 176.85 -12Tarapur transformers 75 22.45 -70.06SJVN ltd 26 21 -19.2Orient green power 47 24.25 -48.4BS transcom 248 87.8 -64.59Power grid 90 96.4 7.1A2Z maintenance 400 234.7 -41.475
NTPC
Tarap
urSJV
N
Orient g
reen
BS tran
scom
Power gri
d
A2Z main
tanan
ce
-80
-70
-60
-50
-40
-30
-20
-10
0
10
20
93
ANALYSIS AND INTERPRETATION:
This was also an tragedy, during 2010, around 7 companies were come up
with new issues, among that only one get gain in their value. Powergrid
corporation was the company which made gain in their price. All others are
gone in to underpriced.
5.1.4 Pharmaceuticals sector and life care
Name of the issue Issue price
Current price
% of gain or loss
Bajaj corp 660 407.05 -38.32Syncom health care 75 31.1 -58.53Parabolic drugs 118 43.15 -63.45Claris life sciences 228 169.95 -25.46
94
bajan corp syncom parabolic drug claris
-70
-60
-50
-40
-30
-20
-10
0
ANALYSIS AND INTERPRETATION:
Unlike other sector, here all issues were traded lower prices than their issue
price. Around 4 companies were come up with new issues. None of them
could trade their share on a higher price than their issue price.\
95
5.1.5 steel industry
Name of issue Issue price
Current price
% gain or loss
Prakash steelage 110 125.2 -13.8Electrosteels ltd 11 8.95 -18.6Bedmutha industries 102 90.75 -11Gyscoal alloys 71 15.95 -77.5
prakash steelage electrosteels bedmutha gyscoal
-100
-80
-60
-40
-20
0
20
96
ANALYSIS AND INTERPRETATION:
Steel industry is the place where we need more initial fund. And its
also an very profitable business too. Even here also only one company
could achieved the gain in their value.
5.1.6 Computer Hardware and software sector
Name of issue Issue price
Current price
% of gain or loss
Infinite computer solution
165 154.4 -6.42
Birla shloka edutech ltd
50 16.1 -67.8
Persistent systems 310 386.95 27.8Intrasoft technologies 145 65.1 -55.1Careerpoint infosystems
310 321.45 3.69
infinite birla shloka persistentsystems intrasoft career point
-80
-60
-40
-20
0
20
40
97
ANALYSIS AND INTERPRETATION:
While taking this sector, two companies were got higher price
that their issue price. Others may be the result of Great financial crisis.
5.1.7 mining and minerals
Name of issue Issue price
Current price
% of gain or loss
NMDC 375 260.6 -30.5Coal India Ltd 245 304.6 24.3Moil ltd 375 405 8.01
98
NMDC Coal India moil ltd
-40
-30
-20
-10
0
10
20
30
ANALYSIS AND INTERPRETATION:
Here out of 3 two were traded at higher price. And some of the
IPOs were oversubscribed. Unlike other sectors, the IPOs made over
this sector performed well.
8 Shipping and Transport
Name of issue Issue price
Current price
% of gain or loss
Aqua logistics 220 19.9 -90.95The shipping corp. of India
140 109 -22.142
99
aqua logisticts the shipping corp.
-100
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
ANALYSIS AND INTERPRETATION:
This was the place where all IPOs were traded lower than their
issue price. In short, the performance of these share was totally so poor.
9 Media and Entertainment
Name of issue Issue price
Current price
% of gain or loss
Hatchway cables and data com ltd
240 120.8 -49.6
DQ entertainment (international) ltd
80 70.2 -12.25
Hindustan media ventures
166 154.95 -6.65
Eros international media
175 154.9 -11.45
Sea TV networks 100 23.25 -76.75
100
hathway
DQ enter
tainmen
t
Hindustan m
edia
ven.
Eros
Sea T
V
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
ANALYSIS AND INTERPRETATION:
The IPOs which made over this sector also under performed.
None of them were traded more than their face value.
10 jewelers and diamond
Name of issue Issue price
Current price
% of gain or loss
Thangamayill jewelry 75 150.95 101.26Shree ganesh jwelry house ltd
260 162.3 -37.57
Goenka diamond and jewelry
135 59.85 -55.67
C Mahendra exports 110 178.45 62.22
101
Thangamayil jewelry
shree ganesh goenka diamonds c Mahendera
-80
-60
-40
-20
0
20
40
60
80
100
120
ANALYSIS AND INTERPRETATION:
While taking this sectors, the performance of IPOs in this sector was
no so poor, out of 4 around two ipos were traded above than their issue
price. Among this, thangamayil jewelers got 101.26% gain, and C
Mahendra got 62.22% gain.
11 Retail and packing
Name of issue Issue price
Current price
% of gain or loss
EMMBI polyarns 40 13.75 -65.6Midfield industries 133 46.4 -65.1Cantabil retails 135 37 -72.59
102
EMMBI midfield cantabile
-74
-72
-70
-68
-66
-64
-62
-60
ANALYSIS AND INTERPRETATION:
This was another poorest performance, out of 3, none of them got
good value. All were traded below the issue price.
13 textiles
Name of the issue Issue price
Current price
% of gain or loss
Pradip overseas 110 75.6 -31.27Mandhana industries 130 259 99.80
103
pradip mandhana
-40
-20
0
20
40
60
80
100
120
ANALYSIS AND INTERPRETATION:
Here we could see, only two issues made, out of them one goe
excellent gain in their value, one was totally worst in result.
12 Others
Name of issue Issue price
Current price
% gain or loss
Jubilant food works 145 490.4 238.2Texmo pipes and products 90 34.25 -61.9Talwalkers better value fitness ltd
128 175.15 36.8
Aster silicates 118 25.7 -78.2Indo solar ltd 29 17.25 -40.8Tirupati inks 43 10.13 -76Gravita india 125 209.1 67.20Ravikumar distilleries 64 28.95 54.7
104
jubilant
texmo pipes
talwalk
ers aster
indosolar
tirupati
gravit
a
raviku
mar
-100
-50
0
50
100
150
200
250
300
ANALYSIS AND INTERPRETATION:
The companies which are not included none of previous sectors are
added with miscellaneous sector. Under this category around 8 issues are
made. And one Issues was withdrew by the company. Here some are got
good gain, some are totally failed. Jubilant food works was one company,
that traded with high gain.
105
5.2Top five gainers
Name of the issue
position % of gain
Jubilant food works
1 238.2
Thangamayil jewlers
2 101.26
Mandhana industries
3 99.80
Gravita India 4 67.20C Mahendra
expots5 62.32
jubilantthangamayill
mandhanagravita
c Mahendra
0
50
100
150
200
250
ANALYSIS AND INTERPRETATION:
The histogram shows the percentage of the gain by comparison of
issue price and the current price. Here from above chart Jubilant food works
106
top the list with 238.2% gain followed by Thangamayyil Jewelers with
101.26 %, followed by Mandhana Industries with the gain of 99.8%,
followed by Gravit India and C Mahendra exports gain of 67.2% and
62.32% respectively. Here from the following data we can observe that
Jubilant foodworks has traded with gain of 238.2%.
Top losers
Name of the issue
Position % of loss
Commercial engineers and body builders ltd
70th -340.9
Nitesh estates 69th -169.3DB reality 68th -126.9technofab 67th 104
Aqua logistics 66th 90.95
commercial engineers
nitesh est DB reality technofab aqua logist.
-350
-300
-250
-200
-150
-100
-50
0
ANALYSIS AND INTERPRETATION:
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These are the list of the company which underperforms in the market.
The bottom most company is commercial engineers and bodybuilders ltd
with decline of 340.9%, followed by Nitesh estates with 169.3% was
followed by DB reality with the decline of 126.9%. carried on by
Technofab and Aqua logistics with 104% and 90.95% respectively. So from
the following data the companies which are under performed have suffered
huge loss of around 80-340%.
OVERALL PERFORMANCE OF IPO ISSUED IN THE YEAR
2010
According to this sector wise analysis made during the year, the
performance of the IPOs was not so bad. The some of the retail
investors invested in the primary market during the year have lost
money as most of IPOs are quoting below their issue price. Among 70
IPOs 13 of them able to gain and rest of 57 are trading at a loss. Again
when we compare the number of IPOs issued in the year, in
construction sector out of 18 only three were got gain in their value, in
shipping and transport, retail sector, packing sector, media and
entertainment sector all IPOs were under performed. Some trent was,
the demand for Coal India, Jubilant food works are excellent, still these
shares have very good demand in the market.
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So overall we can see that companies going for IPO issues are
improved while comparing previous sectors, and almost all IPOs are
underperformed due to the bad condition in the market.
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OBSERVATIONS AND FINDINGS OF THE STUDY
DURING THE STUDY THE FOLLOWING ASPECTS WERE CLEARELY
OBSERVED:
There are increase in the number of companies going out for the public. By comparing different years, the year 2010 shows an increasing trend in going for public.
2010 shows that highest number of companies going for IPO.
Some of the IPOs are over subscribed.
And the companies could able to contribute more fund.
The capital appreciation ot the initial return during the year was very bad, almost 80% of companies issued IPOs during the year was trading less that its offer price.
The capital depreciation was many. The initial return was very frustrating. Even the business giants also suffered loss.
This year was blessed with the number of IPOs, but the performance was not up to expectation.
The awareness to invest in IPO was great. SEBI took some tough initiative to overcome the IPO scam. The enthuse of the investor were in great shape. The investor kept faith with the primary market.
The sector wise results can be watch closely from the performance of the IPO. The sector wise performance deals with best sector. The mining and mineral sectors gives the highest return to its investors. The capital appreciation in this sector was anonymous.
The most expected industry where in DB reality, prestige, birla shloka were failed.
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The IPOs which issued over, shipping and transport, media and entertainment, medical were totally underperformed.
The retail sector IPO was really an failure.
Seeing the performance of the IPO. All the big fun in the Industries fail drastically. The few IPOs like Jubilant, Coal india, Thangamayyil jewelers, etc, were performed well. The big guns like Prestige etates, Birloa shloka, are failed drastically.
Economic impact on IPO due to the market condition is too much during the year. As most IPOs are trading in the price lower than the issue price because of slow down of our market due to the past effect of global crisis and political reasons.
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Recommendation
From the various charts , tables and other information regarding the IPO and its performance I can recommend the following points to judge the performance of IPO
They are:
Firstly invest in selected IPO and diversify the investment pattern to avoid the risk associated with the investing
Secondly, choose the sector effectively. Go for the financial performance of the sector and judge with all technical tools to judge the performance of the company and then only invest in IPO.
Do not go by speculation. Though you can get short term advantage but for long term its very risky.
Before doing for the IPO issue, current market condition also taken in to consideration
The overall performance of the IPO gives both positive as well as negative return to the investor. So decision to invest in IPO must taken carefully.
From this year performance we can see the the IPO from the MINING and Minerals are doing well, whereas….
Never depend the big firms
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Conclusions
From the study and the research analysis made it can be convincingly concluded that:
1. IPO is one of the cheapest sources of financing.
2. All kinds of investors including small, medium and big go in for IPOs
3. The performance of the IPOs of 2010 has not been very good due to economic
recessions slump in the global market and expected revival in the IT and other sectors
not forthcoming
4. timing of the IPOs plays a very vital role in the success of the IPOs
5. Price band of the IPOs is very important and IPOs with mid cap price band have by
and large faired well during 2010
6. Extensive use of electronic media and very high absorption in IT in IPOs has made
the entire process of IPO marketing quite convenient and smooth.
7. Sector performance as foreseen by the investors also plays and major decisive role in
performance of the IPOs.
8. finally marketing of IPOs has been underlined force behind the success or failure of
the IPOs
9. and while considering the last three year trend, the IPO issue has been increasing.
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