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SUMMER INTERNSHIP PROJECT

On

A Study on Indian IPOs

Submitted By Udit Bubna Roll No. 201168 FMG XX

Under the Guidance of Prof. Vinay Asthana FORE School of Management

FORE School of Management, New Delhi B-18 Qutab Institutional Area New Delhi

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SUM R INTER MMER RNSHIP PRO OJECT


On

AS Study on India IPO an s

Sub bmitted By y Ud Bubna dit Roll No. 201168 8 FMG XX F

Under t Guidance of the Prof. Vinay Asth hana nagement FORE School of Man

ent, elhi FORE School of Manageme New De b nal B-18 Qutab Institution Area Ne Delhi ew Pag | 3 ge

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CER RTIFICATE E

t dit 201168, ha complete his sum as ed mmer This is to certify that Mr. Ud Bubna, Roll No. 2 internship at Share ekhan Ltd a and has su ubmitted th project r his report entitled A Stud on dy Indian IPOs towa ards part f fulfillment o the requ of uirements f the awa of the Post for ard te G--20) 2011-2013. Graduat Diploma in Management (FMG This Report is the result of hi own work and to the best of m knowled no part of it is my dge t has earl compris any oth report, monograph, dissertat lier sed her tion or boo ok. This pr roject was carr ried out und my ove der erall supervi ision.

Date: 12/06/2012 Place: D Delhi Dr. D Vinay As sthana Internal Facu Guide ulty

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Ackno owledgme ent

A project is neve a work of an ind er dividual rather it is a combina ation of id deas, suggestions, review contribu w, ution and w work involv ving many people. Th project also his ot en e e t asure would no have bee possible without the contribution of some people. It is my plea to ackno owledge all those per l rsonalities w helped me lot to complete t who d this project and t share th experiences. heir I would like to exp press my s sincere inde ebtedness to my men ntor Prof. V Vinay Asth hana (Profess sor, FORE School o Managem E of ment) for g giving me the opportu unity to wor on rk this project and ma it a suc ake ccess. I wo ould also lik to thank Mr. Asthan for providing ke na valuable insights and guida e ance witho out which this projec would h ct have not b been completed. press my d deep sense of gratitud to my Industry gu e de uide, Mr. Ja aipal I would like to exp (Asst. Man nager Sale Sharek es khan Ltd), Jhandewal , New Delhi, who s la spent Singh, ( his valua able time and guided me. I have benefited a great dea from his in al ncisive ana alysis and eru udite sugge estions. Th atmosphere of learning in Sharekhan Jhandew he n, walan Branch, has been superb under his guida s ance and tr raining. Acknowledgements are also due to all the othe staff members and executive in s er d es Sharekh han Ltd., Jh handewala Branch fo providing informatio at vario or g on ous point of the f project, especially the discuss t sions on the market. e I am als sincerely thankful to all the fac so y o culty memb bers of FOR School o Managem RE of ment for provi iding their help and ad h dvice whene ever it was needed. Finally I wish to ex xtend my sincere ackn nowledgeme to my p ent parents for their moral and l financial support. l

Udit Bubna

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Ex xecutiv ve Sum mmary y

The proj ject on A Study on In S ndian IPOs focuses o the perfo on ormance of IPOs issue in ed India fro 2007 to 2011. Duri this per om ing riod 240 IPO were is Os ssued in Ind This pr dia. roject focuses on the returns from these IPOs and also analyzes investor be ehavior tow wards IPO. T The initial part of the project talks about the Primary Market in India and the p y n d money r rose from Primary Ma P arket since 1993 till 20 010. The tre shows that numb of end ber IPOs issued has declined wh the mo d hile oney raised from them have incr d m reased over the years. In order to write this report va r arious research paper books and online d rs, databases w were referred. The perfo ormance of the IPOs was evalu f s uated on th basis of the return at he f ns different time frame of Open t es ning Day, 1 Month, 6 Months, 1 Year and May 2012. The returns were calcu ulated from the issue price of an IPO. T m The analys will help in sis anding the IPO marke at differe time inte et ent ervals. The project als analyzes the e so s understa number of IPOs giving pos sitive return and negative retu ns urns during different time g ngs er sitive return declines with ns periods. The findin show that numbe of IPOs giving pos he m rom IPOs w were seen during the initial 6 mo onths of issu in ue time. Th maximum returns fr last 5 ye ears. The IPO were also segrega Os ated accord ding to diff ferent indus stries to fin out the most nd consiste performing Industry in last 5 y ent y years on the basis of their returns IT Sector and e s. r Banking Sector we found to be most c g ere o consistent g givers. The project als analyzes the e so s returns f from Public Sector IPO and Pri c Os ivate Secto IPOs launched in la 5 years. The or ast . results s shows that Public Sector IPOs have been performin consistently well in last n ng n half decade. The pro oject enligh htens the readers of the compa arison betw ween Prima Market and ary Seconda Market performanc ary ces. In orde to compa the markets 5 diffe er are erent Indus stries were tak and fro each industry 1 co ken om ompany fro Primary Market wh others from om y hile Seconda market was chose The retu ary en. urns were t then analyz from th listing da of zed he ay new issu The res ue. sults show t that Primary Market sh y hare has be perform een ming better than the Seco ondary Mar rket for almost all the I Industries. The oth part of the repor deals w her f rt with the Primary Data An onlin survey was a. ne conducted to know the investo behavior while inve w or r esting in an IPO. The r response to the o survey w overwh was helming as it collected 90 respon d nses. The re esults show the inves ws stors preferen nces toward the type of IPOs, t returns expected over a yea & factors that ds e the s ar s affect th heir decisio to inves in Prima Market. The resul of the su on st ary lt urvey was also compare with th secondary data analysis to find any deviation in Inves ed he o y n stors Expecta ations and actual resu of IPO performa a ults s ance. This analysis w give rea will aders some int teresting fin ndings. The last part of the report dea with Con t e als nclusions, R Recommen ndations and Findings from d the analysis of the Project.

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Conten nts
ACKNOWL LEDGMENT..... ...................... ................................................................. ...................... ...................... .......6 EXECUTIVE ESUMMARY.. ...................... ................................................................. ...................... ...................... .......7 CHAPTER1 1.................... ...................... ................................................................. ...................... ...................... 12 ...... INTRODUC CTION............. ...................... ................................................................. ...................... ...................... 12 ...... 1.1PROJ BACKGROUN ........................................... JECT ND ..................................................................... ............................. 2 1 1.2COM MPANYBACKGROU ......................................... UND ..................................................................... ............................. 4 1 1.3OBJE ECTIVEOFTHESTU ........................................ UDY ..................................................................... ............................. 6 1 1.4RELE EVANCEOFTHESTUDY....................................... T ..................................................................... ............................. 6 1 CHAPTER2 2.................... ...................... ................................................................. ...................... ...................... 18 ...... LITERATUR REREVIEW..... ...................... ................................................................. ...................... ...................... 18 ...... CHAPTER3 3.................... ...................... ................................................................. ...................... ...................... 20 ...... METHODO OLOGY............ ...................... ................................................................. ...................... ...................... 20 ...... 3.1RESE EARCHMETHODO OLOGY...................................... ..................................................................... ............................. 0 2 3.2DATA COLLECTION................................................. A ..................................................................... ............................. 0 2 3.3SAMPLESELECTION................................................ ..................................................................... ............................. 1 2 3.4DATA ANALYSIS..................................................... A ..................................................................... ............................. 1 2 3.6FIELD EXPERIENCE.................................................. D ..................................................................... ............................. 1 2 3.7LOCA ALEOFTHESTUDY ............................................ Y. ..................................................................... ............................. 2 2 3.8UNIV VERSEOFSTUDY............................................... ..................................................................... ............................. 2 2 CHAPTER4 4.................... ...................... ................................................................. ...................... ...................... 23 ...... SECONDAR RYDATAANAL LYSIS ............. . ................................................................. ...................... ...................... 23 ...... 4.1FUND GENERATEDBY IPOS................................... DS Y ..................................................................... ............................. 3 2 4.2SUM MMARYOFRETURN NSOFIPOSINLA 5YEARS ...... AST . ..................................................................... ............................. 4 2 4.3ANALYSISOFIPOSRETURNSATVARYI TIMEFRAMES................................................................... ING S ............................. 5 2 4.4INDU USTRYWISEDISTR RIBUTIONOFIPOS.................... ..................................................................... ............................. 6 2 4.5INDU USTRYWISEANALYSISOFIPOS.......................... ..................................................................... ............................. 7 2 4.6SECT WISEANALYS .......................................... TOR SIS ..................................................................... ............................. 9 2 4.7COM MPARINGRETURNS PRIMARYMA SIN ARKET&SECOND DARYMARKET.................................................. ............................. 1 3 4.7.1 1ReturnAnalys sisofAutomob bileCompanies sinIndia....................................................... ........................ 31 ...... 4.7.2 2ReturnAnalys sisofITCompa aniesinIndia.. ..................................................................... ........................ 33 ...... 4.7.3 3ReturnAnalys sisofTelecomm municationsCo ompaniesinIn ndia........................................ ........................ 35 ...... 4.7.4 4ReturnAnalys sisofConstruc ctionCompanie esinIndia..................................................... ........................ 37 ...... 4.7.5 5ReturnAnalys sisofBankingCompaniesinI India............................................................ ........................ 39 ...... 4.8ANALYSIS&DISCUSSIONOFPRIMARY&SECONDARYMARKET........................................................... ............................. 1 4 CHAPTER5 5.................... ...................... ................................................................. ...................... ...................... 42 ...... PRIMARYD DATAANALYS SIS.................. ................................................................. ...................... ...................... 42 ...... 5.1SURV RESULTS&ANALYSIS................................... VEY ..................................................................... ............................. 2 4 5.2CROS TABULATIONO EXPERIENCEININVESTING&PREFERREDSECTOR............................................. SS OF ............................. 3 4 5.2.1 1ApplyingChiS SquareTestof fIndependence e................................................................... ........................ 43 ...... 5.3CROS TABULATIONO EXPECTEDRETU SS OF URNSANDPREFERREDSECTOR.................................................. ............................. 4 4 5.3.1 1ApplyingChiS SquareTestof fIndependence e................................................................... ........................ 45 ...... 5.4CRITERIAFORINVESTINGINIPOS............................. ..................................................................... ............................. 6 4

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5.5EXTE ERNALFACTORSAFFECTINGSTOCKMARKET.......... ..................................................................... ............................. 8 4 CHAPTER6 6.................... ...................... ................................................................. ...................... ...................... 50 ...... 6.1MAJORFINDINGS................................................... ..................................................................... ............................. 0 5 6.2CONCLUSION......................................................... ..................................................................... ............................. 1 5 6.3SUGG GESTIONS ....................................................... . ..................................................................... ............................. 1 5 6.4LIMIT TATIONS......................................................... ..................................................................... ............................. 2 5 . REFERENCES ................. ...................... ................................................................. ...................... ...................... 53 ...... APPENDICES ................. . ...................... ................................................................. ...................... ...................... 54 ...... APPENDIXA:LISTOF240IPOS.................................... ..................................................................... ............................. 4 5 APPENDIXB:SURVEYQUE ESTIONNAIRE ............................ . ..................................................................... ............................. 4 6

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List of F Figures FIGURE1:PIECHARTOFPUBLICSECTO ORANDPRIVAT SECTORIPO S................ TE O' .................... .................... ....29 FIGURE2:LINECHARTOFAUTOSECTO COMPANIES................... OR S .................... .................... .................... ....32 FIGURE3:LINECHARTOFITSECTORCOMPANIES..... .................... .................... .................... .................... ....34 FIGURE4:LINECHARTOFTELECOMMU UNICATIONSCO OMPANIES...... .................... .................... .................... ....36 FIGURE5:LINECHARTOF CONSTRUCTIO COMPANIE ................. F ON ES .................... .................... .................... ....38 FIGURE6:LINECHARTOFBANKINGCO OMPANIES ...... . .................... .................... .................... .................... ....40 FIGURE7:PIECHARTOFTOTALSAMPLE ESIZE............ .................... .................... .................... .................... ....42 FIGURE8:PIECHARTOFGENDERDISTRIBUTIONOFSAMPLE.......... .................... .................... .................... ....42 FIGURE9:GRAPHOFDIFFERENTAGEGR ROUPSOFSAM MPLESIZE....... .................... .................... .................... ....42 FIGURE10 GRAPHFORCRITERIAFORINVESTINGINIPO'S............ 0: .................... .................... .................... ....46

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List of T Tables TABLE1:FUNDSGENERA ATEDBYIPO'SOVERYEARS.. .................... .................... .................... .................... ....23 TABLE2:SUMMARYOFRETURNSOFIP SINLAST5YEARS.......... PO' .................... .................... .................... ....24 TABLE3:NO.OFIPOSG GIVINGRETURN NSATDIFFEREN TIMEFRAM ............... NT MES .................... .................... ....25 TABLE4:LAST5YEARSIPOINDUSTRYWISE ........... . .................... .................... .................... .................... ....27 TABLE6:RETURNSFROM AUTOMOBILE SECTORINPR M E RIMARYANDSE ECONDARYMA ARKET ........... . .................... ....31 TABLE7:RETURNSFROM ITSECTORINPRIMARYAND SECONDARYMARKET........ M D .................... .................... ....33 TABLE8:RETURNSFROM TELECOMMUNICATIONSSEC M CTORINPRIMA ARYANDSECON NDARYMARKE ................. ET ....35 TABLE9:RETURNSFROM CONSTRUCTIO SECTORINPRIMARYANDSECONDARYMARKET......... M ON .................... ....37 TABLE10:RETURNSFRO BANKINGSE OM ECTORINPRIM MARYANDSECO ONDARYMARK ............... KET .................... ....39 TABLE11:CROSSTABUL LATIONOFEXPE ERIENCEININV VESTINGANDPREFERREDSEC CTOR ............. . .................... ....43 TABLE12:CROSSTABUL LATIONOFEXPE ECTEDRETURN NSIN1YEARAN PREFERRED SECTOR....... ND D .................... ....44 TABLE13:LISTOF240IPO'SISSUEDIN LAST5YEAR ................. N RS. .................... .................... .................... ....54

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Introdu uction
1.1 Project Backg ground

CHA APTER 1

Initial P Public Offe ering (IPO) is the first public offe t ering of eq quity shares or convertible s securitie by a com es mpany, which is follow wed by the listing of a company shares on a e ys stock ex xchange. In other word it refers to the first sale of a co ds, ompanys c common sh hares to invest tors on a pu ublic stock exchange, with an int tention to ra aise new ca apital. The most importan objective of an IPO is to raise capital for the compa nt e O any. It helps a compan to s ny tap a w wide range of investo who w ors would provide large v volumes of capital to the f o company for future growth a e and develo opment. Co ompany going for an IPO stand to ds make a lot of mone from the sale of its shares which it tries to anticipate how to us for ey o e se further e expansion and develo a opment. The company is not req y quired to re epay the ca apital and the new shareholders get a right to f t future profit distribute by the co ts ed ompany.

g as set ntages and disadvanta ages. Wher on one h re hand, Investing in IPO ha its own s of advan high element of risk is involved, if succes k ssful, it can even resul in a highe rate of re lt er eturn. The rule e Is highe the risk, higher the returns. The compan issues a IPO with its own s of er ny an h set manage ement objec ctives and t investo looks for investment keeping in mind his own the or objective Both ha a lot o risk involved. But t es. ave of then investment also comes with an advantage for both the compa and the investors. The signif h any e ficance of investing in IPO can be s studied from 2 viewpoints for th company and for the investors m he y s.

Advanta ages for Company The T cost of an Initial Pu a ublic Offer is low as co ompared to costs of bo o orrowing it from Banks for many years. B The T compan need not require pa ny t aying back t Capital Raised. the It helps the company to tap wide range of investors like FIIs, R t e Retail Inves stors, Capital Vent C tures etc in order to ra aise huge amount of m money. When a com W mpany sells its stock publicly, ther is also th possibilit for re he ty appreciation of the sha price due to market factors no directly re n are t ot elated to the e company.

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Advanta ages for Inv vestors

One O of the lu ucrative things about I IPO is that company g generally of ffers it at a v very lo price wh ow hich is bene eficial for inv vestors to t the initia rise in pr tap al rice of stock as k, mostly IPOs are under m s rpriced. The T specula ative investo are inte ors erested only in the sho y ort-term pote ential rathe er th long ter gains. han rm The pric cing of an IP is a ver critical as PO ry spect and h a direct impact on the succes or has t n ss failure of the IPO is ssue. There are many factors tha need to b considered while pr e at be ricing an IPO and an att tempt shou be made to reach an IPO pr uld rice that is low enoug to gh generate interest in the marke and at th same tim it shoul be high e e n et he me, ld enough to raise sufficien capital fo the comp nt or pany. The p process for determinin an optim price fo the r ng mal or IPO involves the underwriter arrangin share p rs ng purchase co ommitment from lea ts ading institutio onal investo ors.

Underpricing is one of the m most comm mon ways o pricing a IPO, it is the differe of an s ence between the Initial offer Price and first days clos n l e sing price. Underprice IPO help to ed ps generate additional interest in the stock w e when it first becomes publicly traded. This m t might result in significant gains for investors w have b n t who been alloca ated shares at the offe s ering price. However, un nder pricing also resu in loss of significa amount of capital that g ults ant t could ha been ra ave aised had th shares b he been offered at the hig gher rate

Overpricing is whe a particu stock is made ava en ular s ailable to th public at a greater price he t e pay. It is mo risky tha under pr ore an ricing. As a result it w be will than the market is willing to p difficult f underwriters to keep their ple for edge to sell shares. E Even if they are succe y essful in selling all the of g ffered shar then it is likely to lose its ma res arketable v value to a g great extent.

IPO Mar rket in India a

The Indi IPO ma ian arket is one of the prom e mising mar rkets for the investors. Since 199 e . 93-94 till 2009 9-2010 4418 companies have r raised Rs. 176449 c crore through initial p public offers. In the year 2007-2008 Rs. 42595 crore were raised hig n 2 5 e ghest amou in any g unt given year. IP market in India ha always b PO as been volatil pertainin to Econo le ng omic Condition, Political Instability and Globa Issues. During 200 al 08-09 whe the glob market was en bal cult money raise through IPO in India was only Rs. 2082 c ed y crore going through diffic times, m Page | 13 e

decline o 95% from previous year. It gai momentu in the year 2009-10 mainly du to of m in um ue Coal Ind IPO which raised n dia nearly 15000 crore.

under-price so that c ed company c can attract those inves stors In India IPOs are generally u also who cannot afford to bu at a high prices, this helps companies to raise m a uy her s more money f from retail investors. In a resea arch study conducted for IPOs between 2 20022006 un nder-pricing was found to the extent of 45% However in this rese g d %. earch pape the er under-pr ricing was found to be only 5.45% for the IP f e % POs issued from 2007 to 2011. 7

1.2 Com mpany Bac ckground


Sharekh han is one of the lea ading retail brokerage of SSKI G Group whic was run ch nning success sfully since 1922 in the country. I is the reta broking arm of the Mumbai-ba e It ail ased SSKI Gr roup, which has over e h eight decad of expe des erience in th stock bro he oking busin ness. Sharekh offers its custome a wide range of eq han ers quity relate services including t ed trade executio on BSE NSE, De on E, erivatives, d depository services, o online trading, investm ment advice e etc. The firm online tr ms rading and investment site - www w.sharekha an.com - wa launche on as ed Feb 8, 2 2000. The site gives a s access to s superior content and t transaction facility to retail custome across the country The webs is know for its jargon-free, investor frie ers t y. site wn endly language and high quality re h esearch, the site has a registere base of over one lakh ed f custome ers. The nu umber of tr rading mem mbers curre ently stands at over 1 million. W While online tr rading curre ently accou unts for just over 2 per cent of the daily trad t r ding in stocks in India, Sh harekhan alone accou a unts for 32 p cent of the volume traded on per es nline. Sharekh han has alw ways believ ved in inve esting in te echnology t build its business. The to company has use some o the bes ed of st-known names in t the IT indu ustry, like Sun stems, Or racle, Microsoft, Ca ambridge T Technologies, Nexge enix, Vign nette, Microsys Verisign Financial Technologies India Ltd, Spider Software P Ltd. to build its tra n Pvt ading engine and conten nt. The M Morakhiya f family holds a majorit stake in the comp s ty n pany. HSBC, Intel & Carlyle are the other inves stors. Sharekh hans groun network includes o nd over 588 ce entres in 14 cities in India, of w 48 which 32 are fu ully-owned branches. It also has a custome base of 1 million, it is the sec s er 1.5 cond highest after ICICI Direct.

Product offered by Sharekhan ts Classic Account This is a User Fri iendly Prod duct which allows the client to trade throu e ugh Sharekhan website and is suitable for th retail inv he vestor who is risk-ave erse and he ence prefers to invest in stocks or who does n trade too frequently n w not y. Page | 14 e

es Feature of Classic Account

rminal and Single term S minal for NS Cash, NSE F&O & BSE. SE Live Ter Integrati of On-line trading, Saving Bank and Dem Accoun ion mat nt. Instant c cash transfe facility ag er gainst purc chase & sale of shares e s. Competative transa action charg ges. Instant o order and tr rade confirm mation by E E-mail. Streamin Quotes (Cash & De ng erivatives). Personli ized market watch. Single screen interf face for Ca and der ash rivatives and more. Provision to enter price trigger and view the same o p online in ma arket watch. Online tr rading in Eq quity & Der rivative Mar rket.

-TIGER TRADE-

TRADE-TIGER is an interne et-based s software ap pplication, that enab , bles you to buy o and sell in an instant. al e and jobber who tran rs nsact frequently during days ses g ssion It is idea for active traders a to capita alise on intr ra-day price movemen e nt. Feature of Trade Tiger es e Instant o order Execu ution and C Confirmation n. Single screen trading terminal for NSE C Cash, NSE F F&O & BSE E. Technical Studies. Multiple Charting. Real-tim streamin quotes, tic-by-tic charts. me ng Market s summary (C Cost traded scrip, high d hest calue e etc.) Hot keys similar to broakers te s erminal. Page | 15 e

Alerts an reminde nd ers. Back-up facility to place trades on Direct Phone line p p t es.

1.3 Objective of t the Study


The T objectiv of the res ve search pap is to ana per alyze wheth investing in IPO in long her te is profit erm table or not t. The objectiv is to co T ve ompare the returns fr e rom Primar Market a ry and Secon ndary Market in sa M ame industr to analyz which ma ry ze arket is mor profitable re e. The T paper will also ana w alyze the ex xtent to which IPOs in India are u n under priced. The T study gives an insi ight on the best perfor rming Indus stries in last 5 years on the t n basis of the returns at d different tim frames. me The T purpose is to compare the re e eturns of Pu ublic Sector and Priva Sector IPOs r ate so as to kno which type of IPO is safer to in ow s nvest. The study will provide Sharekhan of the inv T w n vestor beha avior while investing in an IP PO. The objectiv is to identify any deviation between P T ve Peoples ex xpectation from IP POs and ac ctual perfor rmance of IPOs.

1.4 Rele evance of the Study

dy n t nalyzing the IPOs performance in last 5 ye e ears. The stud plays an important part in an Sharekh han being a broking f firm require valuable informatio to sugge their clients es e on est about investing the money. I will also impart usefu informati to the in eir It ul ion nvestors so that o uld decisions ca autiously. It will also g give Sharekhan they cou streamline their investment d insights about perfo ormance of IPOs, so t f that it could recommend it to thei clients. d ir The stud provides an in dept analysis by studying the return at differe time periods dy s th g ns ent rather th at a co han onstant time It also compares b e. both Primar and Seco ry ondary Markets returns t understa which m to and market is more profitab to inves It is an im ble st. mportant as spect of the pr roject as it will clear the earlier myths of the investors a w about both t markets the s. The stud also focu dy uses on IPO industry Os y-wise; this will help in finding sim s n milar patter in rns companies belonging to the same indust As a result, it will b able to a try. be answer the best Page | 16 e

and con nsistent pe erforming in ndustry in last 5 yea and als the most loss ma ars so aking industry. The IPOs are also a s analyzed on the basis of Public a Private Sector to help s and e readers understand the patter in return of both s d rns ns sectors. A survey was also conducted to know th investors behavior while inves y d he s sting in an IPO. The surv results will help in providing i vey insights abo respond out dent investm ment decisions. The results will als help in comparing the investo expectations with t so or the real ma arket results. w e nvestment opportunitie in es Overall the study will help the investors in identifying better in IPO Market. It will also help t them analy their inv yze vestment decisions ta aken in the past ming future. and overcome that in the com

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Literat ture Revi iew

CHA APTER R 2

Over the years ma studies have been conducted on the pe e any n d erformance & relevanc of ce IPOs. T There have studies re e elated to th under pricing of th IPO Reilly and Hatfield he he (1969) r reported un nder pricing to the ex g xtent of 11% Jay R. Ritter (199 docume %, 91) ented underpe erformance by using a sample o 1526 co of ompanies that went p public in U.S.A. during 1 1975 to 19 984, he sho owed that in the long run IPO firms sign g nificantly un nderperforme as comp ed pared to the already listed firms. Ritter also commente that investing e ed in an IPO and retai O ining it for t next thr years w the ree would give lower return as comp ns pared to an already listed firm. Pan d nde and Va aidyanathan (2009) ex n xplained th phenome he enon named Money lef on table this tells that higher the amoun of under pricing gre ft , r nt r eater the mo oney the firm could generate through higher o d e offer price. Pande and Vaidyan nathan (2009) found average un nderpricing of 22% on the day o listing in their n of study of 55 firms listed on National Sto Exchan f l ock nge (hereaf fter NSE), a leading s stock exchang in India. ge

Benven niste and Spindt (198 suggest a mode by which level of un S 89) ted el nder pricing can g be reduc if differentiation is done prio to the allocation of shares bet ced s or tween infor rmed and uninformed investors. Saunders (1990) s i supported that under pricing is a tive outcom in IPO M me Market resulted from small number of informed and l large competit number of uninfor rmed inves stors. Chem mmanur (1 1993) proposed that underpricin is ng positivel related to the increa in the number of investors o the IPO and the co of ly o ase of ost informat tion produc ction while negatively related to the probab bility of bein a high v ng value firm and gross proc d ceed from IPO.

In the In ndian conte Shah ( ext (1995) & M Madhusood danan and Thiripalra (1997) also d aju evaluate the perfo ed ormance of IPO. While Shah stud f e died 2056 s stocks listin from Jan ng nuary 1991 to May 1995 stating 105 5.6% return in IPO o ns over short-te erm. Madhu usoodanan and n raju study were more related to t long ter returns f w the rm from the IP from 199 to PO 92 Thiripalr 1995. K Kakati (1999 who res 9) searched 500 IPOs f from 1993 to 1996 do ocumented that short-ter under pr rm ricing is 36.6% while lo term ov pricing is 40.8%. ong ver

Saurabh Ghosh (2 h 2005) The post offering perform mance of IP from Ba PO anking Indu ustry evaluate the stock returns a operatin perform es and ng mance of the Indian Ba e anks that m made initial pu ublic offerin from 19 to 2000 He documented tha there wa no signif ngs 990 0. at as ficant underpe erformance in the long run of the Banking Industry shar res. Page | 18 e

In India many com mpanies und price th issue in order to g maximu subscription der heir n get um e lt open from the investors. As a resul on the listing day the share price of the companies o at very h high rates, giving good returns, t prices s the stable down after few days of tra n ading due to market forc ces of dem mand and s supply. A study was conducted by Sesha d adev Sahoo & Prabina Rajib (2010) on India IPO mar an rket 2010, in which the analyzed the ey d IPO issu ued between 2002 & 2006. Th hey studied 92 IPOs and repor d rted that u under pricing w 46.55% in these s was % shares. This study also suggested that those investors who s o e are buying through subscription offer ar earning positive re h re eturns, but those inves stors who bou ught the sh hares on listing day o IPO are earnings n of negative re eturns up to 12 months. Few of th studies conducted before Se he eshadev Sa ahoo & Pra abina Rajib also shows th similar findings like Krishnam he e murti and K Kumar (200 working on a samp of 02) ple IPOs tha hit the market betw at m ween 1992 and 1994 d demonstrat that the under pricing is te to the ex xtent of 72.34%.

n ard K.C.John Sasi Kum mar, Profes ssor, One of the latest studies in this rega is by K Vellama College of Engine al eering and technolo d ogy; he stu udied 275 I IPOs issue in ed India be etween 200 and 200 The st 04 08. tudy was d done by an nalyzing the prices of the e f shares a after a mon 1 Year & 3 Years He docu nth, r s. umented that out of 275 shares, 165 shares w were tradin below th issue pri & 100 s ng he ice shares wer trading a re above the issue price. H also stat He ted the bes return fr st rom an IPO comes in the first m O n month after the issue, in his study it was more than 55% returns from the IP Howev the long run n PO. ver g performa ance of the IPOs was mixed in h analysis. e s his

Page | 19 e

Method dology
3.1 Research Met thodology y

CHA APTER 3

The rese earch A Study on In ndian IPOs has been carried out to find th performa s n he ance of IPOs issued from 2007 to 2011. During th period 240 IPOs were iss s f he s sued. Second dary Data was collected from va w arious webs sites in order to comp plete the re eport. Some re esearch papers were also referre so as to provide some insigh on the topic. ed o hts All IPOs performance were a s analyzed on the basis of returns on Opening Day, af s s fter 1 Month, 6 Months, 1 Year, 5 Y Years and the prices as on May 02,2012. The return on y ns IPOs w were calcula ated from the Issue Price & th hen some s statistical m measures w were applied t have mo in depth analysis. to ore h The research also includes s segregating the IPOs on the basis of different indust to g try which th belong and then s hey studying the trends in the returns from diffe e s erent indust tries. This will help in kno owing the b best perform ming indust in last 5 years. The IPOs are also try e on Private Sect so as to find which sector is m tor, o h more divided o the basis of Public Sector & P profitable to invest. . Primary Research was als conduct y so ted to find out the investors behavior w d while investing in an IP g PO. The s survey focused more on quan e ntitative da ata rather than qualitativ as it will help in s ve, w segregating different aspects of investor b g f behavior. In the n survey a attempt was made to find out the criteria that inves an t a stors consid dered impo ortant to inves their mon in an IPO & whic type of IPO do the prefer. T st ney ch ey They were also asked to rank the factors that affect their investmen decisions on IPOs. The responses o f r nt s will help in getting insights into the invest i o tors buying decisions.

3.2 Dat ta Collectio on


The data collection for projec A Stud on India IPOs has been c n ct dy an carried out with utmost a accuracy ke eeping in m mind the imp portance of the project f t. For the p purpose of data collec ction, two different sou urces were adopted for the study: : Primary Sou P urces Secondary Sources S S In order to collect the data bo Primary and Seco r oth y ondary rese earch was conducted. For Seconda Data va ary arious onlin websites journals, research p ne s, papers & a academic books were ref ferred in or rder to cond duct proper analysis. The data o IPOs was collected for on different time fram t mes and for different i r industries f last 5 y for years. The data was then compare with othe sites to c ed er confirm its r reliability. Page | 20 e

Seconda data was worke upon in excel sh ary w ed n heet to ge importan findings and et nt informat tion regarding the IPO Mostly the data h been r Os. has represented in the for of d rm tables in the Secon n ndary Analy ysis part for easier und r derstanding g. For Prim mary Research an online surve was con ey nducted on social ne n etworking s sites, clients o Sharekhan and on the foreia e-mail id The surv of n an d. vey was m made in Go oogle Docume ents. The su urvey was a also circula ated in my p prior compa and Ma any aruti Suzuki Ltd. i The purp pose of the survey wa to know t investors behavior while investing in an IPO. e as the r Both no ominal and ordinal d d data was collected from the survey. There were 90 e respond dents of di ifferent age groups t that filled t survey The data was colle the y. ected within 2 weeks. The survey r results were shown with the help of graphs, pie charts and p s cross tabulation to make analysis easy to comprehe o end. All the responses collected from e s investors were the compare with the findings fr en ed rom Second dary Data in order to find o orrelation be etween inve estor expec ctations & a actual resul lts. some co

3.3 Sam mple Select tion


The sam mpling meth adopte was Non Probability Sampli hod ed n ing, only th hose individ duals having demat acc counts or those who are activ traders were allow o ve wed to be the e respond dents. As a result e every perso did not have an equal cha on t ance of ge etting selected Due to pa d. aucity of tim and reso me ources the sample wa limited to Delhi/NCR as as o R, a result the finding are limi gs ited to the small regi ion only. T The survey was circulated among f foreians, pe eers, relativ and pr ves rofessionals As a res conven s. sult nience sampling method was used. The surve was con . ey nducted wi ithin 2 wee and tot respond eks tal dents were 90.

3.4 Dat ta Analysis s


The ana alysis of Secondary data was done by calculating returns of 240 IPOs in S f different time fram t mes. The data has been repre esented in tabular f n form for ea asier understa anding and compariso The analysis has also been done using trends lin to d on. g ne represen the returns at differe time periods. nt ent The surv results have been applied with Chi Squ vey n uare Test of Independe f ence to find out d the whether the Re eturns expe ected and Y Years of Ex xperience a depend are dent on the type of IPO c chosen by the investo ors. Chi Sq quare test o Independ of dence was applied to find o the link between tw variable of the sa wo es ample. The nominal data has be represe een ented by pie ch harts while ordinal dat by graph and cross tables. ta hs s

3.6 Fiel ld Experie ence


For the purpose of selling De f emat Accou unts we wer required to get que re estionnaire filled e rmed for 1 w week in diff fferent area in New D as Delhi. from the people. This activity was perfor Page | 21 e

The sole purpose of this as ssignment was to ge enerate lea ads. The le eads gener rated helped in selling some dem accounts. For th purpose of cond mat he ducting Prim mary ch s, es ruti ata ed Researc on IPOs companie like Mar Suzuki Ltd and Ta Capital were visite to get the s survey filled d.

3.7 Locale of the Study


The loca of the Study is lim ale S mited to Sh harekhan L Ltd, Jhande ewalan Bran nch, Delhi. The findings may or may not be similar to t the other b branches of the comp f pany across the s country. The surve has bee conduct ey en ted in Delh hi/NCR Reg gion only. A a result the As d e findings cannot be generalized for whole country.

3.8 Univ verse of St tudy


The univ verse of the Study will be all the branches a employ e and yees of Sha arekhan aro ound India. Th custome base of Sharekhan is spread across the country. T univers of he er n e The se Study w also inclu all the investors in will ude nvesting in IPOs acros the coun ss ntry.

Page | 22 e

Second dary Data a Analysis s

CHA APTER R 4

4.1 Fun nds Genera ated by IPO Os


Table 1: Funds Generated by IPO over Years e O's s

Years 1993-94 4 1994-95 5 1995-96 6 1996-97 7 1997-98 8 1998-99 9 1999-00 0 2000-01 1 2001-02 2 2002-03 3 2003-04 4 2004-05 5 2005-06 6 2006-07 7 2007-08 8 2008-09 9 2009-10 0

IPO Issued O 692 1239 1357 717 52 18 51 114 7 6 21 23 79 77 85 21 39

Amount R Raised (crore es) 786 64 1657 72 1092 24 595 59 104 48 404 4 2719 272 22 120 02 103 39 343 34 1374 49 1093 36 2850 04 4259 95 208 82 2469 96

The abo table sh ove hows the no of IPOs issued and funds rose from them since 199 to o. d e m 93 2010. O can eas interpre that since 2000 the no. of IPO issues ha reduce as One sily et e O ave ed compare to the 90s but the funds rais by them have increased ma folds mainly ed 9 e sed m any because people have started believing that inves e d g sting mone in IPO c ey can be a g good Page | 23 e

investme opportu ent unity. Durin the year 2009 IPO in India dried up a of a sud ng Os all dden because of a globa slowdown People s e al n. started having negativ views on Stock Markets ve n as major investmen banks a nts around the world lost b billions of dollars. As things starte to ed ore ed ore were raised In d. improve in 2010 & 2011 mo IPOs were issue and mo funds w Novemb 2010 In ber ndias bigg gest IPO til date CO ll OAL India w was issued raising ne d early 15000 c crores.

4.2 Sum mmary of R Returns of f IPOs in L Last 5 Year rs


Table 2: Summary of R Returns of IPO in Last 5 Y O's Years

Op pening Day Mea an Media an Standard Dev d Maxim mum Minimum 5.45 0.09 54.11 5 286.25 -9 97.08

1 Month

6 Months

1y year

Currently C

-1.60 -12.79 66.67 499.58 -98.58

-4.66 -25.31 76.05 463.14 -99.48

-23 3.05 -46 6.10 72 2.30 347 7.33 -98 8.93

-34.19 -66.98 103.48 741.67 -99.92

The abo table sh ove hows the av verage returns from th IPO on d he different time frames, it can t be seen that average returns from IPO k keep on dec creasing wi increase in time pe ith e eriod. erage return after 1 year of issu is -23.05 while it is 5.45% on the ope n ue 5% ening The ave day. The current scenario lo s ooks worse as averag return f e ge from 240 IPO is -34. .19% lowest fr rom any oth time pe her eriod. It can also be in n nterpreted th the med hat dian is very low y for all th time pe he eriods after 1 year th median is -46.10% showing that maxim r he % mum number of shares are giving negative re eturns to the investors However the situatio is s. r on t g t n hares are giving totally different on the opening day as it shows that more than 50% of sh eturns unlike any other time frame e r e. some re

Page | 24 e

4.3 Ana alysis of IP POs Returns at Vary ying Time Frames


Table 3: No. of IPOs giving Returns at D Different Time Frames e

Time Pe eriod

Till 10% T No o. % 14 8 5

10% to 3 30% No. 35 31 14 % 14 4.58 12 2.92 5.83 5

Returns R 30% to 50% % No. 19 13 10 % 7.92 5.4 4.17

More Tha an 50% No. % 34 30 43 14.17 12 2.5 17.92

Ne egative Return No. % 119 146 161 49.58 60.83 67.08

Opening Day g After 1 M Month After 6 r Months After 1 Y Year Curren ntly

33 3 20 0 12 2

6 6

3 3

10 8

4.17 4 3.33 3

14 5

5.83 2.08

28 25

11.67 10.42

182 196

75.83 81.67

The abo table sh ove hows the re eturns of the IPO from Opening D m Day, 1 Mon 6 Month 1 nth, hs, Year & as on May 2012. As you can observe f M n from the la column longer the time ast period m more are the shares giving negati returns, out of 240 IPOs currently 81.67 of e ive 7% them ar giving negative ret re turns, there is an inc e crease of 7 (32%) s 77 shares from the m listing da Over th years sh ay. he hares giving more than 50% returns were also reducin as g n ng there wa initially 34 shares and curren there only 25 shares giving only more than as 3 ntly 50% retu urns. It has b been seen that maxim mum return on shares were given on the opening day. ns e There w were more than 50% of the sha ares giving positive r g returns on the listing day highest as compar to any o red other time-period. The shares ar more like to give high e re ely return on the listing day mainly because of under pr g ricing of shares by the company. The e . shares p performanc is better reflected in the long run as then the mark forces c ce ket come into act. It can be easily inte e erpreted tha the short term perfo at t ormance of the IPOs h been b has better than the long term performan in the la 5 years or so. This could be because in the e nce ast s s n long run there is much unc n certainty about the m market, political situa ation, economic situation & even th company perform n he ys mance as a result share prices te to be m end more volatile. Only 44 co ompanies a able to g are give some returns to t investor in the current the rs situation n.

Page | 25 e

The bes performance was se after th 6 months of the iss as 43 c st een he s sue companies w were able to give more than 50% returns on the shar prices, w % re while other 36 compa anies manage to give po ed ositive returns.

4.4 Indu ustry Wise e Distribu ution of IPO Os

40 35 30 25 20 15 10 5 0 Aut to 4 3 4 3 4 1 2 6

35

24 21 17 10 1 2 1 12 3 1 1 2 Ag gro 5 1 Sector 13 10 4 6 2 1 2 3 1 1 1 1 9 6 1 16 1

Banking B Cement C Construction C Electricals E FoodProcessin F ng Hotels H Leather L OilDrilling O PersonalCare P Power P Rubber R Telecommunica T ations Diversified D

Bre eweries Cer ramics Distilleries Eng gineering Gla ass IT Me edia&Entertainment Pac ckaging Pha arma Prin nting Shipping Tex xtiles

Ca astings Ch hemicals Ed dibleOils Finance Ho ospitals Je ewellery Minning M Pa aper Plastics Re etail St teel Tr ransport

Page | 26 e

4.5 Indu ustryWise Analysis s of IPOs


Ta able 4: Last 5 Years IPO Ind dustry Wise

Industry y

No. Companies 4 3 4 1 2 3 4 6 35 1 2 1 10 12 1 1 2 3 24 5 1 & 13 4 2 6 1 2 10 3 17

of Op Day

1 Month

6 Months M -2 25.78 -0 0.55 28 8.32 30 0.80 -6 66.12 43 3.63 -2 28.21 88 8.2 2. .52 -6 61.88 -6 62.65 -3 35.57 -3 30.82 -18.69 -6 63 -7 78.35 -2 29.18 37 7.4 8. .28 18 8.35 -3 35.38 -11.42 -3 31.14 -2 29.24 -2 24.49 -5 58.83 -8 84.94 -3 32.12 -5 51.27 -15.44

1 Year

Current

Auto Agro Banking Brewerie es Castings s Cement Ceramics s Chemica als Construc ction Distillerie es Edible Oils Electricals Engineer ring Finance Food Pro ocessing Glass Hospitals s Hotels IT Jewellery y Leather Media Entertain nment Minning Oil Drillin ng Packagin ng Paper Personal Care l Pharma Plastics Power

15 5.19 -10.57 3.72 -9 9.25 -4 42.3 11 13.26 -2 21.82 19 9.59 4.45 -17.39 -4 41.01 24 4.29 7.68 4.75 46 6.33 -2 29.13 -6 6.99 -1.04 30 0.01 -7 7.41 -12.5 -12.89 -17.23 -3 35.31 -14.85 62 2.33 -7 77.01 -6 6.15 15 5.51 10 0.09

-24.89 -30.67 6.16 -11.20 -57.23 15 55.65 -26.15 23 3.49 0.4 45 -21.44 -54.34 -13.71 -3.8 1.61 68 8.33 -56.09 -9.03 -7.64 31 1.95 0.4 42 -26.63 -13.07 -29.31 -35.05 -10.77 -17.5 -75.96 -9.51 -27.5 7.64

-4 41.75 -3 38 19.45 66 6.20 -7 70.68 -3 36.79 -4 45.53 42 2.43 -3 32.86 -8 87.43 -6 64.18 -6 67.34 -4 45.38 -3 31.57 -7 76.33 -6 66.96 -1 18.59 61.08 1.09 -4 4.73 -5 57.69 -3 33.98 -3 32.62 8.29 -5 53.27 -5 59 -8 85.62 -5 50.22 -6 61.07 -3 32.25

-2 21.88 34 4.23 20 0.23 7 -8 83.95 -3 33.03 -8 81.58 -4 46.11 -4 47.39 -8 84.04 -7 75.89 -7 73.2 -4 46.12 -2 27.68 -8 81.33 -8 87.04 -4 41.05 5. .1 -4 42.28 5. .9 -5 58.94 -5 53.51 -6 6.52 25 5.77 -8 80.03 -8 87.23 -7 77.275 -6 60.7 -2 29.69 -5 54.7

Page | 27 e

Printing Retail Rubber Shipping Steel Telecommunications s Textiles Transpor rt Diversifie ed

1 1 1 1 9 6 21 1 16

-14.77 -2 22.41 -2 26 -2 2.07 29 9.47 -10.17 1.6 -8 88.9 21 1.84

-58.14 -45 -34.29 -6.21 7.04 -23.44 -3.6 -88.73 10 0.84

-7 75.58 -6 68.15 -6 66.71 45 5.34 -1.26 -3 38.75 14 4.05 -7 73.41 34 4.86

-8 85.93 -8 81.19 -6 67.89 45 -2 29.97 -2 26.05 -6 6 -9 91.82 17.16

-8 88.79 -8 87.7 -6 65.29 38 8.68 -5 54.51 -7 73.71 -1 19.16 -9 94.59 78 8.3

The abo table sh ove hows the s sector-wise returns for all the IPO issued in last 5 ye r Os ears. There w were 240 IP POs belong ging to 39 d different ind dustries. In the last 5 y years maxim mum IPOs we issued by Constru ere uction Secto taking th count to 35, it was followed by the or he y IT sector (24) and then the tex t xtiles industry (21). There h have been some cons sistent perf forming ind dustries in last 5 year like Cem rs ment, Chemica als, IT and Diversifie returns in these industries have alwa d ed; ays been t there irrespec ctive of time market c e, conditions & recessio The che on. emical indu ustry has g given very hig returns mainly due to increas in the d gh e se demand of organic ch hemicals, a agrochemica als, coating dyes, p gs, pigments, soaps, cos smetics & polymer. T The Divers sified Compan nies were best amon the lot a their return was c ng as constantly increasing with different time fram t mes. Some of the be perform e est ming comp panies in th sector was his Jubilant Food, Grav India & Advanta. vita The con nstruction sector has issued the most no. o IPOs but the return were not that of t ns t attractive as this in ndustry is highly depen ndent on m market conditions, supp pliers & liqu uidity in the market. The share price in Const es truction sec declined heavily after 1 year after ctor giving some return in initial 6 months. Similar pa ns . attern was also seen in the Cem ment y dustries are related to each other e r. Industry as both ind The bes returns fo all most a the indus st or all stries were seen durin the Open ng ning day & after 1 month The patt h. tern in all t the IPOs issued in la 5 years suggests that long term ast s earnings are very meager as c s m compared t short run term retur to n rns. Industrie es like Personal Care, P Printing, Pharmaceu uticals, E Engineering & g Telecom mmunication were worst perfor ns rming share as their returns w es, were constantly negative in any giv time fra e ven ames. The Pharma In ndustry is fa acing dilem mma due to stiff o completion, Expirin of Patent & no new invention in the field of Medical. ng ts w ast ve Global Slow wdown, Pol litical In the la 5 years many companies hav become victims of G Instabilit Corrupti ty, ion, Inflation & High b borrowing ra ates, as a result the e effect can b been seen the prices of their shares e t s.

Page | 28 e

4.6 Sect torWise A Analysis


Figure 1: Pie Chart of Pub Sector and Private Sect IPO's e blic d tor

SectorWise
14

Private Public 226

Sector-W Wise Return ns


Sector

No.
Shares

pening Day of Op

1 Month

6 Months

1 Year

Current

Public Se ector 16 Private S Sector 240

11.65% 5.0 06%

15.93% -2.69%

15.45% -5.91%

7.13% -24.92%

14.05% -37.18%

The abo pie cha shows t ove art the domina ance of Priv vate Sector IPOs in last 5 years as r s, there we 224 IPO issued in this sec ere Os ctor as com mpared to 1 IPOs is 16 ssued by P Public Sector. bove analyzes the av verage returns from th of Public Sector IPOs hat The table given ab and Priv vate Sector IPOs. The results cl r e learly favor Public Sector IPOs as their ret r turns have be een constan over all time frame While th returns from Privat Sector IPOs nt es. he te has been declining with time. The curren returns fr nt rom Private Sector IPO are very low Os y at -37.18 while at the same time Public Sector IPOs were giving return of 14.05% on 8% t c ns % their sha prices. are Page | 29 e

The res sult of last 5 years clearly fav vors the Pu ublic Secto IPOs as they can be or n consider safer & lesser volatile. Thoug the retu red gh urns from P Public Secto IPOs are not or e as high as Private Sector IPO but still i is not worth the risk involved in Private Se Os it n ector IPOs.

Page | 30 e

4.7 Com mparing Re eturns in P Primary M Market & S Secondary y Market


4.7.1 Re eturn Analy ysis of Auto omobile Companies in n India
Table 5: Returns fro Automobile Sector in Pr om rimary and Sec condary Mark ket

Ne Issue ew Time Period Previous Close Listing Day Price L P Op pening Day Returns R 1 Month Pr rice 1 Month Ret turns 6 Month Pr rice 6 Month Ret turns 1 Year Pri ice 1 Year Retu urns 5 Year Pri ice 5 Year Retu urns Current Pr rice Current Ret turns Maruti Suzuki Ltd i 115 164 42.61% 197.05 71.35% 439.95 282.56% 428.1 272.26% 569.05 394.82% 1289.45 1021.26% %

Listed Companie on Stock Market d es k TA ATA Motors 212.75 209.2 -1.67% 245.5 15.39% 466.3 119.17% 1 415.6 95.34% 404.55 90.15% 301.4 41.66% M&M 170.9 166.1 -2 2.81% 19 99.65 16 6.82% 423.2 4 147 7.63% 510.7 5 198 8.82% 534.3 5 212 2.63% 687.6 6 302 2.34%

The abo ove table analyzes th returns from the to compan a he op nies in auto omobile se ector. Maruti S Suzuki Ltd IPO was l launched o July 9, 2003, while IPO of T on e TATA Moto & ors Mahindr & Mahind was iss ra dra sued in 90s This show that the return from Maruti Su s. ws m uzuki on its lis sting day was 42.61% while the returns fr w % e rom already listed co ompanies in the n same Industry were negative on the sam day. e me Over next one year the returns have bee very vola r en atile for all t three co the ompanies, w while TATA M Motors and Mahindra g gained lot o ground s as to giv returns o 95% & 199% of so ve of respectiv vely, Marut Suzuki Ltd share pric improved by more than 2 folds ti d ce s. Howeve after 5 ye er ears from is ssue Maruti was giving return of 395% from its issue p i g m price, while TA ATA Motors & Mahindra share pr s rices have not shown any improv vements in their prices. T current situation o all the thr scrips lo The t of ree ooks better than befor as all of t r re them Page | 31 e

are givin returns, with Maruti giving high ng i hest returns of more th 1000% while TAT & s han %, TA Mahindr giving 41% & 302% respective ra ely.
Figure 2: Line Char of Auto Sector Companie e rt es

AutoS SectorTr rend


1200.00% % 1000.00% % 800.00% % 600.00% % 400.00% % 200.00% % 0.00% % 200.00% % OpDa ay 1Mo onth 6M Months 1Year 5Year M&M Currently

Maru utiSuzukiLtd

TATAM Motors

Though markets are same fo every co a or ompany, th heir annual results an performa nd ance over the year play a crucial role in the movemen of share prices. Th above g e y e nt he graph shows the trend of returns for all the thr Auto Companies s f ree since 2003 Maruti Su 3, uzuki Ltd clea arly stands out from the other t two compa anies in giv ving maxim mum returns on consiste basis. Maruti & Mahindra show the upw ent M ws ward trend d during all the time fram mes,

Page | 32 e

4.7.2 Re eturn Analy ysis of IT Co ompanies i in India


Table 6: Return from IT Sec T ns ctor in Primary and Secondary Market y

New Issu ue Time Period e TC CS

Listed Comp L panies on St tock Market Infosys HCL Tec chnologies 323.85 3 317 -2.12% 348.8 7.70% 326.8 0.91% 425.7 31.45% 3 307 -5.20% 478.05 4 47.61% 4 Wipro

Prev Close Listing Day Price Open ning Day Re eturns 1 Month Price 1 Mont Returns th 6 Month Price 6 Mont Returns th 1 Ye Price ear 1 Yea Returns ar 5 Ye Price ear 5 Yea Returns ar Curre Price ent Curren Returns nt

85 50 987.5 16.1 18% 1028.95 21.0 05% 1370.15 61.1 19% 1322.05 55.5 54% 528.5 -37.82% 1200.35 41.2 22%

1562 1535 -1.73% 1613 3.27% 2162.35 5 38.43% % 2271.35 5 45.41% % 2096.1 34.19% % 2391.95 5 53.13% %

577 565 -2.08% 582.15 0.89% 677.9 17.49% % 364.35 -36.85% % 544.5 -5.63% 404.15 -29.96% %

The abo table shows the a ove s analysis of TCS IPO issued in A f August 200 with alre 04 eady listed co ompanies in the same sector. TC IPO was highly ant n e CS s ticipated IP in 2004 as it PO was the biggest IT Company in India, a a result the IPO w oversub T y as was bscribed by 6.5 y times ra aising aroun Rs. 3500 crore. E nd 00 Earlier IPOs like Infosy Wipro & HCL had also s ys, gathered huge resp d ponse in the respecti IPOs. eir ive TCS IPO on its op O pening day gave returns of 16.18 as it clo 8% osed at Rs. 987.5 from its m issue pr rice of Rs. 850, wherea the alrea listed c 8 as ady companies in the same sector de e ecline by aroun 2% in th intra-day trading. It also show the under-pricing o TCS scri by nd he y ws of ip 16% as a result it is difficult t compare the results of other c to e s companies on the ope ening day. How wever after a year of issue of IPO the situa r O ation looks d different as Infosys & HCL s are givin returns of 45% & 3 ng o 31% respec ctively from the issue d date, while TCS is still the leader b trading at Rs. 1322 giving 55% returns in 1 year. by % Page | 33 e

In 2009, 5 years af the issu of TCS IPO & during the glob slowdow the price of , fter ue bal wn es all the IT sector co T ompanies b baring Infos were giving negat sys tive returns TCS was the s. s biggest loser as it share price plunge dow to Rs. 5 s wn 528.5 giving negative r g return of aro ound hile s olatile and t their return were -5.6 ns 63% & - 5. .20% 37%, wh Wipro & HCL was not as vo respectiv vely. The cur rrent perfor rmance of t these companies in t the year 20 012 shows that Infosy is ys giving th highest returns as it share prices increas by mor than 50% since 200 it he r sed re % 04, is follow by HCL technolog wed L gies which i giving returns of 47 is 7%. TCS re eturns are lo ower than the other two companies since the issue bec e o e cause of its low perfo s ormance in past couple o years. Wipro has b of W been low pe erforming s scrip in this sector as it returns w s were constant negative during diff tly e ferent time frames.
Figu 3: Line Cha of IT Secto Companies ure art or

ITSec ctorTren nd
80 60 40 20 0 20 40 60 OpDay 1Month TCS 6Mont ths Infosys s 1Y Year HCLT Tech 5Years Wi ipro Current

mpanies h have been the most profitable companies in India and s The IT sector com investors have earned huge a amounts by investing in these co y ompanies. T IPOs o all The of the abov mentioned compan ve nies have b been a succ cessful over the years. The trend for ds all the c companies are very vo olatile in the given tim period. H e me However Infosys has b been the mos consisten share giv st nt ving return on regular intervals while Wip has been a ns s pro disappointing share as its retu was below zero on all the occ e urn n casions.

Page | 34 e

eturn Analy ysis of Tele ecommunic cations Com mpanies in India 4.7.3 Re
Table 7: Re eturns from Te elecommunica ations Sector in Primary and Secondary Market

New IP PO Time Period Idea Cellula ar 75 85.55 5 14.07 7 95.45 5 27.27 7 122.45 63.27 7 97.5 30.00 0 93.95 5 25.27 7 81.65 5 8.87

Listed Co ompanies o Stock Ma on arket Bharti Airtel Reliance e Communica ations 434.1 422.8 -2.60 415.6 -4.26 544.3 25.39 543.35 5 25.17 94.75 -78.17 65 -85.03 TATA Com mmunications s 374.1 368.6 -1.47 408.75 9.26 408 9.06 457.35 22.25 235.95 -36.93 210 -43.87

Pre Close ev Listing Day Price g Opening Day Return ns 1 Mo onth Price 1 Mon Returns nth 6 Mo onth Price 6 Mon Returns nth 1 Ye Price ear 1 Yea Returns ar 5 Ye Price ear 5 Yea Returns ar Curr rent Price Current Returns

36 61.38 375.1 3 3.80 3 38 80.48 5.29 5 42 23.78 17.27 37 75.65 3.95 3 338.9 3 -6.22 29 98.05 -1 17.52

The abo ove table analyzes th returns of New IP Idea C a he PO Cellular and already listed d companies like Bharti Airtel, Reliance C Communica ations & TA ATA Communications from me A was 7, he the sam Industry. The IDEA Cellular w listed on March 07 2007. Th Idea Cellular on its lis sting day ris to Rs. 85 se 5.55 giving 14.07% ret turns to the Investors who bough the e ht shares a issue price. However on the s at same day n much of the movement was s not f seen in the stock prices of the other companie in same i es industry. The re eturns bec came mor re comparable afte 1 year when a the m er r all major Telecom mmunication compan ns nies stocks were perfo orming vigorously in the market. All the com mpanies exc cept Bharti Airtel wer giving m i re more than 2 20% return after 1 y ns year. Howeve the situat er tion looks d different aft 5 years from issue of Idea C ter s e Cellular IPO as O, Page | 35 e

Reliance Commun e nications & TATA C Communicat tions ran into heavy losses giving y negative returns of 78.17% & 36.93 res e spectively. As the iss sue price fo Idea Cellular or was fixe to only Rs. 75, it wa able to g ed R as give some returns to its investors even whe all s en the othe companie were stru er es uggling.
Figure 4: L Line Chart of T Telecommunications Comp panies

Telecom T mmunica ationsIndustryT Trend


80 60 40 20 0 20 40 60 80 100 OpDay 1Month Ide ea 6Mon nths Airte el 1Year Reliance 5Years TATA Current

The tren look si nds imilar for a the comp all panies with the give time fra hin en ames. The Idea Cellular has been the most consistent share in all the time periods, giving pos sitive returns t throughout. However after 1 Yea there wa major sh in the pa ar, as hift attern as all the companies return percentage starts fallin down. D p ng During these 5 years st e teepest fall was C ations due t 2G Scam case as the compan was accused to m ny seen in Reliance Communica on of misrepresentatio of facts. on panies was seen in May 2012 when all the s 2, The worst situatio for all the 4 comp s els s. companies shares were trading at their lowest leve in past 5 to 6 years In the current n n ng arkets situat tion, as a r result situation the Indian Economy is strugglin to stabilize the ma major st tocks are tra ading in the lowest p eir prices.

Page | 36 e

4.7.4 Re eturn Analy ysis of Cons struction Companies in India


Table 8: Returns from Constructio Sector in P 8 m on Primary and Se econdary Mark ket

New Is ssue Tim Period me Pre Close ev Listing Day Price Opening Day Returns g 1 Month Price 1 Mon Returns nth 6 Month Price 6 Mon Returns nth 1Y Year Price 1 Ye Returns ear Cur rrent Price Curre Returns ent DLF D 525 5 57 70.05 8.58 8 58 80.5 10 0.57 113 35.75 11 16.33 41 14.55 -2 21.04 18 89.45 -6 63.91

Listed Com L mpanies on S Stock Market GMR Infr ra 77.19 75.21 -2.57 82.82 7.29 124.43 61.20 44.28 -42.64 19.8 -74.35 Pu Llyod unj 278.55 2 264.5 -5.04 348.8 25.22 577.55 5 107.34 1 228.4 -18.00 46.05 -83.47 L&T T 1129.4 48 1165.5 58 3.20 0 1224.2 25 8.39 9 2122. .2 87.89 9 1349. .5 19.48 8 1189 9 5.27 7

The abo table analyzes the returns from the co ove a e onstruction sector afte the launc of er ch DLF IPO on July 2007. Many IPOs in c O 2 y construction sector w launche during 2 was ed 20072008 be ecause that was the phase whe construc t en ction or rea estate se al ector was a its at peak. T This can als be verif so fied by loo oking at the returns g given by th construction he companies in January 2008, 6 months af the laun of DLF IPO. fter nch Unlike o other indust tries analyz before there was not much o a differen seen in the zed of nce n returns f from DLF and other c a companies i secondary market like GMR In in nfra, Punj L Llyod & L&T. T initial re The eturns from DLF on its listing day was just 8 m s y 8.58% howe ever the ret turns started t increase with the tim period & soon DLF was giving more than 100% retu to me F g n urns. In 2008 there was a huge cris in Amer sis rican Econo omy, shakin other co ng ountries as well. So in 2 2008, after 1 year t r there was decline in stock pr n rices of the Construction Compan nies. The im mpact can also be seen in India as majo construct or tion compa anies stock prices plunge down pe ed ertaining to deplorable market con nditions.

Page | 37 e

Figure 5: Line chart of Construct e t tion Companie es

TrendsinConst tructionCompanies
150 100 50 0 50 100 OpDay 1M Month DLF 6Months GMRIn nfra Pun njLlyod 1Ye ear L&T Current

ove hows the tr rends in fro Construc om ction Comp panies in la 5 years. The ast The abo chart sh trend is similar for all the c companies and no m major deviat tion has been seen from individua compani al ies. For all the comp panies the best perfo orming phase was aft 6 ter months of launch of DLF IPO This was the time period whe DLF ret O. s en turns was m more than 100 in just 6 months, t same tr 0% the rend was a also seen in other com n mpanies as Punj Lloyd al lso gave 107% return followed by L&T and GMR with 87% & 61% ret ns, d turns respectiv vely. The cur rrent positio for all th companies looks w on he worse as th are all trading at their hey lowest p possible pr rices. The major rea ason behind this is increase in prices of raw d n materials, increase in interest rate & low liquidity in market. e ong re e om In the lo run ther was not much of a difference seen in the returns fro a new issue as comp pared with the compan t nies in seco ondary market.

Page | 38 e

eturn Analy ysis of Bank king Compa anies in Ind dia 4.7.5 Re
Table 9: Returns f from Banking Sector in Prim mary and Seco ondary Market t

New Iss sue Time Period Pre Close ev Listing Day Price g Opening Day Return ns 1 Mo onth Price 1 Mon Returns nth 6 Mo onth Price 6 Mon Returns nth 1 Ye Price ear 1 Yea Returns ar 5 Ye Price ear 5 Yea Returns ar Curr rent Price Current Returns Yes Bank 45 58.5 5 30.0 00 71.5 55 59.0 00 74.2 25 65.0 00 78.7 7 74.8 89 285.4 45 534.3 33 319. .7 610.4 44

Listed Compan nies on Stoc Market ck IC CICI Bank 424.45 445.95 5.07 504.7 18.91 583.9 37.57 496.1 16.88 898.6 111.71 795.7 87.47 HDFC Ba ank 131.52 2 128.87 7 -2.01 131.62 2 0.08 146.39 9 11.31 149.45 5 13.63 413.07 7 214.07 7 487 270.29 9 Axi Bank is 268 266.1 2 -0.71 260.85 -2.67 317.25 18.38 1 273.1 2 1.90 13 300.10 385.11 963.8 9 259.63

The abo table de ove epicts the r returns from Banking S m Sector in In ndia. The New Issue S Stock is Yes B Bank whose IPO was launched o July 13, 2005 while HDFC Ba e on e ank, ICICI B Bank and Axi Bank ar the stocks trading in the S is re g Secondary Market. The returns are s calculate from July 13, 2005 when Yes Bank IPO w listed. ed was As seen in earlier companie the ope n r es, ening day r returns was very high for Yes B s h Bank giving 3 30% return on its iss n sue price. The same trend wa seen fo Yes Ban in e as or nk forthcom ming year as the stock price kept on rising a after 1 year the stock was giving a k t and back 74 4.89% to investors on their inves stment. How wever the other bank did not s ks show any mas ssive increa in their prices and their return were ver low as co ase ns ry ompared to Yes o Bank. er rs ation looks more desir rable as all the compa anies Howeve after year Yes Bank IPO, situa in Banking Sector are flourish a hing as their returns ha exceed many ti ave ded imes their initial Page | 39 e

price. Y Yes Bank is still leading the rac with 534 s ce 4.33% retur on its is rn ssue price, it is followed by Axis Ba at 385.11%. d ank
Figu 6: Line Ch ure hart of Banking Companies g

Ba ankingSectorTrend
700 600 500 400 300 200 100 0 100 OpDay 1Month h YesBank 6mo onths ICICIB Bank 1Year HDFCBank 5Years AxisBank Current t

nd anking Com mpanies loo very sim oks milar for the 1st year, as all compa s anies The tren in the Ba are stac cking over each othe in the g er graph. How wever after 1 year th r here was g great improvement in all company share pr s rices, especially Yes Bank as it gave nearly 6 t folds ret turns after 5 years. Other compa anies like H HDFC Bank ICICI Ban & Axis B k, nk Bank showed great impro ovement as their stock prices als doubled in 5 years t s k so time.

Page | 40 e

4.8 Ana alysis & Di iscussion o of Primary y & Second dary Mark ket

The pur rpose of an nalyzing all the above Companie in Prima and Sec es ary condary Ma arket was to see that whether inve w esting in a IPO in P an Primary Ma arket more profitable than investing in some other compa in same industry i Seconda Market. g o any in ary From the results sh e hown in abo tables of Five Industrys i.e. Auto Indus ove stry, IT Indu ustry, Construction Indus stry, Teleco ommunications Indust & Banki try ing industry we found out y d that inve esting in Pr rimary Market has been more pr rofitable tha investing in Secon an ndary Market. the major in ndustries th have b hat been analyz zed it has b been found that the s d stock For all t price rises to 50% of the issue price with 6 months of the lau e hin unch of an I IPO. As a r result investors can earn huge amo n ount by inv vesting during subscription or on the listing day n g uring initial six months companies in Second s dary Marke struggled to give as high et d itself. Du returns a in Prima Market. Though some companies have performed really wel but as ary . e d ll still the r returns wer always higher in Ne Issue Ma re ew arket. Howeve in long Run i.e. afte 1 year, sc er R er cenario loo little diff oks ferent as ot ther compa anies recover well and also the co a ompany in IPO mark shows m ket more realis prices than stic before. A now due to market forces the company has started to trade o the price that As e t e d on e is neither underpr riced nor overpriced. As a re esult it has been se s een that in IT, n Telecom mmunication & Construction Sec the retu ns ctor urns of IPO has decline after 1 ye & ear it has be ecome equ uivalent to S Secondary Market Re eturns. But in Auto Se ector & Ban nking Sector the IPO hav always h an edg over its c ve had ge contempora aries in Sec condary Ma arket as thes compan se nies return have a ns always bee greater than the already listed en companies. On the basis of an overall understand a ding it has been foun from th above g nd he given Industrie that inve es esting in an IPO has been more p profitable fo an invest both in L or tor Long Run & S Short Run. However th returns a he also depend upon the individual performanc of e ce the companies. As a result this inference cannot be generalize for all the IPOs. e e ed e

Page | 41 e

Primar ry Data An nalysis


5.1 Surv vey Result ts & Analy ysis

CHA APTER 5

SampleSize
The tota respondents are 90. al

90

SampleSize

Figure 7: Pie Chart of total samp size e ple

Gend der

23 3 67 7
Out of 90, 23 are females and 67 are a s males.
Male Female

Age eGroup pofSample


80 60 40 20 0 Age eGroup 1825Years 1 3650Years 3 2635Years s Above50Y Years 17 10 4 59 5

Fi igure 8: Pie Ch hart of Gender Distribution of Sample

m respo ondents were w The maximum een roup 18-25 years, as most betwe age gr of the were stu em udents.

Figure 9: Grap of different age groups o Sample Size F ph t of e

Page | 42 e

5.2 Cross Tabulat tion of Exp perience in Investin ng & Prefer rred Secto or
Table 10: Cross Tab bulation of Exp perience in Investing and P Preferred Sector

Prefe erred Sector Experien in Inves nce sting Le Than a Year ess Betw ween 1 to 5 Years Betw ween 6 to 10 Years More Than 10 Years 0 Grand Total

Public IPO 23 25 4 1 53

Sector P Private IP PO 19 12 4 2 37

Sector S

Grand Tot tal

42 37 8 3 90

ss on o t e which inves stors The cros tabulatio links two important results of survey the years for w have been investing & the sec preferre by an investor. ctor ed As most the resp tly pondents were betwee the age group 18 to 25 years so there w en s, were 42 respo ondents wh have sta ho arted invest ting a year ago only. While 37 re espondents are s investing for last 5 years, 8 ar investing for more t g re g than 5 years and finally there we 3 ere respond dents who are investing for more than 10 yea in stock market. a g ars k As the r result show that out o 90 respo ws of ondents 53 prefer inve esting in Pu ublic Sector IPO r while 37 prefer to invest their money in P 7 Private Sec IPO. It c be inte ctor can erpret from t table that alm most all the responde e ents irrespe ective of th heir experie ence in inv vesting in s stock market prefer Pub Sector IPO to inv blic vest. This observation could be related to the n e o ary ollected wh hich showe that in la 5 years Public Se ed ast s ector IPOs has s Seconda Data co given co onsistent re eturns at diff ferent time frames. This mig be a fa ght actor that p people have started p e preferring P Public Secto IPOs du to or ue their con nsistent performance and lesser risk assoc r ciated with them. Though the ret turns are high in Privat Sector IP her te POs but the risk is also high. e

5.2.1 Ap pplying Chi Square Te est of Indep pendence Ho: Exp perience in Investing IPO is indep pendent o t type of IPO the Ha: Experience in Investing IP is depen I PO ndent on th type of IP he PO

Page | 43 e

Chi-Squ uare Tests Value df d As symp. sided) .4 472 .4 470 Sig g. (2-

Pearson n Square

Chi-

2.517a 2.528 90

3 3

Likelihoo Ratio od N of Val Cases lid

a. 4 cells (50.0%) have expe ected count less than 5. The t minimum expected count is 1. m d .23. The abo test ha been ap ove as pplied using SPSS. Th result s g he shows that .472 is gre eater than the level of sig e gnificance o 0.05. So we will acc of cept the null hypothesis. As a res we can say that Y sult Years of Exp perience in investing i IPOs do not depen on n in o nd the type of IPO cho osen.

5.3 Cross Tabulat tion of Exp pected Ret turns and Preferred d Sector
Table 11 Cross Tabulation of Expe 1: ected Returns in 1 Year and Preferred Sector d

Prefe erred Sector Public Sector IPO Expected Returns in 1 yr d Up to 10% % Betw ween 10% to 25% t Betw ween 25% to 50% t Loss Grand Tota al 9 37 7 6 1 53 3 7 24 6 37 16 61 12 1 90 Private Secto IPO P or Grand Total G

ove table analyzes the Expec cted Return and the type of IPOs tha 90 ns e at The abo respond dents have chosen. It is very e t evident that maximum number of respond m dents expect b between 10% to 25% returns i a year f % in from an IP PO. Only 16 people have chosen returns Up to 10% and 12 people have chos returns from 25% to 50%. d e sen s Page | 44 e

The max ximum resp pondents have chosen Public Se n ector IPOs to give mo returns than ore Private S Sector IPO This ref Os. flects peopl les prefere ence is shift ting toward Public Se ds ector IPO tha Private Sector IP an PO. The re espondent prefere ts ence is ju ustified as the analysis of last 5 years IPO shows that Publi Sector IPOs have given 7. s ic e .13% returns within 1 year of issu while Pr y ue rivate Sect Compa tor anies have given -24. .92% returns 1 year. There w was only 1 responden whose c nt chose loss over profi out of 90 however the it 0, r seconda data an ary nalysis show that the were 182 IPOs o of 240 that was giving ws ere out negative returns af 1 year o issue. e fter of The retu urns expect by the respondents are poss ted sible only in the first 6 months o the n of issue of Public Sec f ctor IPO. T This shows that people still believ IPOs to be a profit e ve o table investme that could give su high ret ent uch turns. How wever IPOs can be pro ofitable in s short run if inv vestor sells it within first 6 month as max s hs, ximum no. o IPOs we profitab till of ere ble six mont in last 5 years. ths

5.3.1 Ap pplying Chi Square Te est of Indep pendence Ho: Expected Retu urns on IPO is indepen O ndent on the Type of IP e PO urns on IPO is depende on the T O ent Type of IPO O Ha: Expected Retu

Chi-Squ uare Tests Value Pearso on Square e Chi1.214a 1.569 90 df 3 3 Asy ymp. Sig. (2 2-sided) .750 0 .666 6

Likeliho Ratio ood N of Va Cases alid

By using SPSS so g oftware we calculated the Chi S d Square Tes of Independence w st which comes o to be 0.75. We will accept the null hypot out e thesis as 0.75 is great than lev of ter vel significa ance of 0.05 5. So we c can say th expecte returns on IPOs a independent of th type of IPO hat ed are he chosen. Page | 45 e

5.4 Crit teria for In nvesting in n IPOs


There w were six criteria to be ranked by the respo y ondents. Th chart be he elow shows the s graphica representation of ranking of dif al fferent Crite erias.
Figure 10: Graph for Criteria for In r nvesting in IPO O's

CriteriaforIn nvesting ginIPO's s


17 MarketR Rumours] 4 14 15 [Broker'sAdvice] 5 10 1 [Manage ementoftheCompany] 9 4 6 12 12 12 8 9 27 8 8 9 13 16 20 25 30 0 35 30 23 12 14 13 17 17 17 21

18 19

21

Rank6 6 27 Rank5 5 Rank4 4 Rank3 3 Rank2 2 33 Rank1 1

FutureP ProspectsforCompany]

4 Company'sPastPerfo ormance]

Re eputationofCompany]

36 4 40

10

15

The abo graph shows the results of c ove s criteria while investing in IPO. Ea criteria has g ach a been ran nked 1 to 6 by the res spondents, where 1 b being the m most importa and 6 b ant being the least important. t The respondents believe Rep b putation of the compa the mo important criteria w any ost while investing in an IPO as 36 re g O, espondents ranked it no. 1. It was followed by the Fu s d uture Prospec of the Co cts ompany wh hich also go 33 no. 1 ranks. Com ot mpanies Pa Performa ast ance Page | 46 e

is also re elevant for some inves stors as it too got 27 r rank 1 posit tions. Howe ever it has b been seen tha Market Rumors, Brokers Advice and Ma at R anagement of the Com mpany are least preferred options by the respo b ondents. nys Past Performance was also considered important by respon P e d t ndents as it has t Compan the max ximum responses for r rank 2. The past perfo e ormance of the compa is impo f any ortant criteria a investors believe th same pa as s hat attern will be continued in future a well. d as Future P Prospects of the Com o mpany are a also consid dered important criteri as the fu ia uture projects of the com mpany do ha a majo role to pla in its ear ave or ay rnings and performanc If ce. the com mpanys pro oducts have favorable market co e e onditions in future the chances are n en s higher fo this company to per or rform up to expectations. The res spondents were not i favor of Market R in f Rumors and Brokers Advice as the d s importan factor in choosing an IPO, may be b nt n g because th hese are e external to the o company. Any Ma arket Rumor & Brok ker Advice may not be criteria to judge IPO a Performance.

Page | 47 e

5.5 Exte ernal Fact tors Affect ting Stock Market


Case Pr rocessing Summary S Code N Marginal Percentag ge

1 Which factor affect your decisio the most about on investin in Stock Market ng [Political Situat tion] 2 3

23 2 52 5 14

25.8% 58.4% 15.7% 83.1% 14.6% 2.2% 38.2% 52.8% 9.0% 46.1% 49.4% 4.5% 41.6% 42.7% Page | 48 e

Which factor affect your decisio the most about on investin in Stock Market ng [Eco onomic Situation (Growth rate, Inflat h tion etc)]

1 2 3

74 7 13 2

Which factor affect your decisio the most about on investin in Stock Market ng [Foreign Markets Situation n S (Nas sdaq, FTSE etc)] E

1 2 3 1 2 3 1 2

34 3 47 4 8 41 4 44 4 4 37 3 38 3

Which factor affect your decisio the most about on investin in Stock Market ng [Dom mestic Marke (FII et investments, FD etc)] DI

Which factor affect your decisio the most about on investin in Stock Market ng

[Centr Bank Po ral olicies]

14

15.7% 100.0%

Total Sub bpopulation n

90 9 47 4

1 = Mos Important st t* 2 = Impo ortant* 3 = Not so Important* The abo table an ove nalyzes the responses percentag wise. The options a given va e s ge are alues of 1, 2 & 3 as men ntioned belo the table. The res ow spondents w were asked to answer five d r different factors on three diffe t n erent param meters relev vant to them while inv m vesting in S Stock Market. The res sults show some in w nteresting i insights ab bout inves stor decisio on. Out of 90 f respond dents 74 be elieve that s smooth Eco onomic Situ uation is the most important facto for e or them to invest in Capital Markets. This shows the importanc of economy of cou C e ce untry over the Stock Exc e change. Thi is very ev is vident in cu urrently whe the cou ere untrys econ nomy is going though ro g ough time and stock market are also fac k cing the cr runch from the m investors. However RBI Polic cies and FIIs investme ents are als given so so ome weight age t by the re espondents as both ar an impor s re rtant factor to invest in Stock Mar n rkets. In count like India where Political Situation changes almost every day it is evide to try a, t y, ent have some impact of on mark kets. This is the reaso that 52 respondents chose it to on mportant factor to in f nvest in ma arkets. Political instab bility in cou untry does have be an im an effec on markets as Dome ct estic and Fo oreign Investors lose f faith in coun ntries abiliti ies. Foreign Markets ar also give due impo re en ortance by the respon ndents. It ha been see in as en the Seco ondary Ana alysis that t banking companie and othe companie faced a very the g es er es difficult time during 2008 slow g wdown in A America an other Eu nd uropean Co ountries. There were 34 responde 4 ents saying it was th most im he mportant fa actor and 47 others who said it to be important. Central Bank Polic cies does n seem to entice res not o spondents reaction m be beca may ause they find policy cha d anges not u useful in Sto Markets ock s.

Page | 49 e


6.1 Major Finding gs

CHA APTER 6

This rep on Study of Indian IPOs ha given some useful insights about the Prim port as mary Market, Returns of IPOs, tren in the primary ma f nds arket and in nvestors be ehavior tow wards IPOs. ortant findin of this re ngs eport. Let us now look at some impo The T under pricing in IP p POs has been found up to 5.45 5%. The under pricing rate has reduced drastically in last 5 ye d y ears. Currently the are 196 IPOs out of 240 givi negative returns. T C ere 6 ing e This accoun for nt nearly 82% of total IPO issued in last 5 yea The Indian stock market is g Os ars. going th hrough a very rough period as m many share are trad es ding in their lowest pr rices. This can be attributed to slow growth rate, decline in FIIs in T e d nvestments and Political Inst P tability. It has been observed t t that the ret turns in IPO have be declining in long term Os een i.e. 1 year or more. r Public Sect IPOs has been more profitable tha Private Sector. In the P tor an n survey cond ducted it ha been see that inve as en estors prefe Public Sector IPO m er more han e he could have been the consistent performanc of e ce th Private Sector. Th reason c Public Secto IPO as co P or ompared w Private Sector. with According to industry Banking In A o ndustry, IT Industry, C Chemicals and Divers sified has had the most succ cessful run in last 5 ye ears. These were the m e most consis stent performing industries. However the were many industr H ere ries giving n negative returns throughout 5 yea ars. A comparis son was also made b between Pr rimary Mar rket & Secondary Ma arket, which show w wed that Pr rimary Mark is more profitable than Sec ket e e condary Ma arket. The T former shares gav very high returns in initial 6 mo s ve h onths. How wever secon ndary market was not able to compete o that leve In long ru too Prim m o on el. un mary Market had t an edge abo the com ove mpanies in S Secondary Market. From the su F urvey it has been found that investors prefer Public Se ector IPOs than Private Sect P tor. From Chi Sq F quare Test of Indepen ndence it ha been transpired tha Experience in as at In nvesting an Expecte Returns from IPO are not dependent up nd ed pon the typ of pe IP POs chose by the inv en vestors. In nvestors ge enerally pre efer Reput tation of C Company & Future Pr rospects of the f company be efore investing in a com mpanys IPO. In nvestors co onsider the Economic & Political Situation o the coun as the most of ntry im mportant & important factors res spectively fo investing money in Stock Ma or g n arket. Countrys ec C conomic situation has an overall impact on t Stock M the Market. It has been seen in last 5 year that IPO are more profitable for short term t n rs O e in nvestment. Industries like Teleco ommunications, IT and Construction have g d given very high re eturns for initial 6 mo onths but afterwards t their stock prices plun nged downwards. Page | 50 e

6.2 Con nclusion

In India, many peo , ople rely on Stock Ma n arkets as th heir only so ource of inv vestment. T They invest th savings and hard earned mo heir s oney to get returns. H t However the expectations eir are not always fulfilled and t they suffer huge loss ses by inve esting in Markets. So it is necessa for an investor to have know ary wledge abo the markets, past trends, fac out ctors affecting the marke & apt en and exi time. g ets ntry it This rep do not touch upon all the par port t n rameters of Stock Mar f rkets but focus on the past trends, r returns and investors behavior to d owards IPO or new is Os ssue marke IPOs ca be et. an a great s source of revenue to investors, i they inves with a plan or strate r if st egy. As see in en the repo IPOs can be very p ort profitable if invested at right time and in right company. t t In last 5 years IPO has been underpriced by only 5.45%, this is better if compared with s n s f earlier y years. Out of 240 IPOs studied in this report 196 are cu o s n t urrently trad ding below their issue pr rices. The numbers of IPOs have kept on in n e ncreasing w time. T best ret with The turns from IPO were av Os vailable only on the lis sting day or after 1 mo r onth of issu The ave ue. erage returns f from IPOs were negative on all t time frames excep on the list the pt ting day. Public S Sector IPOs are prefe erred by inv vestors in S Survey, the secondar results ju e ry ustify their pre eference as they are more pro e ofitable than Private Companies Accordin to s. ng industry wise analy ysis IT Indu ustry, Banking Industry and Diver y rsified have been the most e consiste performe In last 5 years Co ent ers. onstruction Sector has issued 35 IPOs, which is s closely f followed by IT Sector a Textile Sector at 2 & 21 IPO respectively. y and 24 Os The online survey results giv useful insights about investo buying decisions. The ve ors returns expected by investors in 1 year are aroun 10% to 2 b s r nd 25% which is in complete h contrast of what ac t ctual results show. Th actual re s he esults show a negative return of 24% w e from 1 y year of issue e. While in nvesting in an IPO in nvestors giv importance to Rep ve putation of Company and f Future P Prospects of Company Neither the years of experienc of investing in IPOs nor o y. f ce s expected returns fr rom IPOs depends on the type of IPO cho osen by inv vestor. This has s y re ence. Accor rding to su urvey been found out by applying Chi Squar Test of Independe rs ve Os ofitable in lo ong run bu secondar results g ut ry gives Investor do believ that IPO are pro totally di ifferent pers spective.

6.3 Sug ggestions

This rep port gives valuable ins v sights to inv vestors as w as Sha well arekhan ab bout investin in ng an IPO. The analy ysis of retu urns of 240 IPOs sh 0 hows that investing in IPOs are not n e er y trategy and proper un d nderstandin of ng profitable. Howeve if money is invested with a st markets an investo can surely book prof or fits.

Page | 51 e

An inves stor must invest in an IPO for a short term perspectiv as the analysis sh n m ve, hows that IPO are less profitable in long run. While inve Os esting in an IPO an inv vestor must give importan nce to the reputation of company, past pe erformance and futur scope of the e re f company. This cou give valuable inform uld mation abo the com out mpanys per rformance & will help inve estor make a wise dec e cision. In order to recomm r mend an IP to retail investor S PO Sharekhan m must perfor an inten rm nsive research about the companys future gro h e s owth prospe ects, valuation of stock and risk fa k actor associat ted with th company. As seen in the a he analysis aro ound 50% of IPOs g gave negative returns on listing da itself an figure k e o ay nd keeps on in ncreasing w with time. A a As result a careful analysis on p part of Sharekhan is e essential fo recomme or ending IPO to Os investors. Those w who are risk averse in nvestor must prefer to invest in Public Sec o ctor IPO as it is s safer an profitable in future. These inve nd e estors could also pref safer inv fer vestments tools like Mutu Funds, Bonds and Treasury B etc. ual d Bills Both Pr rimary and Secondar Markets are highly volatile but analys shows that d ry s sis investing in New Is g ssue Market is more pr t rofitable tha investing in Second an g dary Marke So et. investors must stre eamline their portfolio t minimize their risk. to e

6.4 Lim mitations

The stud is not proposed to be an expert study as it was d dy p o done by a student for the purpose of fulfillme of the course in S e ent Summer Training, wh hich is an i integral part, in completion and rew ward of MB The stud was con BA. dy nducted in s short-span of eight we eeks, so the findings cannot be generalized for all times. r paucity of time and res sources the survey wa conducte online w e as ed within Delhi/NCR Due to p area on The res nly. search was conducte only on IPOs issu s ed ued in last 5 years, so a t generalized interpr retation on IPOs cann be made and all the results ar strictly ba not e re ased movement in prices in last 5 years only. s on the m

Page | 52 e

Ref ferences
Web Sit tes Company Website: ww C W ww.sharekha an.com http://www.b bseindia.com/bookbuilding/bookb buildinghist. .asp?status s=h&irflag=IPO nseindia.com/marketin nfo/ipo/ipo_pastissues.jsp http://www.n http://www.m moneycontr rol.com/ipo/ / http://en.wik kipedia.org/w wiki/Initial_ _public_offe ering http://www.g gbmf.info/20 009/Investo or_preferen nce_Sasi%2 20Kumer.pd df ndiainfoline e.com/Mark ketStatistics s/NSE-Sect tor-Performance http://www.in http://busine ess.mapsofindia.com/ipo-india/ http://economictimes.in ndiatimes.co om/ipohom me.cms http://www.in nvestopedia a.com/univ versity/ipo/ http://www.in nvestmentg guruindia.co om/IPO_Pr rofile.aspx

Books Business Re B esearch Me ethods, Will liam G Zikm mund 7th Ed dition National Sto Exchange NCFM M N ock Module Cap pital Markets Basic Mo odule Ken Black, Business S K Statistics fo Contemp or porary Deci ision Makin Wiley India, ng, 5e

Journal ls Chandrasek C khar Krishnamurti, P Pradeep K Kumar, (20 002) "The initial listing e performance of Indian IPOs", Man e nagerial Fin nance, Vol. 28 Iss: 2, p pp.39 51 K.C K John Sasi Kumar (2010), Indian Prim S r mary Market Review International w, Journal Vol. 1

Page | 53 e

Appendices
Append dix A: List of 240 IPO Os
Table 1 List of 240 IPO's issued in Last 5 Yea 12: 0 d ars

IPOs JAN 200 07 Autoline Ind e Lumax A Auto Tech Ashtavin nayak * Cairn In ndia Tanla S Solutions * FEB 2007 SMS Ph harma C&CC Construct Transwa arranty Power F Finance Firstsou urce Sol House o Pearl of Redingt * ton Cinema India ax Technocraft Ind Pochiraj Ind ju TV18 Broadcast * Hubtow wn Cambrid Tech dge MAR 20 007 Page In ndustries Raj Tele evision Mudra L Lifestyle VTX Ind dustries Euro Ce eramics Idea Ce ellular Indus Fila

Issue Price

1M Month

6 Month hs

1 Year

225 75 160 160 265

195 5.1 82. .75 6.3 38 138 8.65 184 4.68

193.2 95.15 5.16 157.55 236.73

211.9 2 81.1 8 9 252.8 2 341.7 3

380 291 52 85 64 550 113 155 105 30 250 540 38

261 1.8 183 3.95 38. .85 111 1.1 70 390 0.35 28. .11 120 0 100 0.6 25. .3 103 3.61 372 2.5 55. .35

273 195.78 25.1 171.95 73.3 288.45 52.62 131.1 70.9 22.35 172.71 519.5 45.9

200.85 2 218.3 2 26.65 2 185.1 53.45 5 189.65 72.05 7 106.4 67.8 6 29.45 2 182.07 1238.65 63.65 6

360 257 90 100 165 75 170

338 8.2 196 6.2 58. .15 78. .05 132 2.15 95. .45 147 7

430.5 232.2 65.9 65.25 179.7 122.45 221.45

450.45 4 106 39.85 3 34.35 3 154.9 100 184.08

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MindTre ee Broadca ast Orien Trimex ntal Evinix * Indian B Bank Astral P Poly Tec * Jagjana Text ani AMD Ind dustries Abhishe Corp ek Lawresh hwar Poly

425 120 48 120 91 115 25 75 100 16

867 7.3 61. .5 22. .75 9.4 47 90. .2 45. .48 23. .4 68. .5 67. .05 11. .74

585.9 59.15 20.8 17.96 149.65 57.6 12.39 45.3 46.75 10.34

333.35 3 30.15 3 18 16.46 199.6 73.33 7 6.12 6 26.75 2 29.25 2 6.77 6

APRIL 2 2007 Advanta a ICRA Orbit Co orporati * Sancia Global Advanta a MAY 20 007 Insectic cides In MIC Ele ectronics * Binani C Cement Hilton M Metal Bhagwa Banque ati Fortis H Health JUNE 2 2007 Meghma Organi ani Nelcast Decolight Ceram Glory Po olyfilms Time Te echno * Nitin Fir Prot re Asahi S Songwon JULY 20 007 HDIL * 500 22. .35 36.2 17.7 19 219 54 48 315 190 90 22. .35 31. .83 33. .35 53. .2 63. .55 22. .51 59. .45 36.2 34.5 36.15 100.4 76.92 30.45 54.3 17.7 17.03 18.8 66.1 6 75.02 7 22.29 2 43.35 4 115 150 75 70 40 108 83. .5 75. .36 67. .9 49. .7 41. .6 88. .35 70.25 120.04 121.55 36.4 76.85 73.1 47.1 4 149.14 60.7 6 35.6 3 87.4 8 82.05 8 640 330 110 86 640 788 8.45 926 6.05 111 1.7 137 7.35 788 8.45 1094.8 901.9 311.6 280.2 1094.8 934.8 9 889.15 8 214.35 2 116.75 934.8 9

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Suryach hakra Pow Spice C Comm Celestia Labs al Ankit Metal Roman Tarmat DLF V2 Reta ail Allied D Digital * AUGUS 2007 ST Puravan nkara Pro KPR Mill Take So olutions * Asian G Granito I SEL Ma anufacturi Central Bank Refex R Refrigera Zylog Systems IVRCL A Assets Omnitec Infoso ch Omaxe Alpa Laboratori Simplex Project x Everonn Edu n SEPTEM MBER 2007 7 Magnum Ventures m Indowin Energy nd Motilal O Oswal F * OCTOB BER 2007 ILandFS Engg S Saamya Biotech a Suprem Infra me Dhanus Tech s Consolidated Co * Koutons Retail s Power G Corp Grid Kaveri S Seed Co

20 46 60 36 175 525 270 190

31. .83 33. .35 53. .2 63. .55 22. .51 59. .45 22. .35 31. .83

34.5 36.15 100.4 76.92 30.45 54.3 36.2 34.5

17.03 18.8 66.1 6 75.02 7 22.29 2 43.35 4 17.7 17.03

400 225 730 97 90 102 65 350 550 105 310 68 185 140

428 8.6 150 0 105 5.44 102 2.95 127 7.4 126 6.03 60. .4 444 4.55 241 1.54 163 3.85 332 2.2 47. .05 296 6.9 636 6.95

310.4 136.2 94.93 65.95 247.4 87.62 155.6 262.05 178.45 162.95 266.9 34.8 373.95 788.4

203.55 2 92.5 9 94.93 9 50.15 5 295.45 2 50.7 5 275.35 2 221.25 2 178.45 138.15 138.15 20.75 2 180 492.65 4

30 65 825

24. .75 189 9.7 248 8.25

12.35 64.35 138.11

12.3 52.35 5 102.65

370 10 108 295 510 415 52 170

914 4.8 20. .84 146 6.05 77. .2 169 9.26 657 7.9 152 2.15 205 5.25

628.9 12.81 98.7 70.3 134.5 797 98.65 263.1

422.6 4 6.14 6 39.3 3 21.66 2 71.4 7 634.85 6 90.7 9 147.45

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NOVEM MBER 2007 Barak V Vally Cem Varun In ndustrie Religare Enterp e Circuit S Systems Adani P Ports * Empee Distiller Allied C Computer Rathi Ba ars DECEM MBER 2007 Brigade Enterp e eClerx S Services * Transformers Jyothy L Labs * Kaushalya Infra Kolte-Pa atil Renaiss sance Jew Edelwei Cap * iss JA 2008 AN Porwal A Auto Precisio Pipes on Aries Ag gro Manaks sia BGR En nergy Burnpur Cement r FEB 2008 Tulsi Ex xtrusion IRB Infr ra Bang Overseas Shriram EPC m OnMobi Global ile KNR Co onstruct Cords C Cable Ind J Kumar Infra Reliance Power * Future C Capital 85 185 207 300 440 170 135 110 450 765 71. .82 178 8 105 5 228 8.15 237 7.5 96. .1 95. .25 95 347 7.46 762 2 29.27 144 241 247.5 257.4 70 84 92.9 172 358 12.95 100 91.75 9 92.5 9 119.5 36.7 3 31.2 3 62.5 6 101.9 135.8 75 150 130 160 480 12 32. .55 90 153 3 83. .9 575 5 29 22.1 82 119 73.5 285 21.3 8.5 8 29.05 2 35.8 3 34 3 151 9.1 9 390 315 465 690 60 145 150 825 270 0.8 223 3.08 596 6.5 180 0.09 84. .35 232 2.35 138 8.55 157 7.15 103.2 144.47 295 98.66 30.3 86.65 65.75 62.53 40.85 4 63.7 6 146.55 85.6 8 13.06 28.9 2 22.35 2 25.67 2 42 60 185 35 440 400 12 35 51. .85 107 7.65 513 3.45 30. .2 249 9.1 314 4.25 71. .95 33. .85 38.35 77.05 403.25 22.55 174.35 152.5 19.3 16.55 13.8 24.15 2 317.8 3 11.43 51.48 5 50.3 5 5.05 5 5.92 5

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MAR 20 008 Rural Elect Cor GSS Inf fotech V-Guard Ind d APRIL 2 2008 Kiri Indu ustries Titagarh Wagons h Sita Shr Food ree Gammo Infra * on MAY 20 008 Aishwar Tele * rya JUNE 2 2008 Bafna P Pharma Niraj Ce ement Anus La * abs Gokul R Refoils * 40 190 210 195 25. .45 60 16 42. .8 16.8 19 13.7 38.58 25.5 2 37.5 3 18.3 56 5 35 36. .73 6.25 6.43 6 150 540 30 167 163 3.5 756 6 50. .5 34. .65 128 536 11.1 12.76 148.9 204.6 2 7.1 7 11.4 105 400 82 111 1.5 545 5 67 88.1 275.1 55.25 80 8 106 42.45 4

JULY 20 008 Birla Co otsyn * Somi Co onveyor KSK En nergy Vent Lotus Eye Care First Winner Archidply Indus Avon Co orporatio Sezal G Glass AUGUS 2008 ST Nu Tek India * Coral Hub SEPTEM MBER 2008 8 192 150 64. .43 21. .2 16.25 21.27 30.13 3 18.95 14 35 240 38 125 74 10 115 0.9 92 23 165 5 38. .05 132 2 39. .55 7.9 9 50. .5 0.4 11.65 161.95 28.1 23.05 23.4 5.3 24.9 0.64 0 11.24 224.05 2 33 3 17.45 26.85 2 9.48 9 38 3

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Austral Coke * Resurge Mines * ere OCTOB BER 2008 Chemce Biotech el 20 Micro ons NOVEM MBER 2008 Alkali M Metals MARCH 2009 H Edserv Softsyst JUNE 2 2009 Rishabh hdev Tech JULY 20 009 Mahindr Holiday ra AUGUS 2009 ST Raj Oil M Mills Excel In nfoways Adani P Power

196 270

20. .61 3.8 83

17.1 1.4

43.4 4 2.9 2

16 55

2.8 84 18. .95

7.48 16.6

8.3 8 40.7 4

103

147 7

266.25

148.25

60

21. .6

59.5

268.4 2

33

20

18.15

8.49 8

300

326 6.1

464.8

545.15 5

120 85 100

83. .25 91. .75 102 2.1

65.9 52.1 106.5

51.5 5 50.3 5 140.6

SEPTEM MBER 2009 9 Oil India a Globus Spirits Jindal C Cotex NHPC OCTOB BER 2009 IndiaBP Power Thinkso oft 45 125 32. .5 294 4.85 29.1 165.1 28 2 115.95 1050 100 75 36 454 4 88. .8 85. .05 34. .5 452 130.8 80.1 32.2 615.16 6 166.2 154.8 30.5 3

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EuroMu ult Pipavav Defence v NOVEM MBER 2009 Astec Life Den Networks DECEM MBER 2009 Cox & K Kings JANUAR 2010 RY MBL Inf fra DB Corp p Godrej P Proper JSW En nergy FEBUR RARY 2010 Hathway Cable Emmbi Polyarns DB Rea alty Aqua Lo ogistics * Thangamayil Syncom Health m VasconEngg Jubilant Food t Infinite C Comp MARCH 2010 H DQ Ente ertain United B Bank Man Inf fra Texmo Pipes ARSS In nfra ILandFS Trans S APRIL 2 2010

75 58

31. .1 54. .4

28.85 84.3

30.25 3 84.1 8

82 195

83 194 4.5

59.8 212

66 6 225 2

330

212 2.5

215

274 2

180 212 490 100

204 4.95 235 5.1 450 0 111 1.45

253.8 235 617.95 125

200 2 270 2 615 6 100.25

240 45 468 220 75 75 165 145 165

206 6.2 22. .8 452 2.5 24. .79 78. .05 116 6.1 138 8.65 261 1.9 202 2

207 17.9 450 58.5 151 41 171.1 412 176.85

115.1 13.7 117 18 166 32.8 3 101.5 521.2 5 185

80 66 252 90 450 258

107 7 73. .4 378 8.75 84. .1 993 3 287 7.6

112.5 117.8 345.1 55.5 1286 327.95

60.75 6 104.25 142 34 3 616.8 6 235.55 2

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Goenka Diamond a Intrasoft Tech ft Shree G Jewel Gan Persiste ent Pradip O Oversea MAY 20 010 Jaypee Infra SJVN Mandha Ind ana Tarapur Trans r Nitesh E Estates Talwalk kars Fitn JULY 20 010 Aster Si ilicates Hindust Media tan Technof Engg fab Parabol Drugs lic

135 145 260 310 110

96. .7 126 6.9 123 3.9 394 4 85. .25

99.95 100 174.5 442.1 80.65

65.7 6 70.95 7 162.1 415 4 85 8

102 26 130 75 54 128

85. .45 24. .3 148 8.5 39. .9 38 164 4.3

81.05 23.75 274.95 36.05 41 271.1

52.6 5 21.3 2 180.25 21.85 2 27.1 2 224.3 2

118 166 240 75

65. .2 183 3.9 269 9 53. .35

35.25 171 173 57.8

23.15 2 133.2 133.1 42.8 4

AUGUS 2010 ST Prakash Steelag h Bajaj Co * orp SKS Microfin Midfield Ind d 110 660 985 133 144 4.1 145 5.1 140 00 262 2.5 125.8 104.4 645 62.9 125.2 108 338.25 3 50 5

SEPTEM MBER 2010 0 Indosola ar Gujarat Pipavav OCTOB BER 2010 Cantabi Retail il Ramky Infra Electros steel St Orient G Green Career Point 135 450 11 47 310 74. .25 369 9 10. .97 39 485 5 43 293 9.81 27 349.1 25.4 2 212 2 6.3 6 14.85 251.8 2 29 46 25. .2 59. .8 17.6 60.2 8.95 8 67 6

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Eros Int tern Microse Fin ec Tirupati Inks Gyscoal Alloys Prestige Estate e BS Tran nsComm Oberoi R Realty Comme ercial Eng Bedmut Ind tha Ashoka Buildcon Sea TV Network Va Tech Wabag h Tecpro Systems NOVEM MBER 2010 Gravita India Coal Ind dia

175 118 43 71 183 248 260 127 102 324 100 1310 355

193 3.1 82. .6 18 53. .5 161 1 170 0.1 267 7.8 104 4.85 111 1.15 320 0.5 103 3.9 672 2 406 6.7

147.65 43.5 10.5 15.35 153.15 116 253 40.3 127.5 289 23.85 509.2 300.1

237 2 29 2 6.05 6 19.07 97.8 9 98.8 9 232 2 39.8 3 109.8 240 2 18.25 379.65 3 277.05 2

125 245

238 8.8 320 0

359.5 371.45

443.5 4 328.8 3

DECEM MBER 2010 Punjab & Sind A2Z Ma aintenance Claris Life MOIL RPP Inf Proj fra JANUAR 2011 RY Midvalle Enter ey C Mahe endra Expo Shekhawati Poly FEBUR RARY 2011 Omkar S Special MARCH 2011 H PTC Ind Fin dia Lovable Lingeri e 28 205 22. .05 315 5.8 15.55 487 15.05 368 3 98 32. .45 57.35 57 5 70 110 30 87 205 5 25. .5 138.1 226 31.3 31 3 142 23 2 120 400 228 375 75 108 8.9 304 4 185 5 436 6 58. .4 101.35 243.9 173.4 349.25 76.8 60.95 6 92.9 9 99.55 9 225.95 2 63.5 6

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Fineotex Chem x Sudar G Garments Acropet Tech tal APRIL 2 2011 Shilpi C Cable MA 2011 AY Future V Ventures Paramo ount Print Muthoot Finance t

70 77 90

208 8 118 8.5 50. .35

299 78.3 16.85

57 5 79.2 7 14.25

69

24. .5

13.4

11.65

10 35 175

9.6 65 22. .75 164 4.55

8.7 25.2 187.8

8.74 8 5.3 5 123.8

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Append dix B: Surv vey Questi ionnaire

Survey o Primary Market on

Do you i invest in Pr rimary Mark ket? a. Y Yes b. N No

ng u esting in Sto Market? ock ? How lon have you been inve Less than a Ye s ear Betw ween 2 to 5 Years Betw ween 6 to 10 Years More Than 10 Years e Y

What is the criter s rion for inv vesting in a IPO?*R an Rank the c criteria (1 b being the most importan & 6 being the least important) nt g 1 Reputati ion Compan ny of f 2 3 4 5 6

Compan ny's Past t Performance Future Prospects s for Company Management the Com mpany of f

Page | 64 e

1 Broker's Advice s

Market R Rumours

actor affect your decis sion the most about inv vesting in S Stock Marke et?**Select only Which fa 1 of eac Most Imp ch portant, Imp portant & No So Important ot Mo ost Imp portant Political Situation Important so Not Impor rtant

Econom Situation (Growth mic n rate, Inflation etc) Foreign Markets Situation q, c) (Nasdaq FTSE etc Domesti ic Mark ket investme ents, FDI etc) (FII

Central B Bank Polici ies

Which sector IPO do you pref d fer?* Public Sector IP PO Priva Sector IPO ate

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How mu return do you expe from an IPO in 1 Y uch d ect Year?* Up to 10% Betw ween 10% to 25% t Betw ween 26% to 50% t More Than 50% e % Loss s

Do you t think invest ting in IPOs in long ru is Profita un able? a. Y Yes b. N No

Name:

Gender a. M Male b. F Female

Age a. b. c. d. 18-25 years 26-35 years 36-50 years 50 & above

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