A STUDY OF IPO’S AT

NATIONAL STOCK EXCHANAGE

1.1 INTRODUCTION:
Initial Public Offering (IPO)

Initial Public Offer (IPO) is a process through which an unlisted

Company can be listed on the stock exchange by offering its
securities to the public in the primary market. The object of an IPO
may be relating to expansion of existing activities of the Company or
setting up of new projects or any other object as may be specified
by the Company in its offer document or just to get its existing
equity shares listed by diluting the stake of existing equity
shareholders through offer for sale.

An "initial sale of stock" is an organization's first offer of stock to

people in general. This is the reason it is additionally termed as
"opening up to the world". At the point when an organization that
has already issued, stock issues progressively stock it is known as a
"second offering" Various companies that undertake IPO takes the
assistance of investment banking which acts as underwriter to advice
firms wisely.

This process can be used by small or giant companies for expansion

and make their company go public. The Pricing Process The Indian
securities market has experienced a several building changes
especially after the deregulation of the economy. The dynamic
financial condition and the floods of globalization and advancement
have contributed generously for the extending, augmenting and
widening of the securities showcase. A far reaching bundle of
changes was acquainted comprising of measures with change,
control and build up the showcase, the most commendable change
being the destroying of Controller of Capital Issues (CCI) and the
presentation of free evaluating On this ground another system
named as book building was perceived as a strategy for evaluating by
Securities and Exchange Board of India on the suggestion of the
advisory group under the chairmanship of Y.H. Malegam in 1995."
the essential market saw a blast both regarding no of issues and the
measure of issues under SEBI period in contrast with CCI system.

METHODS OF PRICING THE IPO’S

1. Fixed price method: In this method firm with the consultation

of investment bank, fixes the price .This is the price at which investor
will subscribe to capital. It is a traditional method of pricing the IPOs

2. Book Building Method: In this Type of method pricing is done

by fixing band instead fixing a price. Book Building is a price discovery
component utilized by organizations issuing the securities. SEBI
characterizes book building as "a procedure embraced by which
interest for the securities proposed to be issued by a body corporate
is inspired and developed and the cost for such securities is
evaluated for the assurance of the quantum of such securities to be
issued by methods for a document, circular, notice, memorandum or
advertisement or offer report." The lowest cost in the value band is
called 'floor cost' and the highest cost is called 'top cost'. A financial
specialist can buy in at a cost anyplace in the value band. A
speculator who needs to buy in at any cost can make reference to
the 'cut-off cost'. When the problem stops, a book with a descending
order of cost is read. The cut-off cost is the cost to which the entire
issue is subscribed. It is the most commonly used technique. Book
Building is fundamentally a price and demand disclosure component.

FRAMEWORK OF BOOK BUILDING PROCESS

Under this framework during the period for which the book for the
IPO is open, offers are gathered from speculators at different costs
which are above or equivalent to floor cost. The offer cost is resolved
after the offer closing date based on some assessment basis.
Underpricing of IPO ,IPO underpricing , basically, is the contrast
between the closing offer price of a stock (through IPO) and the end
cost of the equivalent on first exchanging (posting) day if the posting
cost is higher. Naturally, it gives a short- term speculation open door
for the speculators. Consequently, a gigantic surge of firms towards
posting on stock trade and producing assets through IPO is
additionally trademarked with a huge line of financial specialists
sitting tight for IPO.

ANOTHER FORM OF LISTING

New Listing is a process through which a company which is already
listed on other stock exchange/s approaches the Exchange for listing of
its equity shares. The companies fulfilling the eligibility criteria
prescribed by the Exchange; from time to time; are listed on the
Exchange.

BENEFITS OF LISTING IN NSE

Comprehensive marketplace
NSE offers comprehensive coverage of the Indian capital markets
across asset classes, including equity, fixed income and derivative
securities. It has a fully-integrated business model comprising
exchange listings, trading services, clearing and settlement services,
indices, market data feeds, technology solutions and financial
education offerings.

Scale of operations
The scale and breadth of NSE's products and services, its sustained
leadership positions across multiple asset classes in India it's
leadership positions in trading volumes help to attract additional
participants to the exchange, which in turn results in more efficient
price discovery.
NSE's trading technology and risk management framework offers
faster and automated execution of orders, which contributes to
reduced impact costs for large trade orders.

Visibility
The trading system provides high level of trade and post-trade
information. The best 5 buy and sell orders are displayed on the
trading system and the total number of securities available for
buying and selling is also displayed. This helps the investor to know
the depth of the market. Further, corporate announcements,
results, corporate actions etc. are also available on the trading
system.

Largest exchange
NSE is the leading stock exchange in India and the Third largest in
the world by number of equity trades in 2019(YTD as on 31st July),
according to WFE.

Unprecedented reach
NSE has a pan-India, high-speed network, which supports more than
181,524 terminals through VSAT-based connectivity, leased line
terrestrial-based connectivity and multiprotocol label switching
transactions on the exchange, as of September 30, 2016.

Settlement Guarantee
NSE Clearing assumes the credit risk of each party to the trade,
which is the risk that a clearing member defaults on its obligations
in respect of the trade.

Broadcast facility for corporate announcements

The NSE network is used to disseminate information and company

announcements across the country. Important information regarding
the company is announced to the market through the Broadcast
Mode on the NEAT System as well as disseminated through the NSE
website. Corporate developments such as financial results, book
closure, announcements of bonus, rights, takeover, mergers etc. are
disseminated across the country thus minimizing scope for price
manipulation or misuse.

Trade statistics for listed companies

Listed companies are provided with monthly trade statistics for all
the securities of the company listed on the Exchange.

Investor service centres twenty four investors centres opened by

NSE across the country cater to the needs of investors.

Eligibility Criteria
An applicant who desires listing of its securities with NSE must fulfil
the following pre-requisites:

FOR INTIAL PUBLIC OFFERING(IPOs)

An applicant who desires listing of its securities with NSE must fulfill
the following pre-requisites:

Qualifications for listing Initial Public Offerings (IPO) are as below:

i. Paid
The paid up equity capital of the applicant shall not be less
than   10 crores * and the capitalization of the applicant's
equity shall not be less than   25 crores**

* Explanation 1

For this purpose, the post issue paid up equity capital for
which listing is sought shall be taken into account.

** Explanation 2

For this purpose, capitalisation will be the product of the

issue price and the post issue number of equity shares. In
respect of the requirement of paid-up capital and market
capitalisation, the issuers shall be required to include, in
the disclaimer clause of the Exchange required to put in the
offer document, that in the event of the market
capitalisation (Product of issue price and the post issue
number of shares) requirement of the Exchange not being
met, the securities would not be listed on the Exchange.
i. Conditions Precedent to Listing:

The Issuer shall have adhered to conditions precedent to

 listing as emerging from inter-alia from Securities Contracts
(Regulations) Act 1956, Companies Act 1956/2013, Securities
and Exchange Board of India Act 1992, any rules and/or
regulations framed under foregoing statutes, as also any
circular, clarifications, guidelines issued by the appropriate
authority under foregoing statutes.
ii. Atleast three years track record of either:
 the applicant seeking listing; or
 the promoters****/promoting company,
incorporated in or outside India or
 Partnership firm and subsequently
converted into a Company (not in
existence as a Company for three years)
and approaches the Exchange for listing.
The Company subsequently formed would
be considered for listing only on
fulfillment of conditions stipulated by SEBI
in this regard..
For this purpose, the applicant or the promoting company
shall submit annual reports of three preceding financial years
to NSE and also provide a certificate to the Exchange in
respect of the following: 

 That the company has not referred to the

Board of Industrial & Financial
Reconstruction (BIFR) &/OR No
proceedings have been admitted under
Insolvency and Bankruptcy Code against
the issuer and Promoting companies..
 The company has not received any
winding up petition admitted by a NCLT 
 The net worth of the company should be
positive. (Provided this criteria shall not
be applicable to companies whose
 proposed issue size is more than Rs.500
crores)  [*Net Worth – as defined under
SEBI (Issue of Capital and Disclosure
Requirements) Regulations , 2018. 
****Promoters mean one or more persons with minimum 3
years of experience of each of them in the same line of
business and shall be holding at least 20% of the post issue
equity share capital individually or severally..
iii. The applicant desirous of listing its securities should satisfy
the exchange on the following:
 Redressal Mechanism of Investor
grievance

The points of consideration are:

 Details of pending investor grievances
against Issuer, listed subsidiaries and top
5 listed group companies by Market Cap. 
 Arrangements or mechanism evolved for
redressal of  investor grievances including
through SEBI Complaints Redress System..
 Defaults in payment
 Defaults in respect of payment of interest and/or principal to
the debenture/bond/fixed deposit holders by the applicant,
promoters/promoting company(ies), group companies,
Subsidiary Companies shall also be considered while evaluating
a company's application for listing. The securities of the
applicant company may not be listed till such time it has
cleared all pending obligations relating to the payment of
interest and/or principal.