IPO Market in India

A Study on IPO Market in India
A Project Submitted to
Dr. Homi Bhabha State University for partial completion of the degree of
Bachelor of Management Studies
Under the Faculty of Commerce
By
FREYA FAYYAZ SHAIKH
Under the Guidance of

Dr. ANIL. R. CHOUGULE
(MA, NET, MPhil, Ph.D.)
SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS,

B-ROAD, CHURCHGATE,
MUMBAI-400020
ACADEMIC YEAR 2021-2022

SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS
B ROAD, CHURCHGATE, MUMBAI - 400020
Certificate
This is to certify that Ms. FREYA FAYYAZ SHAIKH has worked and duly completed
her Project Work for the degree of Bachelor of Management Studies under the Faculty of
Commerce in the subject of Finance and her project is entitled “A STUDY ON IPO
MARKET IN INDIA” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and
that no part of it has been submitted previously for any Degree or Diploma of any
University.
It is her own work and facts reported by her personal findings and investigations.

(Project Guide)
Date of Submission: 21st March, 2022.
Coordinator’s Signature College Seal

Declaration
I, the undersigned FREYA FAYYAZ SHAIKH, hereby, declare that the work embodied
in this project work titled “A STUDY ON IPO MARKET IN INDIA”, forms my own
contribution to the research work carried out under the guidance of Dr. ANIL. R.
CHOUGULE is a result of my own research work and has not been previously submitted
to any other University of any other Degree/Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.
I, hereby further declare that all information in this document has been obtained and
presented in accordance with academic rules and ethical conduct.
FREYA FAYYAZ SHAIKH

Student Researcher
Certified by
Project Guide
Acknowledgement
To list who all have helped me is difficult because they are so numerous and the depth is
so enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank Dr. Homi Bhabha State University for giving me a chance
to do this project.
I would like to thank my Principal, Dr. MADHURI KAGALKAR for providing the
necessary facilities required for the completion of this project.
I take this opportunity to thank our Prof. In Charge, Dr. RADHIKA IYER for her moral
support and guidance.
I would like to extend my heartfelt gratitude towards our Coordinator, Dr. JHARNA
KALRA for her guidance and due support.
I would also like to express my sincere gratitude towards my project guide Dr. ANIL. R.
CHOUGULE whose guidance and care made the project successful.
I would like to thank Sydenham College for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly and indirectly helped me
in the completion of the project especially my Parents and Peers who supported me
throughout my project.
TABLE OF CONTENTS
Sr. No. Title of the Chapter Page No.
CHAPTER 1
INTRODUCTION AND RESEARCH
DESIGN
A. INTRODUCTION
B. RESEARCH DESIGN
1
1.1 Sources of Data Collection
1.
1.1.1 Secondary Data
1.2 Rational Behind the Topic
1.2.1 Challenges faced in IPO
1.2.2 Problems faced by an Investor
1.3 Chapter Scheme
CHAPTER 2
2. 11
REVIEW OF LITERATURE
CHAPTER 3
INTRODUCTION TO IPO MARKET
3.1 Types of Issue of Securities in Primary
3. 20
Market
3.2 Initial Public Offering [IPO]
3.2.1 Need for Initial Public Offering
3.2.2 History of IPO
3.2.3 Working of Initial Public
Offering [IPO]
3.2.4 Advantages of Initial Public
Offering [IPO]
3.2.5 Disadvantages of Initial Public
Offering [IPO]
3.2.6 Applying for an IPO: The Process
3.2.7 Other Factors that the Company
Considers Before the Initial Public
Offering Process is Completed
CHAPTER 4
APPLYING FOR AN IPO
4.1 Requirement before applying for an
IPO
4.2 Eligibility norms required to invest in 37
4.
an IPO
4.3 Step-wise process to invest in an IPO
4.4 IPO Associated Terms
4.5 Tips to invest in an IPO
CHAPTER 5
GROWTH AND DEVELOPMENT OF 50
IPO MARKET IN INDIA
5.
5.1 No. of IPOs launched in India during
the Years 2010 – 2022 [Feb 2022]
5.2 An overview of the IPOs listed in the
Indian Market from the Year 2010 to 2020
5.3 Amount Raised via IPOs Each Year
[2010 – 2020]
CHAPTER 6
ROLE OF IPO IN CAPITAL
FORMATION
6.1 SWOT analysis of going public via
IPO
6.2 The Road to Creating an IPO
6.3 The Process of Taking a Company
6. 70
Public
6.4 The Company’s Perspective
CHAPTER 7
CONCLUSION
7.1 Review of the basics of an IPO
7. 74
7.2 Aspects to consider before applying
for IPOs in India
7.3 Major Observations
8. BIBLIOGRAPHY 78
9. WEBLIOGRAPHY 79
LIST OF TABLES
Sr. No. Title of Table Page No.

Table 5.1: No. IPOs launched in India during the Years
1. 2010 – 2022 [Feb 2022] 50
2. Table 5.2: YEAR 2020 52
3. Table 5.3: YEAR 2019 54
4. Table 5.4: YEAR 2018 55
5. Table 5.5: YEAR 2017 56
6. Table 5.6: YEAR 2016 58
7. Table 5.7: YEAR 2015 59
8. Table 5.8: YEAR 2014 60
9. Table 5.9: YEAR 2013 61
10. Table 5.10: YEAR 2012 62
11. Table 5.11: YEAR 2011 63
12. Table 5.12: YEAR 2010 65
Table 5.13: Amount Raised via IPOs Each Year [2010 –

13. 68
2020]
LIST OF CHARTS
Sr. No. Title of Chart Page No.
1. Chart 3.1: Primary Market 21
Chart 5.1: No. IPOs launched in India during the Years 2010
2. 50
– 2022 [Feb 2022]
Chart 5.2: Amount Raised via IPOs Each Year [2010 –
3. 68
2020]
CHAPTER 1
INTRODUCTION AND RESEARCH DESIGN
A. INTRODUCTION
In today’s world running a business or having a 9 to 5 job with a

paycheque are not the only ways of earning. There are various ways through
which an individual can gain money and add to their income; one of the best
ways of doing the same is investing in Capital Markets. Through this research
we will understand the concept of Initial Public Offering (IPO) and figure out,
how one should invest, especially for a neophyte Investor, a person to which this
concept is complete unknown, Let’s start by understanding the Financial Market
and its fundamentals specifically focusing on the Initial Public Offering [IPO]
Market of India.
In today’s fast-moving and dynamic world, short-term investors face difficulty

when choosing which avenue to invest in. Investors view investment in
securities as a highly risky avenue due to VUCA (Volatility, Uncertainty,
Complexity, and Ambiguity) pertaining to the future movement of security
prices. The study has been carried out to analyze the post-Initial Public Officer
(IPO) performance of various companies that have gone public until 2020 using
the event study methodology. The study also tries to determine whether these
IPOs were under-priced in the short-run identifies various factors that influence
the movement of such IPOs in the short run. The study found that about 70
percent he selected IPOs are under-priced in the short -run the movement of
these IPOs in the the short-run is not influenced by the age of the company, issue
size of the IPO, ownership sector, and the promoter’s holdings after the issue.
1
I. Objectives
1. To analyse the IPO performance of companies.

2. To Observe and Find out How? When? and What to invest in? with respect
to IPOs.
3. To understand the perspective of the investor as well as the company.
4. To help provide the reader convenience and to understand and implement
the tips mentioned.
II. Selection of Year:
The IPOs have been selected on the basis of the year of issue. The study
selected all the IPOs issued in the year 2020 (January 2010 to December
2020).
B. RESEARCH DESIGN
1.1 Sources of Data Collection
The only source of Data that has been actively used in this Project is Secondary
Data.
1.1.1 Secondary Data
The data has been collected through conducting a though research on the topic
of the IPO Market in India on various Websites and going through numerous
Research Papers. Also, by analysing the current state of the IPO Market. Past
Data of the IPOs and Investors has also been analysed and kept under
observation while creating this Project.
2
1.2 Rational Behind the Topic
1.2.1 Challenges faced in IPO

It would be erroneous to assume that the IPO implementation process is a
challenge-free undertaking. In order to benefit from the aforementioned merits
of an IPO, a public company and its shareholders have to be able to meet certain
challenges. And those challenges are as follows:
1. Share price of a public company is exposed to the stock market

fluctuations
Regardless of how well the company is managed, in certain circumstances
imposed by the external market, the price and liquidity of the shares may drop.
In order to minimize the influence of such unfavorable events on a public
company’s share price, the management should retain constant communication
with the market and investors, keeping them informed about the company’s
current developments and prospects.
2. The interests and expectations of the minority public investors must be

taken into consideration
The sale of an equity stake during the IPO inevitably transfers a certain degree
of influence to the new public shareholders; their interests and opinions must be
considered going forward. This means that the owners of a formerly private
business are no longer allowed the same autonomy in making strategic
decisions. In order to satisfy the current expectations of the public investors, the
company might need to achieve the short-term operational goals at the expense
of the longer-term strategic prospects.
3. Wide-ranging disclosure requirements and financial reporting

The IPO implementation process and a listing on a reputed stock market are only
possible when the company discloses the necessary financial information and
3
provides periodic financial reporting of scope and quality substantially in excess

of those required from a private company.
4. Substantial investment in the IPO process

Aggregate investment in the IPO process on a leading stock exchange (such as
the London Stock Exchange) may be quite significant. Even though most of
these expenses will be reimbursed from the funds raised during the IPO and
therefore will not impact the operating results of the company, a part of the
preparation expenses will have to be funded by the company’s own resources
before the IPO takes place. Thus, it is necessary to plan the investments in the
IPO process carefully.
5. New responsibilities and restrictions for the management

The IPO process, as well as the ongoing responsibilities that arise from the new
public status, require substantial amounts of the executives' time that otherwise
might have been spent on the operational business. The directors and executives
of a public company also face certain restrictions.
1.2.2 Problems faced by an Investor
А spectacular growth in the Indian capital market has taken place in recent
years. The capital mobilization is expected to increase with every five-year plan.
The number of investors has also increased considerably during the last decade.
Although capital formation was considerable, а number of malpractices like
manipulation of share prices, exploitation of unwary investors by fly by night
operators, insider trading, misleading information, the concentration of
shareholding, etc. have been witnessed.
The SEBI is expected to play а pivotal role in the capital market so far it relates
to the issue of securities, prospectus, disclosure of information, listing, takeover,
4
etc. SEBI has issued а number of guidelines to regulate the malpractices in the
Indian capital market and provide protection to the investors.
Problems faced by Investors in the Indian Capital Market:

Investors in the capital market face а number of problems. Some of these
problems are discussed below:
1. Inadequate Disclosure
Availability of complete and correct information is required for developing an
investor protection system. But the disclosures required under the Securities
Contracts (Regulation) Act, 1956, leave а lot of loopholes regarding the
disclosures to be made in the prospectus. Therefore, some companies give false
or misleading statements in their prospectus so as to attract and cheat innocent
investors.
2. Insider Trading
Insider trading means the sale or purchase of securities by persons who possess
price-sensitive information about the company on account of their fiduciary
capacity. For instance, information about the declaration of high rate of
dividend, issue of bonus shares, rights shares etc., information relating to
financial results of the company, amalgamations, mergers and takeovers,
disposal of the undertaking, and such other information.
3. Price Manipulation
It is а common practice that the prices of shares of companies proposing to come
out with а public issue or right issue are artificially pushed up in the market.
This is usually done by way of giving large employment advertisements in the
newspapers just before the public or right issue. So that some form of
5
respectability may be created and thereby the market price of shares of that
company may be pushed up.
4. Over Subscription of Shares

Usually, when the companies make public issues, they are oversubscribed many
times. А large number of investors lose interest in the money locked with the
company.
5. Lack of Transparency
Lack of transparency is another shortcoming of the stock market. The investor
does not know the actual rate of the transaction. The investor should be informed
about the rate and brokerage by noting them on the contract.
6. Investor’s Grievance
Thousands of complaints are received from the investors against companies and
brokers. The complaints include non-receipt of refund orders, letters of
allotment, dividends, brokerage, underwriting commission, etc.
7. Takeovers and Mergers

In а closely held company, the shareholders are adequately protected against
takeover as the number of shareholders is few and the shareholders’ agreements
impose restrictions on transfer. But in the case of а publicly listed company such
protection is not included in the agreement to protect the minority shareholders.
6
8. Problems related to Settlement Mechanism

The settlement mechanism calls for the physical movement of share
certificates in order to record ownership changes in the company’s books. Some
serious risks such as bad deliveries, delays in transfer and registration,
mutilation, loss, forgery, and theft of certificates have been attached to the
settlement mechanism. These problems were repeatedly raised in several
investor forums.
9. Information Overload
Many people looking to get involved with the stock market google around a bit
to discover the basics and quickly find themselves overwhelmed by the sheer
amount of seemingly complex and even contradictory advice on the internet.
Luckily, many of the most reliable trading strategies used by successful
investors is quite timeless. New investors may find it easier to avoid the noise
and use books as a resource to get started.
10. Unknown Risks

New investors may not know about the hidden risks in many seemingly simple
investment strategies. This can cause their portfolios to take large hits early on
in the process. To combat this pitfall, it’s important to be as informed as
possible. Make sure to be familiar with the risks involved with margin, leverage,
options, futures, etc. before considering them as an investment option.
11. Limited Capital

One of the biggest challenges that new investors face is having limited capital
available to invest. This is only compounded when certain financial instruments
are too expensive. However, these issues can often be solved by looking into
“partial shares.” partial shares are essentially workarounds that allow you to
invest in equity at a lower price. A couple of common examples are the use of
REITs to combat real estate investment challenges or using automated investing
7
tools with low minimum deposits, many of which we review right here on this
website.
12. Over-Diversification
This challenge is one that is almost always self-inflicted. Many new investors
feel as though they need to invest a bit in everything to shield themselves from
risk. However, over-diversification can significantly stunt your portfolio’s
growth. It is often best to pick 2-3 options to invest the majority of your portfolio
in.
13. Bad Timing

Though the least common of these five challenges, some new investors simply
go into the market right before a financial downfall. This has caused investors
to lose money before making any! However, this risk can easily be mitigated
by dollar-cost averaging, a strategy where you invest into the market bit by bit
and over a long period to mitigate larger fluctuations in the value in your
portfolio.
14. Not Getting Help

It’s risky to start investing without any outside help. Especially when you’re
getting started, you should be using some form of investment advising, whether
it’s automated or live. This will give you added assurance that you’ll see a return
on your money.
There are many online resources such as this website, Investopedia, or Wealth
simple’s free Investing Master Class to learn about personal finances and
investing before jumping into the deep end.
8
15. Not Getting Your Personal Finances in Order

If you don’t have your personal finances in order before you start investing, you
might be fighting an uphill battle.
Make sure all of your unsecured debt is completely paid off so you aren’t paying
high-interest rates, which are almost always higher than any investment gains
you might realize. If you have credit card debt, pay that off first. You can use a
service such as Tally Advisor to get your debt organized and help you pay it off
faster. Tally also has an option that gives you a lower-interest loan to help you
pay off your credit card debt, so you aren’t stuck running on a financial hamster
wheel for years down the road.
9
1.3 CHAPTER SCHEME
CHAPTER 1: INTRODUCTION AND RESEARCH DESIGN

This chapter contains a brief introduction to the Project Topic and why investing
in IPOs in India is a great opportunity to multiply wealth. Along with this it also
provides information on the sources of Data used.
CHAPTER 2: REVIEW OF LITERATURE

The Review of Literature consists of a total number of 20 reviews of experts and
their take on the IPO Market in India.
CHAPTER 3: INTRODUCTION TO IPO MARKET

This chapter includes a summary of Primary markets and detailed information
about the IPO Market.
CHAPTER 4: APPLYING FOR AN IPO

Here we not only focus on the requirement but also break down the procedure
of how to apply for an IPO in simple steps for a Rookie Investor, starting right
from the basics.
CHAPTER 5: GROWTH AND DEVELOPMENT OF IPO MARKET IN

INDIA
In this chapter, we study the past data of all the IPOs launched from the year
2010 to 2020. It also contains a gist of the current market scenario.
CHAPTER 6: ROLE OF IPO IN CAPITAL FORMATION

This chapter explains the reason why a company decides to launch its IPO and
how it functions.
CHAPTER 7: CONCLUSION
In conclusion, this project has proved that investing in IPO is one of the best
ways to multiply your wealth provided, one has the knowledge and judgement
of finding the best out of the lot and a sense of how the stock market fluctuates.
10
CHAPTER 2
REVIEW OF LITERATURE
Seshadev Sahoo and Prabina Rajib (2010)1: attempted to specify the

relationship between post-issue promoter groups’ retention and IPO
performance on listing. The researchers investigated the impact of financial
variables, i.e., offer size, times subscribed, age of the firm, book value, leverage,
market volatility, ex-ante uncertainty and the post issue promoter group holding
on listing performance of an IPO. 92 IPOs from manufacturing and non-
manufacturing sectors were used as sample and found that in 46.55% of IPOs,
listing price was more than the offer price during 2002 - 2006. The study
documented a positive relationship between post-issue promoter group holding
and IPO performance on listing. The results further indicated that offer size,
times subscribed and post-issue promoter group holding were statistically
significant in influencing the performance of listing.
Mahesh Nayak, (2010)2: Point out that, IPOs have grown in size and entered
their own brave new world. Further he states that raising money in India’s
booming economy cannot be a onetime affair; if a company does not maintain
a good relationship with investors and rewards them well it may not able to go
back to them when it wants to raise money later
Jagannadham Thunuguntla (2011)3: Published in the Dalal Street Investment

pointed out that, the age-old philosophy of understanding the company and
sticking to the basics should be given due respect. Let the buyer be made aware
that the investor has to put a price tag to his hard-earned money. There is a need
for investor education and awareness and the connections should be on a stable
income than an becoming rich overnight.
1
Sahoo,S. and Rajib, P.(2010) ‘Post issue promoter groups holding, signaling and IPO underprice: evidence from
Indian IPOs’, Int. J. Financial Services Management, Vol 4, No.2, pp.95-113.
2
Mahesh Nayak, (2010) in his article, ‘Of Primary Concerns’, published in the Businessworld
3
Jagannadham Thunuguntla (2011) in his article “IPOs: More Misses Than Hits”
11
Ragupathy, M.B (2011)4: Initial Public Offering (IPO) is a milestone in a

corporation's financial strategy. Studies probing this cardinal activity are
diverse. While, post–issue stock performance dominates the IPO literature,
valuation and pricing and ownership and structuring issues follow later in that
order. IPO research found a firm ground in some of the well-established finance
theories like signalling theory and capital structure theory. The effect of
institutional investors in various aspects of the IPO process is the theme of a
relatively new stream of research on public offerings. While most of the studies
are done in the context of US, an equally rich set of publications can be found
in other contexts too. Unlike who provides the review based on IPO process,
this study reviews the literature on ‘IPO as a financial strategy' by integrating
the factors like, underwriter selection involving venture capitalist, reducing
informational asymmetries and reducing ownership without losing control.
Bandgar & Atul Rawal (2012)5: studied the impact of pricing of Banks IPOs
in long and short run. The researchers also evaluated the effect of size and issue
nature (par, premium or at discount) of IPOs on its pricing. A sample of 10 banks
were selected randomly which issued their equities through initial public
offering (IPO) during the period 2000 – 2010.It was found that the average
return in short run was at - 8% and long run was at - 53%. Further findings from
the study revealed that big issue size IPOs got listed with a higher listing price
and the small issue size IPOs got listed with a lower listing price. IPOs with
lower issue price gave more returns on the listing day than the IPOs with higher
issue price. Private sector banks IPO’s gave higher return than the public sector
banks IPOs during the study period.
4 Ragupathy, M.B. (2011), Initial Public Offering: A Critical Review of Literature. The IUP Journal of
Behavioural Finance, 8(1):41 - 51
5
Bandgar and Atul Rawal (2012): ‘Returns on IPO’s – A Study on Banking Sector IPOs’, Management Guru-
Journal of Management Research, Vol1, Issue 2,pp.50-55
12
Ganesamoorthy&Shankar (2012)6: Attempted to study the price behaviour of

IPOs and its persistent effect after listing. For this purpose, a standard event
study methodology by taking market adjusted return model was used. As per the
methodology, Annual average abnormal return (AAR) and cumulative average
abnormal return (CAAR) were calculated along with the t-statistics for testing
significance. The study covered a ten years period from 2001 to 2010. 219 initial
public offerings made by Indian companies during the period were selected as
sample for the study. The overall result indicated that the issue price was more
than listed price for the Indian IPOs during 2001 to 2010. Even though the AAR
on the first trading day was more than one per cent, in the subsequent days the
price was adjusted by the market. CAAR at the end of the event window (75th
day) stood at -10.7 per cent. The negative CAAR of 68 days out of 75 days were
found to be significant, which strongly indicate the underperformance of Indian
IPOs during the period.
Baluja Garima (2013)7: examined the efficacy of IPO grading mechanism by

using a sample of 50 graded IPOs listed with BSE from 2007 to 2010. The
researcher identified that the IPO grading is not an effective mechanism in
reducing information asymmetry. The One-Way ANOVA result exhibits no
significant difference in listing price performance of the different graded IPOs.
Hence, listing price performance of different graded IPOs varies due to chance
or due to some other factors such as subscription level, Issue size, age of the
firm etc. but it was irrespective of level of grades obtained by IPOs.
6
Ganeshamoorthy, L and Shankar, H(2012): ‘ Over pricing of Initial Public Offerings in India: An Empirical
Analysis’, International Journal of Management Research and Review, vol 2, Issue 9, pp.1455-1463.
7
Baluja Garima(2013) ‘ Comparitive Analysis of listing price performance between different graded IPOs in
India’, Pacific Business Review International, Vol 6, Issue 5, pp.01-07
13
Rakesh H.M (2014)8: The paper proposes to study the behavior of individual
investors in the stock markets and the factors that influence their investment
decisions, which include awareness level, investment duration, etc. The research
was based on the primary data collected from the city of Mysore of 150
respondents, being stock market investors. The research paper observes that
only 10 % of the respondents intended to stay invested in the stock market for a
period of more than 5 years. In other words, the research paper observed that
people do not want to stay committed for a longer period of time into the stock
market despite it giving better returns. The paper analyses that annual income
and annual savings are given importance by investors, but the level of savings
is decided by their level of income. He states that “investors are fully aware of
the stock market and they feel that market movements also affect the investment
pattern of investors in the stock market.”
Puneet Bhusan (2014)9: This research has assessed the financial literacy level
of salaried individuals affects their investment preferences toward financial
products. Primary data had done to collect data using a non-disguised structured
questionnaire. The multistage sampling method is used in collecting data. There
is a total of twelve districts in Himachal Pradesh. These three districts namely
Shimla, Solan and Kangra were selected randomly (first stage). Measure the
level of financial literacy of the respondents using OECD approach in the study.
The financial literacy of an individual affects its awareness regarding financial
products and investment preferences. Due to low financial literacy individuals
prefers traditional financial products.
8
Rakesh H.M (2014), A Study On Individual Investors Behavior In Stock Markets Of India, IJMSS (Vol.02,
Issue-02), ISSN:2321-1784
9
Bhushan, P., (2014).Relationship between Financial Literacy and Investment Behavior of Salaried Individuals.
Journal of Business Management & Social Sciences Research, 5(3), 82-87
14
Nachiket Bhate and Alok Bansal (2015)10: states that personal investing helps
to achieve major emergency funds, buying a real estate later on and better cash
management, personal finance and investment alternatives and retirement plans.
One needs to appoint a better fund manager to ensure stability while managing
risk. People don't consider Insurance and other secured schemes as asset. Hence,
they end up investing into such products with are not able to beat the inflation.
It was concluded that disciplined way of investing and diversification of funds
including Insurance products boost their personal financial planning.
S.Poornima, Aalaa J. Haji,Deepa (2016)11: Initial public offerings are gaining

importance worldwide as an important source of funds for the companies to
accelerate their growth by using the mobilized funds to implement innovative
strategies as well as considered as an important tool for investment since it offers
huge profits on the listing day. In this study the short run performance of the
companies is analysed to understand the anomaly of abnormal returns as well
long-term performance to analyse the performance of the IPOs in the long run.
The period of study is from Jan 2013 – Dec 2014. The sample for the study
includes 9 companies listed in National Stock Exchange of India pertaining to
the study period. The results of this study will throw light on the performance
of the IPO’s which are majorly considered as a speculative tool and hence aid
in better decision making for the investors. The findings will also help conclude
if IPO can be a long-term investment tool or a speculative opportunity to earn
booming profits.
10
Nachiket Bhate and Alok Bansal (2015) Personal Financial Planning: A Review, Altius Shodh Journal of
Management & Commerce, ISSN 2348 - 8891
11
Dr.S.Poornima. (2016). A study on the performance of Initial Public Offering of companies listed in NSE, India
& Gulf Base GCC Index. International Journal of Research in Finance and Marketing.6 (1), 31-46.
15
Garima Baluja, Balwinder Singh (2016)12: In their research paper stated IPO
market has witnessed vast fluctuations in the post SEBI era. Still several new
issues have entered the market during this period, and only a few managed to
survive well. A lot of researchers have verified the aftermarket performance of
such IPOs; however, the phenomenon of IPO's survival has remained a
neglected issue in India. Therefore, the need arises to probe the factors behind
and the success and fiasco of new issues in the market. The purpose of this paper
is to critically analysis the voyage of IPOs in terms of their survival in the
aftermarket.
Patel A (2016)13: “Determinants of Listing Day Performance of IPOs: Study

from Indian Equity Market” carried out a study based on listing day performance
of 80 initial public offerings (IPOs) in India during January, 2011 to June, 2016,
listed on National Stock Exchange (NSE), India. The researchers observed that
on an average, the listing day returns of IPOs were positive. The investigator
performed a sample t-test to check whether or not the average raw
Gowtham Ramkumar (2017)14: In their article “Influences of stock market

factors on investors perception” concluded that whether factors influencing
investor perceptions has a important impact on their investment choices and
which can advantage people dealing in stock exchanges.
12
Garima Baluja, Balwinder Singh. (2016). The survival analysis of initial public offerings in India. Journal of
Advances in Management Research. 13 (1), 23-41.
13
Mehta, D., & Patel, A. (2016). Determinants of listing day performance of IPOs: Study from Indian equity
market. Anvesha, 9(4), 1- 7.
14 Gowtham Ramkumar. (2017). Influence of stock market factors on investment perception. EPRA International
Journal of Economic and Business Review. 5 (1), 38-41.
16
Dhamija, S., & Arora, R. K. (2017)15: in their article entitled “Determinants

of long-run performance of initial public offerings: Evidence from India”
studied the long run performance of 377 initial public offerings (IPOs) made by
Indian companies during the period 2005–2015. The aim of the paper is to
examine if, in the long run, Indian IPOs are underperforming or outperforming
the large market and to identify the key determinants of their long-term success.
The findings indicate that Indian IPOs outperform the general market, preceded
in the long run by considerable under-performance initially. During 2005- 2015,
the IPOs listed on the mainboard yielded an average initial excess return (IERs)
of about 22 percent. Negative IERs were, however, provided by 37 per cent of
the IPOs. The IPOs underperformed the wide industry, producing an abnormal
buy and-hold return of 57.33 percent (BHAR) over 36 months following listing.
Over 36 months holding time, just 38 out of 377 IPOs (10 percent) outperformed
the benchmark index. The type of issuer (government owned or private), lead
manager credibility (LMP), promoter retention and the scale of the issue are the
significant problem characteristics that affect the long-term success of IPOs in
India.
Ashish Kumar Suri and Bhupendra Hada (2018)16: in their paper stated they
considered 107 IPOs launched during the period 2011 to June 2017 on the basis
of two performance indicators i.e., over-subscription and listing day gains. This
study aims at comparing the performance of the IPOs for two periods January
2011-May 2014 and June 2014-June 2017. The results of the study show that
the performance of the IPOs launched during the period 2011-May 2014
significantly differs from the performance of the IPOs which were launched
between June 2014-June 2017. It was also examined that the number of IPOs
and the fundraised through them also differ considerably for the two periods.
15 Dhamija, S., & Arora, R. K. (2017). Determinants of long-run performance of initial public offerings: Evidence
from india. Vision, 21(1), 35-45.
16
Ashish Kumar Suri, Dr.BhupendraHada. (2018), Performance Analysis of Initial Public Offering in India.
BVMSR’s Journal of Management Research, 10 (1), 126-134.
17
Suri A, Hada B (2018)17: in their article entitled “Performance analysis of

initial public offerings in India” examined the performance of 107 IPOs in the
Indian stock market. The time period for the study was between the period 2011
to June 2017. The researchers verified the IPOs on the basis of two main
performance metrics namely the over-subscription ratio of the IPO and the
listing day gains generated by the IPO. The purpose of the study was to compare
between January 2011-May 2014 and June 2014-June 2017 performance of the
IPOs. The study findings indicate that the performance of the IPOs launched
between 2011 and May 2014 was substantially different from the performance
of the IPOs launched between June 2014 and June 2017. It was also investigated
that the number of IPOs and the fund raised from them also varied significantly
for the two years.
Ajay Yadav, Sweta Goel (2019)18: there are several ways of raising funds from
the primary market but, IPOs are the widely adopted tool by the companies to
raise funds from open market for the initial sale of stock by private company.
India being a developing nation with and flourishing corporate network is
focused on IPO. The motivation behind this examination is to understand the
case of under-pricing exists to think about whether or not an Indian IPO and the
impact of the administrative system on IPO under-pricing. In this examination,
enterprise information is broken down by descriptive and comparative methods.
The Indian market has more under-pricing than overpricing.
17
Suri, A. K., & Hada, B. (2018). Performance analysis of initial public offerings in india. BVIMSR’s Journal of
Management Research, 10(1), 126-134. Retrieved from https://lavasalibrary.remotexs.in/ scholarly-
journals/performanceanalysis-initial-public.
18
Ajay Yadav, (2019). Research on Under pricing concept of IPO in Indian stock market. International journal of
innovative technology and exploring engineering.8, 179-183.
18
Aloysius Edward J (2019)19: In this article, the researcher analyzed that the
capital market promotes economic growth by promoting savings and increasing
productivity. One of the major reforms is the primary market including IPOs
started emerging as one of the foremost sources of funds for Indian companies
and also an important opportunity for retail investors to apportion their funds
for higher return. To address one of issue in this paper SEBI has changed the
basis of allotment of IPO to retail investors from pro-rata basis to lottery method
since 2012. Two methods are widely used for an IPO, book building and fixed
price issue. Out of 132 companies raised funds through IPO 14 companies are
taken for study based on its issue size. It is found that the companies which had
listing gain also had current market price gain. The companies which had
substantial oversubscription had both listing and current market price gain.
Tanted N, Mustafa S (2019)20: “A Study of Returns Between IPO Issue Price

and Listing Day Price” (2019) conducted a study to identify the difference in
returns between IPO offered price, listing day opening price, closing price. The
goal of the study was to assist investors to make an investment decision through
the IPO or buy it directly from the secondary market. Data is collected for the
review of all IPOs released over 10 years. The study concluded that the price
offered by the IPO, the open-day listing price and the closing-day listing price
did not vary statistically significantly. The mean value for the open price listing
day was higher than the price provided by the IPO. For the listing day close
price, the mean value was high compared to the listing day open price. For the
listing day closing price, when the price offered by the IPO was high, the mean
value was high.
19
Aloysius Edward J. (2019). A Study on performance of Indian IPO’s during the financial year 2018-19.
International Journal of Advance and Innovative Research. 6, 1-200.
20
Tanted, N., & Mustafa, S. (2019). A study of returns between IPO issue price and listing day price (listing
gains). AAYAM : AKGIM Journal of Management, 9(2), 34-41.
19
CHAPTER 3
INTRODUCTION TO IPO MARKET
The primary market refers to a portion of the capital market wherein companies,
institutions, governments, and other entities attain funds through selling debt
and equity-based securities. When a corporation chooses to go public by raising
an IPO (initial public offering) for the very first time, it is done in the primary
market. The securities are primarily sold for the very first time due to which, a
primary market is also referred to as the NIM (New issue market).
During this IPO, the corporation focuses on selling its shares to the investors
directly in the primary market. This process of boosting the investment capital
through selling new stock to traders through Initial Public Offering is called
underwriting.
On selling these shares, the sales are further purchased and sold by investors in
the secondary market.
Primary Market is a form of the capital market wherein new securities are sold
by the companies for the very first time to the investors, to raise funds and that
is why it is also acknowledged as New Issues Market (NIM).
The process of selling the new securities, in the primary market is

called underwriting, which is performed by a group called as underwriters or
security dealers.
The underwriting service is offered by financial institutions such as investment

banks, insurance companies, etc. The underwriting companies guarantee
payment if there is any loss and accepts the risk which occurs as a consequence
of such guarantee.
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The main function of the primary market is to mobilize the investible money
from the savers to the companies or young entrepreneurs who seek funds to set
up new businesses or expand the existing venture, by issuing securities.
Initial Public Offering [IPO]

Public Issue
PRIMARY MARKET
Further Public Offering [FPO]

Right Issue
Bonus Issue Preferential Allotment
Qualified Institutional
Private Placement
Placement
Institutional Placement
Programme
Table 3.1
3.1 Types of Issue of Securities in Primary Market

There are several types of issue of securities in the primary market which are
discussed as under:
I. Public Issue: Public issue is when a company enters the market, to raise
money from all kinds of investors. The securities offered for sale to the new
investors, so as to become a shareholder in the issuer company, is called
Public Issue.
a) Initial Public Offer: Initial Public Offer or IPO, as the name suggests, is
the fresh issue of equity shares or convertible securities, or exiting shares or
convertible securities by an unlisted company for the very first time i.e., the
shares are not previously traded or offered for sale to the general public. This
is often followed by listing and trading of the company’s securities on the
stock exchange.
21
b) Further Public Offer: Otherwise called a Follow-on offer or FPO, refers

to the fresh issue of securities to the general public made by a company
already listed on the stock exchange, so as to raise additional funds.
II. Right Issue: Right Issue is an offer to the company’s existing shareholders
to buy further new shares of the company at a discount, as a part of the
dividend of pre-emption rights. It helps the firms to raise additional funds,
without going to the public. It invites its existing shareholders to subscribe
for its fresh issue in the proportion of their shareholdings on the record date
in the concern.
III. Bonus Issue: When a company issues fully paid additional shares to the
company’s existing shareholders for free. The issue is made from the
company’s free reserves or securities premium account, in a specific
proportion to the shareholding on a specific record date.
IV. Private Placement: When a company’s stocks or bonds are sold directly to
a selected group of people, say 50 to 200 people, called as private investors
or institutions, instead of offering the same to the general public is called
private placement. Hence, in case of a private placement there are only a
handful of subscribers to the company’s shares. However, it is capable of
raising money, more quickly as compared to offering shares for sale in the
open market.
a) Preferential Allotment: Preferential Issue is one in which the specified

securities are allotted by a listed company to a selected group on a
preferential basis. The issuing company needs to adhere to the provisions
relating to pricing, lock-in period, disclosures, and so on.
b) Qualified Institutional Placement: When a company, which is already

listed in a stock exchange issue shares or debentures or any other kind of
security not including warrants, which are convertible in nature, to QIB, is
called as Qualified Institutional Placement (QIP).
22
c) Institutional Placement Programme: Institution Placement Programme or

IPP implies a further public issue of equity shares by a listed firm or group
of promoters of a listed company, wherein the offer and allocation are made
to Qualified Institutional Buyers only.
Note: Qualified Institutional Buyers includes mutual fund, venture capital

fund, scheduled commercial bank, state industrial development corporation,
national investment fund, insurance fund, provident fund, pension fund, etc.
In a nutshell, Primary Market is a market where new long-term securities are

created and issued to the public for sale through IPO, that helps the company,
public sector institutions and governments to raise funds. These funds are
injected by the company in new projects and also to expand or upgrade the
existing projects.
3.2 Initial Public Offering [IPO]
Initial Public Offer or IPO, as the name suggests, is the fresh issue of equity
shares or convertible securities, or exiting shares or convertible securities by an
unlisted company for the very first time i.e. the shares are not previously traded
or offered for sale to the general public. This is often followed by listing and
trading of the company’s securities on the stock exchange. An initial public
offering (IPO) refers to the process of offering shares of a private corporation to
the public in a new stock issuance. An IPO allows a company to raise capital
from public investors. The transition from a private to a public company can be
an important time for private investors to fully realize gains from their
investment as it typically includes a share premium for current private investors.
Meanwhile, it also allows public investors to participate in the offering.
A corporate may raise capital in the primary market by way of an initial public
offer, rights issue or private placement. An Initial Public Offer (IPO) is the
selling of securities to the public in the primary market. It is the largest source
of funds with long or indefinite maturity for the company.
23
An IPO is an important step in the growth of a business. It provides a company

access to funds through the public capital market. An IPO also greatly increases
the credibility and publicity that a business receives. In many cases, an IPO is
the only way to finance quick growth and expansion. In terms of the economy,
when a large number of IPOs are issued, it is a sign of a healthy stock market
and economy. When the company makes its first IPO to the public, the
relationship is directly between the company and investors, and the money flows
to the Company as its “Share Capital”. Shareholders thus become owners of the
Company through their participation in the Company’s IPO and have ownership
rights over the company. This is the largest source of funds for a company,
which enables the company to create “Fixed Assets” which will be employed in
the course of the business. The shareholders of the Company are free to exit
their investment through the secondary market.
Initial public offering or IPO is the first time a company goes public. When
we say a company has gone public, it means it has offered its shares to the
public at large and is ready to get listed at the stock exchanges of the country.
We have two exchanges: Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE). The first time a company gets listed at BSE, NSE, or both
and offers its shares to be publicly traded the offering is called an IPO.
IPO stands for Initial Public Offering, which is the first sale of the stock by a
private or any government company that opens to the general public. The
company which comes with an IPO can be new, a budding company or an old
company which decides to be listed on an exchange and therefore, goes public.
In an IPO the company can raise equity capital by issuing new shares to the
public or to its existing shareholders without the need of raising any fresh
capital. Overall, going public is a complex decision that requires careful
consideration and planning; though there always remains a threat of public
company’s loss of confidentiality, flexibility, and control etc but if one chooses
the right procedure, an IPO is bound to turn out a success in short as well as long
run, for the issuer company.
A company offering an IPO i.e. “the issuer” is not obliged to repay the capital
to its investors. The issuer of the IPO is assisted by an underwriter or investment
banker.
24
After IPO, the company’s shares are traded in an open market. Those shares can
be further sold by investors through secondary market trading. Any company
“goes public” once they come out with an IPO gets listed in the stock exchange
(in India it will be NSE, BSE & other regional stock exchanges).
An initial public offering (IPO) refers to the process of offering shares of
a private corporation to the public in a new stock issuance. Public share issuance
allows a company to raise capital from public investors. The transition from a
private to a public company can be an important time for private investors to
fully realize gains from their investment as it typically includes share premiums
for current private investors. Meanwhile, it also allows public investors to
participate in the offering.
Important Points
1. An initial public offering (IPO) refers to the process of offering shares of
a private corporation to the public in a new stock issuance.
2. Companies must meet requirements by exchanges and the Securities and
Exchange Commission (SEC) to hold an initial public offering (IPO).
3. IPOs provide companies with an opportunity to obtain capital by offering
shares through the primary market.
4. Companies hire investment banks to market, gauge demand, set the IPO
price and date, and more.
5. An IPO can be seen as an exit strategy for the company’s founders and early
investors, realizing the full profit from their private investment.
25
3.2.1 Need for Initial Public Offering
Once a private company becomes profitable and plans to expand, it needs more
capital to fund its plans. At this juncture, going public becomes the natural
choice to raise equity capital.
Companies file for IPO broadly for the below-mentioned reasons:
1. Being publicly listed, they are able to raise funds from a wider pool of
investors, i.e., the general public.
2. The IPO launch enables and facilitates mergers and acquisitions.
3. The IPO launch helps them gain visibility.
4. An IPO is also an opportunity for early investors of the company to make an
exit.
3.2.2 History of IPO

The term initial public offering (IPO) has been a buzzword on Wall Street and
among investors for decades. The Dutch are credited with conducting the first
modern IPO by offering shares of the Dutch East India Company to the general
public.
Since then, IPOs have been used as a way for companies to raise capital from
public investors through the issuance of public share ownership.
Through the years, IPOs have been known for uptrends and downtrends in
issuance. Individual sectors also experience uptrends and downtrends in
issuance due to innovation and various other economic factors. Tech IPOs
multiplied at the height of the dot-com boom as start-ups without revenues
rushed to list themselves on the stock market.
26
The 2008 financial crisis resulted in a year with the least number of IPOs. After
the recession following the 2008 financial crisis, IPOs ground to a halt, and for
some years after, new listings were rare.
More recently, much of the IPO buzz has moved to a focus on so-
called unicorns—startup companies that have reached private valuations of
more than $1 billion. Investors and the media heavily speculate on these
companies and their decision to go public via an IPO or stay private.
3.2.3 Working of Initial Public Offering [IPO]
Prior to an IPO, a company is considered private. As a private company, the

business has grown with a relatively small number of shareholders including
early investors like the founders, family, and friends along with professional
investors such as venture capitalists or angel investors.
When a company reaches a stage in its growth process where it believes it is
mature enough for the rigors of SEC regulations along with the benefits and
responsibilities to public shareholders, it will begin to advertise its interest in
going public.
Typically, this stage of growth will occur when a company has reached a private
valuation of approximately $1 billion, also known as unicorn status. However,
private companies at various valuations with strong fundamentals and proven
profitability potential can also qualify for an IPO, depending on the market
competition and their ability to meet listing requirements.
An IPO is a big step for a company as it provides the company with access to
raising a lot of money. This gives the company a greater ability to grow and
expand. The increased transparency and share listing credibility can also be a
factor in helping it obtain better terms when seeking borrowed funds as well.
The proceeds from the sale of shares/stocks during the IPO, provides the issuing
company with capital & fund growth. The amount of cost and time involved in
its process is immense.
27
The whole process of issuing the first capital to public is carried by

an underwriter which aids the issuing company by soliciting potential investors
to settle on the price at which the stock should be offered to investors. IPO shares
of a company are priced through underwriting due diligence. When a company
goes public, the previously owned private share ownership converts to public
ownership, and the existing private shareholders’ shares become worth the
public trading price.
Share underwriting can also include special provisions for private to public
share ownership. Generally, the transition from private to public is a key time
for private investors to cash in and earn the returns they were expecting. Private
shareholders may hold onto their shares in the public market or sell a portion or
all of them for gains.
Following the IPO, shares trade between buyers and sellers on the open market,
whereby the underlying company receives no compensation. Meanwhile, the
public market opens up a huge opportunity for millions of investors to buy
shares in the company and contribute capital to a company’s shareholders'
equity. The public consists of any individual or institutional investor who is
interested in investing in the company.
Overall, the number of shares the company sells and the price for which shares
sell are the generating factors for the company’s new shareholders' equity value.
Shareholders' equity still represents shares owned by investors when it is both
private and public, but with an IPO the shareholders' equity increases
significantly with cash from the primary issuance.
3.2.4 Advantages of Initial Public Offering [IPO]
1. Fundraising
The most often cited advantage of an initial public offering is money. In 2016,
the median proceeds received from an initial public offering were $94.5 million,
and many offerings bring in hundreds of millions of dollars. For example, in
2016, the largest IPO—ZTO Express—netted $1.4 billion. The proceeds from
28
an IPO provide ample justification for many companies to go public even

without looking at the other benefits, especially considering the many
investment opportunities available because of the new capital. These funds can
benefit a growing company in countless ways. Companies may use an initial
public offering to finance research and development, hire new employees, build
buildings, reduce debt, fund capital expenditure, acquire new technology or
other companies, or to bankroll any number of other possibilities. The money
provided by an IPO is significant, and can transform the growth trajectory of a
company.
2. Exit Opportunity
Every company has stakeholders who have contributed significant amounts of
time, money, and resources with the hopes of creating a successful company.
These founders and investors often go for years without seeing any significant
financial return on their contributions. An initial public offering is a significant
exit opportunity for stakeholders, whereby they can potentially receive massive
amounts of money, or, at the very least, liquefy the capital they currently have
tied up in the company. As stated in the previous paragraph, initial public
offerings often raise nearly $100 million (or even more), which makes them very
attractive to founders and investors who often feel that it is time to receive
financial compensation for years of “sweat equity.” It is, however, important to
note that in order for founders and investors to receive liquidity from an IPO,
they will have to sell their shares of the now-public company on a secondary
exchange (e.g., New York Stock Exchange). Shareholders do not immediately
receive liquidity from the proceeds of an IPO.
3. Publicity and Credibility

If a company hopes to continue to grow, it will need increased exposure to
potential customers who know about and trust its products; an IPO can provide
this exposure as it thrusts a company into the public spotlight. Analysts around
the world report on every initial public offering in order to help their clients
know whether to invest, and many news agencies bring attention to different
companies that are going public. Not only do companies receive a great deal of
29
attention when they decide to go public, but they also receive credibility. To
complete an offering, a company must go through intense scrutiny to ensure
what they are reporting about themselves is correct. This scrutiny, combined
with many individuals’ tendencies to trust public companies more, can lead to
increased credibility for a company and its products.
4. Reduced Overall Cost of Capital

A major obstacle for any company, but especially younger private companies,
is their cost of capital. Before an IPO, companies often have to pay higher
interest rates to receive loans from banks or give up ownership to receive funds
from investors. An IPO can lessen the difficulty of receiving additional capital
significantly. Before a company can even begin its formal IPO preparation
process, it must be audited according to PCAOB standards; this audit is
normally more scrutinizing than any prior audits, and fosters greater confidence
that what a company is reporting is accurate. This increased assurance will
likely result in lower interest rates on loans received from banks, as the company
is perceived as being less risky. On top of lower interest rates, once a company
is public, it can raise additional capital through subsequent offerings on the stock
exchange, which is usually easier than raising capital through a private funding
round.
5. Stock as a Means of Payment

Being a public company also allows for the use of publicly traded stock as a
means of payment. While a private company has the ability to use its stock as a
form of payment, private stock is only valuable if a favourable exit opportunity
arises. Public stock, on the other hand, is essentially a form of currency that can
be bought and sold at a market price at any moment, which can be helpful when
compensating employees and acquiring other businesses. For a company to
thrive, it must hire the right employees. The ability to pay employees with stock
or offer stock options allows a company to be competitive when trying to hire
top-tier talent, even if the base monetary salary is lower than what competitors
are offering. Additionally, acquisitions are often an important way for
companies to continue to grow and stay relevant. However, acquiring other
30
companies is normally very expensive. When a company is public, it has the

option to issue shares of its stock as a means of payment, rather than using
millions of dollars of cash.
3.2.5 Disadvantages of Initial Public Offering [IPO]
1. Additional Regulatory Requirements and Disclosures

Unlike private companies, public companies are required to file their financial
statements with the Securities and Exchange Commission (SEC) every year.
These financial statements must be prepared in accordance with United States
Generally Accepted Accounting Principles and audited by a certified public
accounting firm. These SEC regulations are both burdensome and costly.
Reporting a company’s financial position publicly requires that company to
establish more stringent financial controls, staff a financial reporting team and
audit committee, implement quarterly and yearly financial close processes, hire
an audit firm, and complete hundreds of other tasks. These responsibilities cost
public companies millions of dollars every year and require thousands of labour
hours. For more information about public company audits see our article Audit
prep for the Big Leagues.
2. Market Pressures
Market pressures can be very difficult for company leadership who are used to
doing what they feel is best for the company. Founders tend to have a long-term
view, with a vision of what their company will look like years from the present
and how it will impact the world. The stock market, on the other hand, has a
very short-term, profit-driven view. Once a company is public, its every move
is scrutinized by investors and analysts around the world, who are generally
interested in one question: “Will this company meet its quarterly earnings
target?” If a company meets its target, its stock price will normally increase; if
not, its stock price will normally decrease. Even if leadership is doing what is
best for the company in the long-run, failing to meet the public’s short-term
goals may cause the company to lose value and the leadership might be replaced
31
as a result. Founders who do not like the idea of being constrained by short-term
public goals should think carefully about going public.
3. Potential Loss of Control

One major disadvantage of an IPO is founders may lose control of their
company. While there are ways to ensure founders retain the majority of the
decision-making power in the company, once a company is public, the
leadership needs to keep the public happy, even if other shareholders do not
have voting power. Going public means receiving considerable amounts of
money from public shareholders. Since shareholders have given the company
so much money, they expect the company to act in their best interest, even if it
means going in a direction the founder’s dislike. If shareholders feel the
company is not operating in a way that will help them make money, they will
force the company, through shareholder votes or public criticism, to appoint new
leadership.
4. Transaction Costs
Initial public offerings are expensive. Beyond the recurring expenses of public
company regulatory compliance, the IPO transaction process comes at a hefty
cost. The largest cost of a public offering is underwriter fees. Underwriters will
typically charge between 5% and 7% of the gross proceeds, which means the
underwriter’s discount can cost up to $7 million on an average IPO. On top of
underwriter fees, companies who raise an average amount of proceeds (approx.
$100 million) should expect to spend about $1.5 – 2 million in legal fees, $1
million on auditor fees, and $500,000 on registration and printing fees. The
transaction costs will be even higher if a company chooses to hire a financial
reporting advisor6, or other specialty groups.
Thus, to conclude IPO which is also termed as ‘stock market launch’ is public
offering of company’s stock for the first time. The issuer company selling shares
is never required to repay the capital to public investors. IPOs are out generally
to raise the capital for expansion, to monetize investments, and to become
publicly traded enterprise.
32
3.2.6 Applying for an IPO: The Process
An IPO comprehensively consists of two parts. The first is the pre-marketing

phase of the offering, while the second is the initial public offering itself. When
a company is interested in an IPO, it will advertise to underwriters by soliciting
private bids or it can also make a public statement to generate interest.
The underwriters lead the IPO process and are chosen by the company. A
company may choose one or several underwriters to manage different parts of
the IPO process collaboratively. The underwriters are involved in every aspect
of the IPO due diligence, document preparation, filing, marketing, and issuance.
Applying for an IPO: The Process [Company’s perspective]
Step 1: Hiring of An Underwriter or Investment Bank
To start the initial public offering process, the company will take the help of
financial experts, like investment banks. The underwriters assure the company
about the capital being raised and act as intermediaries between the company
and its investors. The experts will also study the crucial financial parameters of
the company and sign an underwriting agreement. The underwriting agreement
will usually have the following components:
1. Details of the deal

2. Amount to be raised
3. Details of securities being issued
Step 2: Registration For IPO
This IPO step involves the preparation of a registration statement along with the
draft prospectus, also known as Red Herring Prospectus (RHP). Submission of
RHP is mandatory, as per the Companies Act. This document comprises all the
compulsory disclosures as per the SEBI and Companies Act. Here’s a look at
the key components of RHP:
Definitions: It contains the definitions of the industry-specific terms.
33
1. Risk Factors: This section discloses the possibilities that could impact a
company’s finances.
2. Use of Proceeds: This section discloses how the money raised from
investors will be used.
3. Industry Description: This section details the working of the company in
the overall industry segment. For instance, if the company belongs to the IT
segment, the section will provide forecasts and predictions about the
segment.
4. Business Description: This section will detail the core business activities
of the company.
5. Management: This section provides information about key management
personnel.
6. Financial Description: This section comprises financial statements along
with the auditor's report.
7. Legal and Other Information: This section details the litigation against the
company along with miscellaneous information.
This document has to be submitted to the registrar of companies, three days

before the offer opens to the public for bidding. Alongside, the submitted
registration statement has to be compliant with the SEC rules. Post-submission,
the company can make an application for an IPO to SEBI.
Step 3: Verification by SEBI
Market regulator, SEBI then verifies the disclosure of facts by the company. If
the application is approved, the company can announce a date for its IPO.
Step 4: Making an Application To The Stock Exchange
The company now has to make an application to the stock exchange for floating
its initial issue.
34
Step 5: Creating a Buzz by Roadshows
Before an IPO opens to the public, the company endeavours to create a buzz in
the market by roadshows. Over a period of two weeks, the executives and staff
of the company will advertise the impending IPO across the country. This is
basically a marketing and advertising tactic to attract potential investors. The
key highlights of the company are shared with various people, including
business analysts and fund managers. The executives adopt various user-
friendly measures, like Question-and-Answer sessions, multimedia
presentations, group meetings, online virtual roadshows, and so on.
Step 6: Pricing of IPO
The company can now initiate pricing of IPO either through Fixed Price IPO or
by Book Binding Offering. In the case of Fixed Price Offering, the price of the
company’s stocks is announced in advance. In the event of Book Binding
Offering, a price range of 20% is announced, following which investors can
place their bids within the price bracket. For the bidding process, the investors
have to place their bids as per the company’s quoted Lot price, which is the
minimum number of shares to be purchased. Alongside, the company also
provides for IPO Floor Price, which is the minimum bid price and IPO Cap
Price, which is the highest bidding price. The booking is typically open from
three to five working days and investors can avail the opportunity of revising
their bids within the stipulated time. After completion of the bidding process,
the company will determine the Cut-Off price, which is the final price at which
the issue will be sold.
Step 7: Allotment of Shares
Once the IPO price is finalised, the company along with the underwriters will
determine the number of shares to be allotted to each investor. In the case of
35
over-subscription, partial allotments will be made. The IPO stocks are usually
allotted to the bidders within 10 working days of the last bidding date.
3.2.7 Other Factors that the Company Considers Before the Initial Public
Offering Process is Completed
Yes, any company will endeavour to prevent company insiders or internal

investors from participating in the IPO process. Remember, company insiders
trading in their own shares can disrupt the demand and supply balance. Not only
does this measure protect retail investors from manipulated offer prices but also
prevents fraudulent company officials to F.O.B off overpriced stocks at the
expense of general investors. This measure also helps to fend off additional
selling pressure from inside, and thus sustain the market price of shares.
Now that you know the IPO process steps and its importance, you can make
informed decisions to invest in IPOs. Also, have a look at India
Infoline upcoming IPO calendar to aid your understanding on IPO. To make
prudent investment decisions, you will be invariably required to do a lot of
legwork. This includes selecting a trusted and reliable financial partner. You
must select a stockbroking firm providing multiple benefits such as smooth
trading platforms, an all-in-one account to trade in all investment options,
zero Demat account opening and AMC charges, award-winning research, and
so on.
36
CHAPTER 4
APPLYING FOR AN IPO
1.1 Requirement before applying for an IPO
1. Demat Account- It is essential to have a Demat account to invest in IPOs.

This is where your shares will be stored after allotment.
2. Trading Account- It is mandatory to have a trading account before applying
for an IPO online. You can open a trading account with any SEBI certified
Depository Participant.
3. UPI Id- You can either use an existing UPI Id linked to your bank account
or create a UPI Id at the BHIM app.
4. Bank Account- You need a bank account to pay the shares applied. Earlier,
the amount bid for the shares was debited from the bank account. Later,
depending on the number of shares allotted, the remaining amount would be
credited; this was time-consuming. So, SEBI formulated ASBA or
Application Supported by Blocked Amounts to simplify the payment
procedure. Via ASBA, a certain amount of money is blocked depending on
the number of shares you bid for. After the allotment, cash is debited from
your bank, and if you get fewer shares than you bid for, then the rest of the
amount is unblocked.
4.2 Eligibility norms required to invest in an IPO
Any individual who is an adult and is capable of entering into a legal contract
can serve the eligibility norms to apply in the IPO of a company. However, there
are some other inevitable norms an investor needs to meet.
37
The eligibility criteria are as follows:
1. It is required that the investor interested in buying a share in an IPO has a

PAN card issued by the Income Tax department of the country.
2. One also needs to have a valid Demat account.
3. It is not required to have a trading account, a Demat account serves the
purpose. However, in case an investor sells the stocks on listings, he will
need a trading account.
It is often advised to open a trading account along with the Demat account when
an investor is looking forward to investing in an IPO for the first time.
4.3 Step-wise process to invest in an IPO
Step 1: Log into the trading app or mobile application of the broker.
Step 2: Go to the ongoing IPO section.
Step 3: Select investor type and the IPO.
Step 4: Enter the number of shares and bid price.
Step 5: Also enter the UPI ID.
Step 6: Once the application is submitted, the request is sent on the UPI
application for approval.
Step 7: Log into the UPI application and accept the mandate request. Once it is
accepted, the amount for the IPO is blocked.
Note: The whole amount will be debited if the applicant is allotted all the shares
he has applied for. If only some shares have been allocated to the bidder, only a
part of the money will be debited and the remaining amount will be unblocked.
The entire amount will be unblocked if no shares have been allotted.
38
4.4 IPO Associated Terms
1. Price band
This refers to the price range within which investors can bid for the company
stock for the first time. The spread between the floor of the price band and its
cap, should not be more than 20% according to SEBI regulations.
2. Abridged Prospectus
A condensed version of the IPO prospectus that contains all the salient features
of the main prospectus. Under the Companies Act of 1956, every IPO
application form should be accompanied by the abridged prospectus.
3. Draft Red Herring Prospectus (DRHP)
The draft prospectus submitted by the company to Securities Exchange Board

of India (SEBI) at least 21 days before the IPO. SEBI reviews the prospectus
and requests changes during these 21 days. The general public can also submit
their comments to SEBI during this period.
4. Red Herring Prospectus
The final prospectus filed by the company with the Registrar of Companies
(ROC) before launching the IPO. It contains all the information that investors
need about the company and the IPO, including the company’s business
description, management credentials, operating details, future strategy, IPO
price band, the intended use of the proceeds, and the IPO calendar. The
prospectus is also known as the offer document.
39
5. Book Building Process
The process of deciding the issue price for an IPO based on the prices bid by
investors. The issue price will be closer to the upper end of the price band if
investors have shown strong interest in the IPO and bid high. Otherwise, it will
be closer to the lower end of the band.
For example, if the price band for an IPO is Rs. 100-110 per share, the issue
price would be set closer to Rs. 110 if investors have bid high. If investors have
bid low, the issue price would be set closer to Rs. 100.
6. Offer Date
This is the first date when you can apply for shares in an IPO. It is also known
as the opening date of an IPO.
7. Lot size
The minimum number of shares you can bid for in an IPO. If you want to bid
for more shares, it has to be in multiples of the lots size. For example, if the lot
size for an IPO is 1500 shares, you have to bid for at least these many. If you
want to bid for more, it should be in multiples of 1500, such as 3000 and 4,500.
8. Floor Price
The minimum price per share that you can bid when applying for an IPO is
called the Floor Price. In case of IPOs with a price band, this is the lower limit
of the price band.
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9. Issue Price
The price at which shares are allotted to investors once the book building
process is over. The issue price is different for each investor category and is
generally the lowest for retail investors. It is also called offer price at times.
10. Cut-off Price
This is the lowest issue price at which shares are allotted in an IPO. It is
generally reserved for retail investors. If your bidding price is higher than the
cut-off price, the difference will be refunded to you.
11. Oversubscribed
An IPO is oversubscribed if investors have bid for more shares than offered by
the company.
12. Oversubscription
The excess subscription amount received by the company in case of an

oversubscribed IPO is called oversubscription. An IPO is oversubscribed if the
bids received are more than the number of shares on offer.
13. Under subscription
An IPO is undersubscribed if the bids received are less than the number of shares
offered.
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14. Listing Date
This is the date on which IPO shares start trading on the stock exchange. You
can sell the shares you received in the IPO and buy the company’s shares if you
don’t receive them in the IPO.
15. The Bottomline
IPO can appear to be a very complicated process first up. But that is only
because of its many technicalities. It is quite simple to understand once you are
aware of some key IPO terms. This IPO glossary will help you master these
terms and make the most out of IPOs.
16. Merchant banker
The merchant banker performs the due diligence to prepare the offer document
(or DRHP), which contains all the details about the company. The merchant
banker for the IPO is also responsible for ensuring legal compliance in the entire
issue process and for marketing of the issue.
17. Bankers to the issue
Bankers to the issue enable the movement of funds in the issue process and
therefore, enable the registrars to finalise the basis of allotment by making clear
the status of funds available to the registrars.
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18. Registrars to the issue
They are involved in finalising the basis of allotment in an issue and for sending
refunds, allotment details, etc.
19. Underwriters
These are intermediaries, who undertake to subscribe to the securities offered

by the company, if it is not fully subscribed by the public.
20. Green-shoe option
This green-shoe option enables the issuer company to release additional shares
in the event of oversubscription. Provisions about this are mentioned in the
underwriting agreement.
21.
21. Non-Institutional Investor
There are different categories under which an investor can apply for shares in
an IPO. The non-institutional investor or NII includes eligible resident Indian
individuals, non-resident Indians (NRIs), Hindu Undivided Families (HUFs),
corporate bodies, companies, trusts, science institutions, and societies. NIIs
can invest more than Rs.2 lakh in the IPO and can withdraw their bids until
allotment. They are NOT allowed to bid at the cut-off price. Around 15% of
the IPO is reserved for NIIs.
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22. Qualified Institutional Buyer (QIB)
The qualified institutional buyer or QIB category of investors includes Mutual

funds, public financial institutions, foreign portfolio investors, and
commercial banks, etc. QIBs are not allowed to bid at the cut-off price or
withdraw the bid after the close of the IPO. Further, nearly 50% of shares of
the total issue size in a book building IPO is reserved for QIBs.
23. Retail Individual Investor (RII)
The retail individual investor or RII category of investors includes resident

Indian individuals, non-resident Indians (NRIs), and Hindu Undivided
Families (HUFs). RIIs are not permitted to invest more than Rs.2 lakh in an
IPO and can withdraw their bids until allotment. Further, they can bid at the
cut-off price. Also, 35% of shares of the total issue size in a book building
IPO is reserved for RIIs.
24. Anchor Investor
There are various categories of investors that can apply for shares in an IPO.
One such category is a Qualified Institutional Buyer or QIB that includes
commercial banks, public financial institutions, mutual funds, foreign
portfolio investors, etc. 50% of the offer size is reserved for QIBs.
Under this category, there is a sub-category called Anchor Investors who

apply for shares worth Rs.10 crore or more in the IPO. In the QIB category,
60% of the shares are reserved for Anchor.
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25. GREY MARKET
For many individuals living in this colourful world, for them, Black and white
are two ends of the same paradigm, with black conveying all that is wrong
and white standing for all that is pure and correct. But when you come out of
the imaginary world, “only” Black or white life is impossible. Thus, at some
point, we adopt a middle path, the grey.
Similarly, even the stock market has more colours like black, white, green and
red and even grey. But, in this scenario, the meaning is quite different. Let’s
dig in deep and understand the grey market terms, its working and more.
A. What is Grey Market IPO?
Grey Market IPO is an unofficial market where individuals buy/sell IPO

shares or applications before they are officially launched for trading on the
stock exchange. As it is an unofficial over-the-counter market, there are no
regulations around it. All transactions are done in cash on a personal basis.
Any 3rd party firms like SEBI, Stock Exchange or Brokers are not involved
or back this transaction.
Grey market trading is done among the small set of people as there is no
official platform or rules defined for these trading. Two popular terms used in
the IPO grey market are ‘Grey Market Premium' and ‘Kostak'.
B. What is Grey Market Premium?
Grey market premium (GPM) tells you the price at which IPO shares are being
traded in Grey Market, before they get listed on the Stock Exchange. GMP
can be in Positive or Negative based on the demand and supply of stocks.
45
The GPM reflects how the IPO might react on a listing day. For instance, if
the company introduces an IPO or Rs.100 and the grey market premium is
around Rs.20 then we can assume the IPO to list around 120 rupees on listing
day. There is no reliability but, in most cases, the GMP works properly and
IPO list around the given price.
C. What are Kostak rates?
The Kostak rate is the amount where the individual pays for the IPO
application before the IPO listing. One can buy and sell their full IPO
application on Kostak rates outside the market and fix their profit. The Kostak
rates apply in every condition you get the allotment. For instance, if one did
5 applications for one IPO and sold the same at Rs.2500 per application it
means that the individual secured the IPO profit at Rs 12500. However, if he
gets the allotment in 2 applications still his profit will be the same. Further, if
he/she sells the stock which he earned and gets the profit around 25000 then
he or she needs to give the remaining profit to the guy who bought the
application.
D. Is Grey Market a part of the IPO market?
The grey market is an unofficial market, whereas the IPO market is an official
recognized medium of raising funds in the market under SEBI regulation. The
IPO market and the IPO grey market do not have any official connection.
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E. Is it Legal?
It is an Unofficial Market and is not regulated by SEBI. Trades are facilitated

by dealers on cash basis and happen among a closed trusted group of
investors.
F. How does GMP work?
What if someone says GMP is at ₹ 200
IPO issue price + GMP
IPO Issue Price ₹ 440 per share
(+) Grey Market Premium ₹ 200 per share
Possible Listing ₹ 640 per share
G. Who decides the GMP?
Just like stock market or commodity market trading, IPO GMP are decided
on the basis of demand and Supply
1. More Buyers, GMP goes up

2. More Sellers, GMP goes down
There is no guarantee but, in most cases, IPO lists around the GMP Price.
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H. Trading IPO Application
One can also trade IPO Application on the Grey Market. Buyer bids for the
IPO Application from a seller, at a premium price, called, Kostak. If the seller
gets allotment for the IPO, he transfers the shares to the buyer, removing the
risk of any loss.
I. What if the seller does not get the allotment?
In ‘Subject to Sauda’ deal, buyer and seller agree that deal is only valid if the
seller gets the allotment. If the seller doesn’t get any shares in IPO process,
the deal is considered void.
J. How does the grey market benefits companies?
Companies that decide to launch an IPO decide to first test the waters in the
Grey Market. They do so for various reasons such as to check the demand for
the IPO or to understand what the IPO valuation should be
4.5 Tips to invest in an IPO
While IPOs provide investors with great options to multiply their money, a great
deal of care and diligence has to be applied, to make the most of this financial
tool.
Since there is no historical data available in the public domain about a company
that has set out to launch an IPO, it might be hard to gauge the financial health
and stability of the company. This could impact your chances of profit-making
in an IPO investment.
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The red-herring prospectus of the company released at the time of the IPO
launch, is your only way to have an understanding about the company and its
financials. Make sure you study the IPO DRHP carefully. Also track all news
about the company and its past performance.
Your profit-generating potential is directly related to the company’s

performance. Hence, it is essential to ensure that the company’s prospects are
promising.
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CHAPTER 5
GROWTH AND DEVELOPMENT OF IPO MARKET IN
INDIA
5.1 No. of IPOs launched in India during the Years 2010 – 2022 [Feb 2022]
Number of Amount Raised Successful Failed

Year
IPOs (Rs Cr) IPOs IPOs
2022 3 7,429 3 0
2021 63 1,19,882 63 0
2020 16 26,628 15 1
2019 16 12,687 16 0
2018 25 31,731 24 1
2017 38 75,279 38 0
2016 27 26,501 26 1
2015 21 13,513 21 0
2014 7 1,201 5 2
2013 5 1,284 3 2
2012 13 6,834 11 2
2011 40 5,977 37 3
2010 66 36,362 64 2
Table 5.1
Number of IPOs
70
60
50
40
30
20
10
0
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
Chart 5.1
50
5.2 An overview of the IPOs listed in the Indian Market from the Year 2010
to 2020
The entire decade from 2010 to 2020 has been a roller coaster ride for the Indian
stock market especially the Year 2020. The market has been impacted adversely
due to Covid 19 but the IPOs launched in the year 2020 came through inspite of
the Market conditions.
1. YEAR 2020
The year 2020 has been a very bizarre year for humanity. Even when we look
back at the year being plagued by COVID-19 it still confuses many even from
a financial perspective. The Indian GDP hitting all-time lows, unemployment at
an all-time high, companies struggling to function normally, yet despite all this,
the stock markets have touched an all-time high. The cherry on top being the
successful IPO’s of 2020. Today we look back at the IPO’s of 2020 and their
performance in the market.
When the severity of the pandemic was first realized governments all around the
world began to go into damage control. The measures started off with flight
restrictions being imposed and eventually harsh complete lockdown. This set of
panic selling in the market with many investors being caught off guard. Equity
markets in the US, Europe, and Asia plunged to their lowest in over a decade.
The BSE Sensex Index which tracks the 30 largest and most actively traded
stocks listed on its exchange in India plummeted to its lowest in 3.3 years.
The year began with some exiting IPO’s with the likes of SBI Cards in March
but the fallout due to the virus made it seem as if the year would be extremely
dry for IPO’s. This put companies in a tough situation where they were faced
with one of the most challenging years and on top of that the markets seemed
unresponsive. This almost cut of raising funds through equities a favourable
source of funds in comparison to debt.
The year 2020 began on a robust note with the SBI Cards mega IPO. The issue
was heavily oversubscribed and had a stellar listing on the bourses. However,
just after the listing, the pandemic spread leading to the lockdown. If you look
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back at the IPOs in 2020, they appear to have flattered the street in terms of
oversubscription, listing gains as well as post-listing performance. The table
below captures the gist of IPOs in 2020.
Issue Details Subscription Price

Issue
Listing Listing
Date IPO Name Size QIB HNI RII Total Issue
Open Gains %
(in crs)
24.12.2020 Bectors Food 540.54 176.85 621 29.3 198 288 501 106.79
14.12.2020 Restaurant Bran 796.5 86.64 354 68.2 156.7 60 115.35 130.67
20.11.2020 Gland 6479.55 6.4 0.51 0.24 2.06 1500 1710 21.36
02.11.2020 Equitas Bank 517.6 3.91 0.22 2.08 1.95 33 31 -0.76
12.10.2020 UTI AMC 2159.88 3.34 0.93 2.32 2.31 554 476.2 -13.97
12.10.2020 Mazagon Dock 443.69 89.71 679 35.6 157.4 145 216.25 19.31
05.10.2020 Angel One 600 5.74 0.69 4.31 3.94 306 275 -9.85
01.10.2020 CAMS 2244.33 73.18 112 5.55 46.99 1230 1535 13.95
01.10.2020 Chemcon Special 318 113.54 449 41.2 149.3 340 731 72
21.09.2020 Route 600 89.76 193 12.7 73.3 350 708 86.03
17.09.2020 Happiest Minds 702.02 77.43 352 70.9 151 166 351 123.49
23.07.2020 Rossari 496.25 2.75 4.34 2.51 2.97 425 670 74.67
16.03.2020 SBI Card 10286.2 57.18 45.2 2.5 26.54 755 658 -9.51
Table 5.2
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Four takeaways from the Initial Public Offering [IPO] - 2020 story
a) The IPO market is showing preference for emerging business ideas with a
futuristic tweak. If you look at IPOs with heavy oversubscription and exciting
market performance; most of them are from high-growth sectors. For example,
stocks like Rossari Biotech and Chemcon are into specialty chemicals with a
strong pharma focus. Happiest Minds and Route Mobile are digital technology
plays where the value creation could be exponential.
b) IPO markets have been rather sceptical about the financial sector stocks or
where there are larger group issues. For example, Angel Broking and UTI AMC
just about managed to get oversubscribed. SBI Cards and CAMS got good
oversubscription but post-listing performance has been tepid.
c) The enthusiasm was visible in the case of stocks with solid business models
and reasonable pricing. For example, Mazagon Docks IPO was available at less
than 7 times P/E ratio although the company has an order book position of over
Rs50,000cr. On the contrary, in the case of Angel Broking and Likhitha
Infrastructure, investors had serious concerns over valuations. This is more
pronounced considering that these companies are likely to face pressure on not
only the top line but also the bottom line.
d) There appears to be an element of secondary market boredom setting into the

markets. Over the last 6 months, the secondary market has been driven by a
handful of stocks like Reliance, Infosys and TCS. That has only made these
stocks more steeply priced on the strength of the relentless flow of liquidity.
Under these circumstances, IPOs that are reasonably priced and well positioned
in businesses with exponential growth potential offer a very good alternative.
That possibly best explains the IPO enthusiasm this year.
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2. YEAR 2019

Issue
Size Listing Listing
Date IPO Name QIB HNI RII Total Issue
(in Open Gains %
crores)
04.12.2019 CSB Bank 409.68 38.85 45.5 9.01 35.24 195 275 53.9
14.10.2019 IRCTC 635.04 108.79 355 14.9 112 320 644 -54.46
20.08.2019 Sterling Wilson 3125 1.02 0.89 0.3 0.85 780 700 -7.01
04.07.2019 Indiamart Inter 474.12 30.83 62.1 14.1 36.21 973 1180 33.87
08.05.2019 Neogen 131.48 30.49 114 16.1 41.18 0 251 0
15.04.2019 Metropolis 1200.18 8.88 3.03 2.21 5.84 880 960 9.04
11.04.2019 Rail Vikas 430.88 1.36 0.8 2.92 1.82 19 19 0.26
01.04.2019 Embassy Office 4750 2.15 3.09 0.31 2.57 300 300 4.7
29.03.2019 MSTC 213.81 1.13 2.15 2.95 1.46 128 111 -10.78
07.02.2019 Chalet Hotels 1628.84 4.66 1.1 0.03 1.57 280 291 3.71
04.02.2019 Xelpmoc Design 23 1.24 7.69 2.64 3.25 66 56 -10.91
Table 5.3
Indian initial public offerings tumbled to a 4-year low by value in 2019 as the
economy slowed, but some analysts are hoping for better in 2020 on the back of
potential government reforms likely to boost stock markets.
Financials and industrial sectors led the declines in IPO issues, with proceeds
more than halving. “Because of different types of disruptions, such as corporate
failures and bankruptcies, things have slowed down considerably.
Funds raised by Indian IPOs fell to just $2.8 billion this year, the lowest in four
years, according to data from Refinitiv. In 2017, the proceeds hit a record $11.7
billion before falling to $5.5 billion in 2018. “2019 has been the worst year from
an IPO market perspective,” said Sandip Khetan, a partner at consultancy EY.
Many of this year’s IPOs have performed well, boosting the outlook for more
issues next year. Shares of Indian Railway Catering and Tourism Corp Ltd
(INIR.NS), marketing and advertising firm Affle (India) (AFFL.NS), and e-
commerce company Indiamart Intermesh (INMR.NS) have doubled in value
from their issues prices. The S&P BSE IPO index. BSEIPO, which measures
the performance of companies listed at the Bombay Stock Exchange after the
54
completion of their IPOs, has surged 34% this year, outperforming broader
indexes such as NSE Nifty 50 and BSE Sensex.
A clutch of Indian stocks bettered global rivals in 2019 though domestic indices
underperformed EM peers. SBI Life, HDFC Life and Bajaj Finserv were among
top 10 firms globally, based on stock performance.
3. YEAR 2018

Issue
Listing
Size Listing
Date IPO Name QIB HNI RII Total Issue Gains
(in Open
%
crores)
30.07.2018 TCNS Clothing C 1121.98 13.47 5.08 0.67 5.27 716 715 -8.13
02.07.2018 RITES 453.6 71.72 195 15.7 67.24 185 190 -8.02
02.07.2018 Fine Organics 597.87 12.86 21 1.62 8.99 783 815 5.08
21.05.2018 Indostar Capita 1844 16.08 6.91 1.48 6.8 572 600.6 2.36
05.04.2018 ICICI Securitie 4016 0.54 0.05 0.39 0.36 520 435 -14.44
04.04.2018 Mishra Dhatu Ni 438.38 1.96 0.12 0.72 1.21 0 93.1 0
28.03.2018 Hindustan Aeron 4229 1.73 0.03 0.39 0.99 1215 1159 -7.13
27.03.2018 Bandhan Bank 4473 38.67 13.9 1.2 14.63 375 485 27.25
23.03.2018 Bharat Dynamics 960.94 1.5 0.5 1.41 1.3 428 360 -8.71
09.03.2018 HG Infra Engg 457.7 8.37 4.97 3.08 4.98 270 270 0.02
26.02.2018 Aster DM Health 980.14 2.1 0.55 1.18 1.31 190 182 -5.34
08.02.2018 Galaxy Surfacta 937.09 54.67 6.96 6 20 1480 1525 14.74
30.01.2018 Amber Enterpris 600 174.99 519 11.7 165.4 859 1175 44.03
29.01.2018 Newgen Software 424.62 15.62 5.52 5.18 8.25 245 256 3.27
22.01.2018 Apollo Micro Sy 156 101.93 958 40.2 248.5 275 478 65.13
Table 5.4
As compared to a high point reached in 2017, the number of IPOs has been on
a decline in 2018. This is a consequence of several factors that have dampened
investor interest in the primary capital markets
55
4. YEAR 2017

Issue
Listing
Size Listing
Date IPO Name QIB HNI RII Total Issue Gains
(in Open
%
crores)
15.12.2017 Shalby 504.8 4.34 0.42 2.98 2.82 248 237 -3.53
17.11.2017 HDFC Life 8695.01 16.6 2.29 0.9 4.89 290 313 18.71
14.11.2017 Khadim India 493.06 2.45 0.18 2.34 1.9 750 727 -8.2
10.11.2017 Mahindra Logist 829.36 15.61 2.07 6.11 7.9 429 425 0.03
06.11.2017 Nippon 1542 118.41 209 5.23 81.33 252 289 12.7
25.10.2017 General Insuran 11372 2.25 0.22 0.63 1.38 912 870.4 -52.28
23.10.2017 IEX 1000.7 2.56 0.85 2.61 2.28 1650 1500 -96.71
16.10.2017 Godrej Agrovet 1157.31 150.96 236 7.67 95.41 460 615 29.47
05.10.2017 Prataap Snacks 481.94 76.89 101 7.62 46.97 938 1250 25.62
03.10.2017 SBI Life Insura 8400 12.56 0.7 0.81 3.55 700 735 1.14
27.09.2017 ICICI Lombard 5700.94 8.93 0.83 1.23 2.98 661 651 3.11
25.09.2017 Capacite Infra 400 131.32 638 17.6 183 250 360 36.96
21.09.2017 Matrimony.com 501.07 1.88 0.41 18.2 4.44 985 985 -8.51
18.09.2017 Bharat Road Net 600.65 1.33 1.63 5.16 1.75 205 205 1.54
18.09.2017 Dixon Technolog 599.28 134.66 346 9.46 117.3 1766 2725 -67.24
04.09.2017 Apex Frozen 152.25 1.91 7.82 8.53 6.14 175 202 19.91
11.08.2017 Cochin Shipyard 1454 63.51 289 8.12 76.06 432 461 20.83
10.08.2017 SIS 362.25 5.64 1.65 18.7 6.92 815 875 -53.58
25.07.2017 Salasar Techno 35.87 0 487 58.6 277.3 108 259.45 151.94
10.07.2017 AU Small Financ 1912.51 78.77 144 3.52 53.6 358 544 51.17
04.07.2017 GTPL Hathway 484.8 1.48 2.48 0.99 1.53 170 170 0.97
30.06.2017 CDSL 523.99 148.71 563 23.8 170.2 149 250 75.57
29.06.2017 Eris Life 1741.1 4.68 0.45 3.51 3.29 603 612 -0.32
27.06.2017 Tejas Networks 326.69 2.16 0.48 3.1 1.88 257 257.7 2.45
06.06.2017 IndiGrid InvIT 2250 1.14 1.6 0 1.35 100 99.7 -4.92
29.05.2017 PSP Projects 211.68 8.38 10.4 6.47 8. 58 210 195 -0.5
19.05.2017 HUDCO 1224 55.45 330 10.8 79.53 58 76.5 25
09.05.2017 S Chand and Co 325 44.27 205 6.07 59.49 670 675.85 0.87
05.04.2017 Shankara Buildi 232.96 51.62 90.7 15.4 41.88 460 545 37.57
31.03.2017 CL Educate 238.95 3.65 0.21 1.63 1.9 500 398 -58.21
Avenue
21.03.2017 1870 144.61 278 7.3 104.5 299 604 114.3
Supermar
17.03.2017 Music Broadcast 488.53 39.78 109 9.85 39.67 333 413 -82.07
03.02.2017 BSE Limited 1243 48.64 159 6.48 51.22 806 1085 32.66
Table 5.5
56
Even as most IPOs that came out during the year were offers for sale (OFS), the
demand for such offerings remained robust, as 41 companies managed to
mobilise over Rs 75,000 crore from the primary market so far this year. In 2017,
as many as 36 firms mopped-up a record amount of over Rs 68,000 crore
through initial share-sales.
57
5. YEAR 2016

Issue
(in Open Gains %
crores)
08.11.2016 Varun Beverages 1114 4.94 0.42 0.82 1.86 445 430 -53.87
07.11.2016 PNB Housing Fin 3000 37.33 86.2 1.32 29.53 775 860 14.92
19.10.2016 Endurance Techn 1161 1.7 0.13 0.82 0.92 472 572 37.22
04.10.2016 HPL Electric & 361 5.77 22.2 3.31 8.06 202 190 -6.41
29.09.2016 ICICI Prudentia 6057 11.83 28.6 1.42 10.48 334 329 -10.88
27.09.2016 GNA Axles 130.41 17.18 218 11.8 54.88 207 252 12.78
23.09.2016 L&T Technology 900 5.01 1.03 1.74 2.52 860 900 0.59
31.08.2016 RBL Bank 1100 85.08 198 5.7 69.62 225 274.4 33.02
12.08.2016 S P Apparels 215 1 0.45 0.54 0.66 268 275 10.07
11.08.2016 Dilip Buildcon 430 0 0 0 0 219 240 15.05
01.08.2016 Advanced Enzyme 60 94.03 393 11.7 116 896 1210 -73.7
21.07.2016 L&T Infotech 1242 19.91 10.8 7.39 11.69 710 667 -1.74
12.07.2016 Quess Corp 400 59.02 392 31.2 144 317 500 58.68
01.07.2016 Mahanagar Gas 1039.64 72.84 192 6.82 64.54 421 540 23.49
19.05.2016 Parag Milk Food 764.3 1.15 3.08 2.12 1.83 215 230 15.26
10.05.2016 Ujjivan Financi 358.16 33.84 136 4.02 40.68 210 231.9 10.29
09.05.2016 Thyrocare Techn 479.21 73.18 225 8.73 73.55 446 662 38.59
21.04.2016 Equitas Holding 2159 14.93 57.3 1.4 17.21 110 145.1 22.95
01.04.2016 Bharat Wire Rop 70 1.01 2.02 2.08 1.21 45 47.25 0.89
18.02.2016 Quick Heal Tech 450 4.34 36.7 3.82 10.8 321 305 -20.73
12.02.2016 TeamLease Ser. 273.68 26.97 185 10.6 66.02 850 860 20.23
08.02.2016 Precision Camsh 410 2.62 0.73 2.01 1.91 186 165 -4.7
06.01.2016 Narayana Hruda 613 0.01 0.01 0.13 0.07 250 291 34.68
Table 5.6
2016 has been a fruitful year for initial public offerings (IPOs) so far. Out of the
20 issues launched since January, 13 are trading at least 20% above the issue
price.
So far in 2016, the Sensex has gained a little less than 5%. Ujjivan Financial
Services has been the best performer among debutants in 2016. The stock, which
listed in the second week of May, has almost doubled since listing. The strong
listings have prompted investors to pour money into IPOs, prompting others to
follow.
58
6. YEAR 2015

Issue
(in Open Gains %
crores)
16.11.2015 S H Kelkar 200 0 0 0 0 180 216 15.17
10.11.2015 Interglobe Avi 3000 17.8 3.57 0.92 6.15 765 868 14.83
02.11.2015 Coffee Day 1150 4.39 0.54 0.9 1.82 328 313 -17.64
21.09.2015 Prabhat Dairy 300 0.88 1.42 0.34 0.77 115 113 1.17
16.09.2015 Sadbhav Infra 425 3.04 1.66 1.69 2.24 103 111 3.06
10.09.2015 Pennar Eng 156.19 0 0.04 0.11 0.07 178 177.95 -11.52
10.09.2015 Shree Pushkar 70 0.97 2.09 1.54 1.34 65 60.05 -3.08
09.09.2015 Navkar Corp 600 6.47 0.9 1.62 2.85 155 152 7.35
26.08.2015 Power Mech 273.22 27.53 133 3.42 38.12 640 600 -8.48
11.08.2015 Syngene Intl 550 51.47 90.2 4.78 32.05 250 295 -37.92
09.07.2015 Manpasand Bever 400 1.99 0.38 1.16 1.4 320 291 -48.93
26.05.2015 PNC Infratech 488 4.51 0.65 0.28 1.56 378 381 -80.94
14.05.2015 UFO Moviez 600 4.49 1.17 1.02 2.04 625 600 -4.19
06.05.2015 MEP Infra 324 1.02 1.51 0.97 1.11 63 63 -3.25
30.04.2015 VRL Logistics 473.88 58.22 251 7.92 74.26 205 288 43.07
09.04.2015 Inox Wind 700 35.68 35.4 2.15 18.6 325 400 34.77
06.04.2015 Imagicaaworld 467 1.17 0.49 1.37 1.11 180 167.95 6.25
19.03.2015 Ortel Comm 240 1.01 0.09 0.39 0.75 181 181 -5
Table 5.7
After years of muted activity in the initial public offering market – due to a
slowing economy and lacklustre demand from investors – 2015 proved to be a
banner year for raising capital in India.
This year, 21 companies launched IPOs, the highest in the last four years. The
total amount issued – value of shares sold – by these firms was Rs 13,559 crore,
according to data provided by PRIME Database, a capital markets information
provider.
The Sensex – India’s benchmark equity index – touched an all time high during
the year, and foreign investors continued to remain bullish. In fact, among the
emerging markets, India has been touted as the “most attractive” for
investments.
59
7. YEAR 2014

Issue
(in Open Gains %
crores)
23.09.2014 Sharda Crop 352 32.06 251 5.85 59.97 156 254.1 48.37
12.09.2014 Snowman Logist 197.4 16.98 222 41.3 59.75 47 75 67.55
09.05.2014 Wonderla 181.25 16.71 159 7.56 38.06 125 164.75 26.08
Table 5.8
Although 2014 has been a stellar year for equities in India, the initial public offer
(IPO) market remained weak. During the year, just five companies hit the
primary market to raise around ₹ 1,200 crore, the lowest since 2001 as per the
data available on NSE and BSE.
According to estimates, Indian firms raised a staggering amount of funds

totalling ₹ 4 lakh crore from the markets in 2014, with debt market emerging as
the most preferred route to garner capital for their corporate needs despite a
sustained rally in the stock market. A large chunk of this amount - more
than ₹ 3.3 lakh crore - has been mopped up from the debt market.
Within the debt market, private placement of corporate bonds and non-
convertible debentures that was used the most to meet funding requirements of
businesses in 2014.
Fresh capital raked in from equity market stood at about ₹ 67,000 crore but it
was mostly through qualified institutional placement (QIP) route and
preferential share allotments to promoters and other investors.
In the equity segment, most of the funds were raised through QIP (Rs 30,000
crore) followed by preferential route (Rs 25,500 crore), rights issue (Rs 5,200
crore) sale of shares via offer for sale route (Rs 4,300 crore) and IPOs and
follow-on public offers (Rs 1,619 crore).
60
8. YEAR 2013

Issue
(in Open Gains %
crores)
05.06.2013 Just Dial 950 10.12 22.3 3.53 11.63 530 590 15.37
01.04.2013 Repco Home 270.38 3.39 0.35 0.51 1.65 172 159.95 -6.48
Table 5.9
Amidst poor capital market conditions, fund raising via Initial Public Offers
(IPOs) has hit a dry spell. Only Rs 16 billion have been raised in 2013 in Indian
stock markets (figures until November 2013). This is possibly the lowest amount
that has been raised via IPOs in any year over the last decade. Lack of retail
interest and poor market sentiments are primary reasons behind waning interest
in IPOs. As a result, most corporates are unwilling to hit the market with fresh
issuances which has further impacted the fund-raising exercise in IPO markets.
Irrational pricing is another factor which has kept investors at bay. Over the
last 3 years nearly 65% of the companies that raised money via IPOs are
currently trading below their issue price. As such, most investors have lost
money. This has hurt investor sentiments and has resulted in lack of appetite for
new issues. Unless the secondary markets offer a boost or solid companies with
established track record seek to get listed at reasonable prices, the market for
primary issuances is likely to remain lull.
61
9. YEAR 2012

Issue
(in Open Gains %
crores)
28.12.2012 INDUS TOWERS 4533.6 2.84 0.1 0.06 1.21 220 200 -13.09
27.12.2012 PC Jeweller 609.3 7.33 18.1 1.68 6.85 135 137 -44.81
26.12.2012 CARE Ratings 539.98 45.8 111 6.18 40.98 750 940 23.19
06.12.2012 Tara Jewels 0 1.49 3.1 2.05 1.98 230 242 -0.02
18.07.2012 VKS Projects 55 1.15 0.38 1.13 1.03 55 55.8 -97.15
30.05.2012 Speciality Rest 181.96 4.68 2.19 0.55 2.54 150 153 7.1
09.05.2012 Tribhovandas 210 1.29 1.91 0.68 1.15 120 115 -7.33
12.04.2012 MT Educare 99 6.01 8 2.17 4.8 80 86.05 12.94
12.04.2012 NBCC (India) 127.2 7.07 1.7 3.4 4.93 106 100 -93.9
28.03.2012 Olympic Cards 25 0 3.43 1.36 0.99 30 29.95 -5
09.03.2012 MCX India 663.31 49.12 150 24.1 54.13 1032 1387 25.68
Table 5.10
There were far fewer Initial Public Offers (IPOs) this year than in 2011. But
those that made it to the market have delivered stunning returns to investors.
Unlike in the past, investing in IPOs this year has also been a better bet than
buying stocks in the secondary market. Returns on seven out of eight IPOs have
beaten the CNX 500 index, reckoned from their offer date.
The bad market conditions at the start of the year helped because that kept offer
prices reasonable, say investment bankers.
2012 was an ideal situation where you could buy good companies in bad markets
at reasonable prices. Plus, some of these were quality companies.
62
10. YEAR 2011

Issue
(in Open Gains %
crores)
20.10.2011 Ujaas Energy 93 1.03 1.56 2.35 1.57 186 180 -82.92
19.10.2011 Taksheel Solut 82.5 0.24 4.7 6.18 2.99 150 157.4 -61.23
19.10.2011 Flexituff Ventu 104.63 0.51 1.55 1.55 1.03 155 155 7.35
17.10.2011 Onelife Capital 36.85 1.02 0.93 2.32 1.51 110 115 32.64
04.10.2011 Setubandhan Inf 60 0.31 2.76 4.68 2.21 138 145 -83.37
26.09.2011 PG Electroplast 120.65 0.98 1.84 1.64 1.34 210 200 96.02
16.09.2011 SRS 227.5 0.74 5 0.29 1.22 58 55 -70.98
08.09.2011 TD Power System 227 6.52 0.32 0.36 2.72 256 251.6 7.34
05.09.2011 Brooks Labs 63 0 2.82 3.36 1.6 100 110 -49.8
26.08.2011 Tree House 112.06 1.02 1.68 2.76 1.85 135 132.8 -13.67
12.08.2011 L&T Finance 1245 1.93 6.18 9.61 5.34 52 53.85 -10.65
04.08.2011 Inventure Grow 81.9 0.25 9.49 8.66 4.58 117 119 -95.56
28.07.2011 Bharatiya Glob 55.1 0 1.94 5.06 2.06 82 84 -62.26
13.07.2011 Kridhan Infra 34.75 0.03 1.37 4.18 1.68 108 115 -87.69
07.07.2011 Rushil Décor 40.64 0.23 1.35 6.57 2.62 72 81.25 45.12
07.07.2011 Birla Pacific 65.18 1.04 0.17 1.82 1.18 10 10.1 153.5
22.06.2011 Timbor Home 23.25 0.65 3.22 14.2 5.78 63 72 44.76
14.06.2011 VMS Industries 25.75 0 1.11 3.41 1.36 40 43.95 -28.75
27.05.2011 Dr Datson Labs 120 0.14 2.65 1.84 1.11 234 218 33.01
23.05.2011 Sanghvi Forging 36.9 0 1.82 2.93 1.3 85 88 31.47
13.05.2011 Innoventive Ind 219.58 0.85 1.94 1.48 1.24 117 110 -20
12.05.2011 Servalakshmi 60 0.34 4.21 1.9 1.47 29 30 -34.48
10.05.2011 Future Consumer 750 0.26 7.81 0.61 1.52 10 9.5 -17
09.05.2011 Paramount Print 45.83 0.33 3.28 9.31 3.92 35 35 -23.86
06.05.2011 Muthoot Finance 901.25 25.01 60.9 8.5 24.55 175 176.45 0.71
08.04.2011 Shilpi Cable 55.88 1.04 6.39 5.74 3.48 69 78.35 -65.51
30.03.2011 PTC India Fin 438.76 2.85 0.22 1.18 1.7 28 28 -11.07
24.03.2011 Lovable Lingeri 93.28 21.87 99.9 20.8 35.21 205 261.5 21.56
11.03.2011 Sudar Ind 69.98 0.17 4.47 2.27 1.55 77 74 46.88
11.03.2011 Fineotex Chem 30.32 0 0.22 4.38 1.57 70 80 -79.87
10.03.2011 Acropetal Tech 170 1.12 2 1.21 1.28 90 130 9.39
10.02.2011 Omkar Special 79.38 0.82 5.27 9.9 4.67 98 95 -52.86
20.01.2011 C Mahendra Expo 165 1.02 3.92 4.82 2.78 110 111 -49.61
Table 5.11
63
The performance of many IPOs was affected badly, with two out of every three
issues that hit the market in 2011, offering negative returns to investors. They
lost, on an average, over 50% of their capital in the 29 companies.
Uncertainty over macro indicators, like inflation, growth, government policies,

and also political situation, will weigh on the sentiment, capping returns in 2012.
Most of the recent IPOs are currently quoting at a discount to their offer prices,
reflecting lack of interest among investors. Investment bankers attribute
generally choppy secondary market conditions, concerns over quality and high
valuations to their disappointing performance.
Not many large-sized IPOs, barring L&T Finance's 1,245-crore offer, Mothoot
Finance's 901 crore and Future Venture's 750-crore issues, hit the market in
2011, affecting fund mobilisation through this route. According to primary
market tracking firm Prime Database, 39 companies raised 14,021 crores in the
year, compared with 69,112 crores in 2010. This, in fact, is the lowest amount
mobilised through IPOs since 2003 when the 14 companies had raised 2,180
crores from the public.
64
11. YEAR 2010

Issue
(in Open Gains %
crores)
20.12.2010 Claris Life 300 1.31 2.03 1.6 1.5 228 224.4 -9.71
15.12.2010 MOIL 1260 0 0 0 0 375 551 -37.8
06.12.2010 RPP Infra Proj 48.75 0.16 7.27 5.6 2.97 75 75 -30.67
16.11.2010 Gravita India 45 6.04 183 37.3 42.88 125 218.75 -66.34
04.11.2010 Coal India 15475 24.7 25.4 2.31 15.28 245 300 39.73
27.10.2010 Prestige Estate 1200 4.32 0.24 0.08 2.26 183 190 5.22
27.10.2010 BS Limited 197.36 0.52 3.16 1.04 1.1 248 251 -92.37
27.10.2010 Gyscoal Alloys 54.67 1.54 33.4 8 8.59 71 76.6 -88.51
20.10.2010 Oberoi Realty 1028.61 22.15 3.61 0.94 12.13 260 280 8.83
18.10.2010 Commercial Eng 172.41 3.68 0.34 0.38 2.07 127 122.8 -11.61
14.10.2010 Sea TV Network 50.2 1.66 40.9 7.45 9.58 100 120 6
14.10.2010 Ashoka Buildcon 225 25.52 13.9 3.46 15.94 324 333.55 -77.37
14.10.2010 Bedmutha Ind 91.8 0.67 29.2 8.51 7.69 102 114.4 77.25
13.10.2010 Va Tech Wabag 472.6 36.13 101 8.55 36.22 1310 1655 -73.9
12.10.2010 Cantabil Retail 105 1.71 3.83 2.63 2.35 135 133.8 -22.41
12.10.2010 Tecpro Systems 268.03 27.99 62.5 9.07 24.47 355 399.4 14.89
08.10.2010 Electrosteel St 0 5.86 28.6 6.19 8.23 11 11.15 2.27
08.10.2010 Orient Green 900 2.09 0.64 0.18 1.07 47 45.7 -4.47
08.10.2010 Ramky Infra 530 4.52 1.45 0.99 2.89 450 450 -13.92
06.10.2010 Career Point 115 47.45 102 31.7 47.39 310 461 103.98
06.10.2010 Eros Intl 350 25.79 73.4 12 26.51 175 213.55 8.6
05.10.2010 Sasta Sundar 147.5 5.91 35.9 11 12.2 118 135.1 -6.02
01.10.2010 Tirupati Inks 51.5 1.78 23.2 12.6 8.77 43 53.95 -14.77
29.09.2010 Indosolar 357 1.44 1.3 1.81 1.55 29 29.75 -18.28
09.09.2010 Gujarat Pipavav 500 13.2 85.7 9.15 19.94 46 56.25 17.5
25.08.2010 Prakash Steelag 68.75 1.27 10.9 6.62 4.53 110 118.55 -82.91
18.08.2010 Bajaj Consumer 297 20.19 53.5 6.62 19.29 660 730 -77.02
16.08.2010 Bharat Fin 1653.97 20.38 18.3 2.81 13.69 985 1036 10.52
28.07.2010 Shri Aster 53.1 0.01 12.5 7.41 4.47 118 127.7 68.73
21.07.2010 Hindustan Media 270 8.98 3.39 1 5.43 166 177.95 13.98
16.07.2010 Technofab Engg 71.76 4.28 48.9 10 12.78 240 265 23.19
01.07.2010 Parabolic Drugs 200 1.48 1.2 0.4 1.04 75 76 -13.6
21.05.2010 Jaypee Infra 1650 1.77 1.15 0.61 1.24 102 98 -10.49
20.05.2010 SJVN 1079 9.03 3.39 3.12 6.64 26 27.1 -3.65
19.05.2010 GB Global 107.9 7.97 10.5 2.81 6.32 130 131 2.81
18.05.2010 Tarapur Trans 63.75 0.03 5.08 2.74 1.74 75 75 -24.13
NEL HOLDINGS
13.05.2010 405 2.54 0.22 0.16 1.16 54 50 -5.65
SO
65
10.05.2010 Talwalkars Fitn 77.44 35.43 51.5 8.43 28.39 128 138 27.03
16.04.2010 Goenka Diamond 145 0.78 2.99 0.66 1.07 135 130 -90.53
12.04.2010 Intrasoft Tech 53.65 21.97 21.6 13.5 18.95 145 140 9.9
09.04.2010 Shree Ganesh 385.29 1.38 6.13 1.39 1.96 260 258.85 -37.21
06.04.2010 Persistent 168.01 144.43 108 21.7 93.6 310 400 -34.19
05.04.2010 Pradip Overseas 116.6 8.57 45.4 10.5 14.08 110 120 -18.83
30.03.2010 ILandFS Trans 700 52.61 39.4 4.56 33.42 258 287 -1.67
29.03.2010 DQ Entertain 128.38 93.86 273 19.5 86.33 80 135 35.69
18.03.2010 United Bank 330 47.08 39.2 9.8 33.38 66 77 4.24
11.03.2010 Man Infra 142 96.06 105 10.3 62.53 252 335 -81.58
10.03.2010 Texmo Pipes 45 1.02 30.5 7.26 7.48 90 92.8 52.5
03.03.2010 ARSS Infra 103 49.34 125 18.6 47.62 450 640 63.62
25.02.2010 Hathway Cable 735.4 1.43 4.29 0.28 1.36 240 246 -82.68
24.02.2010 DB Realty 1500 1.35 1.21 0.01 0.85 468 452.1 -2.69
24.02.2010 Emmbi Ind 43.08 0.43 5.55 0.46 1.2 45 46 -36.33
23.02.2010 Aqua Logistics 150 0.26 5.07 3 1.94 220 225 -88.88
19.02.2010 Thangamayil 0 0.52 1.52 2.26 1.12 75 70 -5.2
15.02.2010 Syncom Health 56.25 0.99 16.6 6.25 5.17 75 88 17.13
15.02.2010 Vascon Engineer 199.8 1.12 3.65 0.62 1.22 165 155.9 -11.28
08.02.2010 Jubilant Food 328.7 59.39 52 3.79 31.11 145 160 -21.03
03.02.2010 Infinite Com 189.8 48.44 106 11.1 43.22 165 178.35 11.82
Table 5.12
Surging markets fuel IPO boom in Asia.

Coal India Ltd., the world's largest coal company, announced Tuesday a $3.4 bn
initial public offering that is India's largest-ever and adds to a growing list of
record-breaking IPOs in Asia this year.
Foreign investors fleeing slow growth and low returns in the developed world
have rushed into Asia, pumping up stock markets and snapping up shares in new
offerings, which can more easily absorb large chunks of capital.
There's a surge of liquidity created in the western world. The belief in the
recovery of their economies is not very high. A lot of this liquidity is looking
for returns and the best growth is available in Asia and emerging markets.
66
Briefing:
The simplification of the controlling structure will encourage many startups and
new age companies to initiate public offering proceedings. While noting that
local listings are also becoming more attractive due to the high valuations,
Agrawal said he believes Indian stocks like Zomato are worth it due to their
higher expected growth than rivals in China or the U.S.
Newly listed Indian stocks are beating the benchmark by the most in seven
years, helped by a record pace of initial public offerings that some see as the
start of a multiyear expansion for the country’s $3.2 trillion stock market. A
gauge of firms that listed in the past two years has outperformed the Nifty 50
Index by more than 40 percentage points this year, the biggest gap since 2014.
Most notable has been food-delivery app Zomato Ltd., the nation’s first
“unicorn,” which has climbed 77% since its debut last month.
The number of unlisted firms valued at over $1 billion will more than double
over the next three-to-five years, according to Raj Balakrishnan, the head of
India investment banking at Bank of America Corp. “Even if 20% - 25% of
these unicorns take the listing route, we could easily add anywhere between
$400 billion and $500 billion of market capitalization. India is experiencing a
boom in tech start-ups that cater to the nation’s still fledgling Internet market,
and regulators have recently made it more appealing for them to list shares at
home. They’ve raised $8.8 billion in local IPOs so far in 2021, and the pipeline
for the rest of the year includes digital-payments service Paytm and beauty
products e-commerce site Nykaa.
The regulation changes include adoption of the globally accepted concept of

controlling shareholder accountability, moving away from India’s traditional
focus on family-controlled corporate founders or promoters. The rules also
narrow the post-IPO lock-up period for founders and investors including venture
capital and private equity funds. The simplification of the controlling structure
will encourage many start-ups and new age companies to initiate public offering
67
proceedings
While noting that local listings are also becoming more attractive due to the high
valuations, Agrawal said he believes Indian stocks like Zomato are worth it due
to their higher expected growth than rivals in China or the U.S.
5.3 Amount Raised via IPOs Each Year [2010 – 2020]
Year Amount Raised [in crores]

2010 ₹ 36,362.00
2011 ₹ 5,977.00
2012 ₹ 6,834.00
2013 ₹ 1,284.00
2014 ₹ 1,201.00
2015 ₹ 13,513.00
2016 ₹ 26,501.00
2017 ₹ 75,279.00
2018 ₹ 31,731.00
2019 ₹ 12,687.00
2020 ₹ 22,420.00
Table 5.13
Amount Raised [in crores]

₹80,000.00
₹70,000.00
₹60,000.00
₹50,000.00
₹40,000.00
₹30,000.00
₹20,000.00
₹10,000.00
₹-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Chart 5.2
While the IPO wave continues in India, experts have advised investors to nurture
a diversified portfolio and evaluate companies before investing. The risk
68
appetite level varies by investors and they need to consider factors such as
business growth, profitability, market share, business model viability and entry
barriers before making an investment decision.
Newly listed Indian stocks are beating the benchmark by the most in seven
years, helped by a record pace of initial public offerings that some see as the
start of a multiyear expansion for the country’s $3.2 trillion stock market. A
gauge of firms that listed in the past two years has outperformed the Nifty 50
Index by more than 40 percentage points this year, the biggest gap since 2014.
69
CHAPTER 6
ROLE OF IPO IN CAPITAL FORMATION
In the legal sense, the process of initial public offering of shares (IPO) represents
the process of creating joint stock companies, while, substantively, this
procedure leads to raising investment capital for company funding. The creation
of a joint stock company is not an end in itself; it is rather a number of
advantages that stock companies bring along, starting from an unlimited
lifetime, the possibility of an easy transfer of ownership by selling shares, as
well as limited obligations and responsibilities (the maximum loss an owner can
suffer is the amount of funds invested in shares). An IPO is the first issuance of
shares of companies that were not previously listed on a stock exchange. In this
way, shares are offered to the widest market investors, i.e., interested investors
who put their money in share purchase, which enables companies to raise
necessary capital for their own development.
The willingness of a company to go public and thus raise necessary capital to a

large extent depends on the conditions, nature and efficiency of a financial
system. It is assumed that positive performance in IPO markets could be
achieved by the economies that have more favourable trends of macroeconomic
variables, efficient legislation which is consistently applied, and a high degree
of corporate education. The success of this process in capital markets is reflected
in the total number and value of realised IPOs during the course of a year. A
comprehensive analysis of IPO issuing activity is aimed at highlighting the
strengths and challenges of the process of going public in developing countries.
When a firm proposes a public issue or IPO, it offers forms for submission to be
filled by the shareholders. Public shares can be bought for a limited period only
and as per the law, any IPO should be traded openly only for minimum 3 days
and 21 days maximum. For offers that are sponsored by financial institutions,
the proposal should be traded for maximum 21 days and minimum 3 days.
For offers that are sponsored by India financial institutions, the proposal should
be traded for maximum 10 days. The submission form should be duly filled up
70
and submitted by cash, cheque or DD prior to the closing date, in accordance

with the guidelines mentioned in the form. IPOs by investment firms generally
entail countersigned charges which signify a load to purchasers.
6.1 SWOT analysis of going public via IPO
OPPORTUNITIES THREATS
1. Possibility of optimal 1. Raising large amounts of

ownership dispersion; funds;
2. Increasing the negotiating 2. Achieving financial structure

strength of a company; flexibility;
3. Realisation of long-term 3. Reduction of borrowing

development goals; costs;
4. Possibility of reducing 4. Gaining liquidity through

financial leverage; equity of shares;
5. Achieving greater 5. Prestige, recognition,

competitiveness on the visibility of a company;
market;
6. Sudden capital raising at no
6. Motivating managers and risk;
employees by providing
opportunities for 7. Determining market value of
acquiring company shares a company.
THREATS WEAKNESSES
1. Share under-pricing; 1. Public disclosure of

information;
2. Exposure to negative
selection and moral 2. High issuance costs;
hazard;
3. Complexity of the process of
3. Hostile takeover by larger issuing shares through IPO.
companies.
71
6.2 The Road to Creating an IPO
Through an initial public offering (IPO), a company raises capital by issuing

shares of stock, or equity, in a public market. Generally, an IPO is a company's
first issue of stock. But there are ways a company can go public more than once.
The IPO process is the locomotive of capitalism. It allows the investing public
to own small shares in any of the many companies that have grown large and
hugely successful since they first went public.
Issuing shares through an IPO is one of the primary reasons that stock markets
exist. A company can raise capital for a variety of reasons, such as to fund its
expansion, let early-stage investors cash out some of their investment, or create
a currency (such as common stock) to acquire rivals.
The IPO process is referred to as the primary market as it enables investors to

buy stock directly from the company. From then on, those shares exist in
a secondary market, where investors trade among themselves with shares that
have already been issued by the company.
1. An initial public offering, or IPO, is the first chance most individual

investors get to buy an ownership stake in a young company.
2. For early-stage investors and insiders, it's a chance to cash in.
3. For the company, it's an opportunity to raise money for development and
expansion.
4. In order to go public, a company must open its books to scrutiny by potential
investors and financial regulators.
5. The company's prospectus and its executive "roadshow" offer a fuller look
at the company's plans and prospects.
72
6.3 The Process of Taking a Company Public
Getting a company through to its IPO takes time, is expensive, and must pass
many regulatory hurdles. A very important component of going public is
opening a firm’s books to public scrutiny, as well as the oversight of the
Securities and Exchange Commission (SEC).
An investment banker, or underwriter, will help a company through this

process, and the younger associates at an investment banking firm will bear the
brunt of the grunt work. Those associates will spend many sleepless nights
preparing a preliminary prospectus for the SEC and investors, which has come
to be referred to as a red herring.
6.4 The Company’s Perspective
In addition to the cost considerations, a company must make many changes to

survive when public. The prospectus stipulates many of the new financial,
regulatory, and legal burdens, and PwC estimates that there are between $1
million and $1.9 million in additional ongoing costs to the average firm that
goes public.
Hiring and paying a board of directors, or at least a higher profile board, can be
expensive.
Learning to deal with analysts, holding conference calls, and communicating

with shareholders may also be a new experience.
73
CHAPTER 7
CONCLUSION
The factors that may form a sound basis for IPO to become a standard practice
for financing the growth and development of the capital market in the Republic
of Serbia area permanent access to financial resources, an access to alternative
sources of financing, liquidity, recognisability and visibility. The decision to go
public is an important step in the development of a company, which brings
significant changes to the conditions in which business is done. Namely,
enabling an access to new sources of capital enables the realisation of
investment projects which further leads to the multiplication of company value.
On the other hand, the process of going public is neither simple nor cheap.
Information asymmetry, IPO under-pricing, and hostile takeover by larger
companies make just some of the reasons that diminish the benefits of going
public.
In many countries, IPOs have proven to be a good way of financing growth,

attracting capital, improving brand, knowledge and skills of management and
employees, and diversifying shareholder structure. Although company loan
supported by financial intermediaries will always play a significant role, there
is a need to emphasise the advantages that the developed capital market, as the
basis of strong and stable long-term financing, brings to investors and
companies. The evidence is provided by practical examples of developed market
economies, such as the USA, China, Japan and the countries of Western Europe,
which have a significant activity and record high performance in the IPO
markets, measured by the number and value of the realised processes.
7.1 Review of the basics of an IPO
1) An IPO is the first sale of stock by a company to the public.
2) Broadly speaking, companies are either private or public. Going public
means, a company is switching from private ownership to public ownership.

3) Going public raises cash and provides many benefits for a company.
74
4) The dot-com boom lowered the bar for companies to do an IPO. Many start-
ups went public without any profits and little more than a business plan.
5) Getting in on a hot IPO is very difficult, if not impossible.
6) The process of underwriting involves raising money from investors by
issuing new securities.

7) Companies hire investment banks to underwrite an IPO.
8) The road to an IPO consists mainly of putting together the formal documents
for the regulators and selling the issue to institutional clients.

9) An IPO company is difficult to analyse since there isn't a lot of historical
info.
10) Lockup periods prevent insiders from selling their shares for a certain period
of time. The end of the lockup period can put strong downward pressure on
a stock.
11) Road shows and red herrings are marketing events meant to get as much
attention as possible.
12) A tracking stock is created when a company spins off one of its divisions
into a separate entity through an IPO.

13) Don't consider tracking stocks to be the same as a normal IPO, as they have
limited shareholder rights
7.2 Aspects to consider before applying for IPOs in India
There are certain factors which need to be taken into consideration before
applying for Initial Public Offerings in India, they are:
1) Promoters, their reliability and past records
2) Firm producing or facilitating services
3) Product offered by the firm and its potential
4) Whether the firm has entered into a collaboration with technological firm
5) Status of the associates
6) Historical record of the firm providing the Initial Public Offerings
7) Project value and various techniques of sponsoring the plan
8) Productivity estimates of the project
75
9) Risk aspects engaged in the execution of the plan
10) Authority that has reviewed the plan.
Investing in IPOs for short term can prove to be very lucrative option and can
help the investors to make handsome gains in very short period of time.
Pearson’s correlation and regression model have been applied between the
returns calculated (total returns and abnormal returns) and the selected
independent variables. The study observed that the selected independent
variables do not affect the IPO performance in the short run. Thus, it can be
concluded that under-pricing exists due to information asymmetry between the
various investors and the issuer. Furthermore, the study emphasizes that positive
sentiments and bullish trends in the market help the companies to keep the prices
of their IPOs on the higher side. Finally, the study aims to eliminate the
information disparity between the issuers and the investors and thereby aims to
increase the confidence and trust of both the players in the primary market,
which can ultimately help the economy to grow as a whole.
7.3 Major Observations:
1. An investor can apply for IPO depending on his or her Goal whether short
term or long term. Investing in IPO is one of the best ways to multiply your
wealth provided, one has the knowledge and judgement of finding the best
out of the lot and a sense of how the stock market fluctuates.
2. There are various factors that are considered before applying that one should
keep in mind. The retail investor shall do a thorough research and also go
through the DRHP before making any decision.
3. A company launches its IPOs for various Reasons majorly for Financial
Growth, pay off Debts Visibility, Credibility and to bring change in their
investors structure
76
4. An IPO is a big step for a company as it provides the company with access
to raising a lot of money. This gives the company a greater ability to grow
and expand. The increased transparency and share listing credibility can also
be a factor in helping it obtain better terms when seeking borrowed funds as
well.
5. You shouldn't invest in an IPO just because the company is garnering

positive attention. Extreme valuations may imply that the risk and reward of
the investment is not favourable at the current price levels. Investors should
keep in mind a company issuing an IPO lacks a proven track record of
operating publicly.
6. IPOs help the Market grow exponentially. But such talk is a bit misguided
with respect to the real reason why recent IPOs have generally failed: The
very process for bringing new issues to market is broken, rife with serious
conflicts of interests and essentially set up to fail retail investors.
77
BIBLIOGRAPHY
1. Initial Public Offerings (IPO): An International Perspective of IPOs [Book]

Elsevier Science
2. Investing in IPOs, Version 2.0 [Book] by Tom Taulli · Wiley
3. Investing in IPOs [Book] by Tom Taulli · Wiley
4. Investing in India by Rahul Saraogi
78
WEBLIOGRAPHY
1. https://groww.in
2. https://www.investopedia.com/
3. https://www.moneycontrol.com/
4. https://economictimes.indiatimes.com/topic/et-markets
5. https://www.chittorgarh.com
6. https://www.5paisa.com/stock-market-guide/ipo/ipos-for-beginners
7. https://housing.com/news/what-is-ipo/
8. https://www.edelweiss.in/investology/introduction-to-primary-market-
79a025/ipo-terms-and-terminology-35e1e6
9. https://groww.in/blog/key-terms-related-to-
ipo#:~:text=Listing%20Date,Listing%20Date%20of%20the%20stock.
79

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A Study on IPO Market in India

Under the Guidance of

SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS,

ACADEMIC YEAR 2021-2022

Dr. ANIL. R. CHOUGULE

Date of Submission: 21st March, 2022.

Coordinator’s Signature College Seal

FREYA FAYYAZ SHAIKH

Sr. No. Title of the Chapter Page No.

Sr. No. Title of Table Page No.

2. Table 5.2: YEAR 2020 52

3. Table 5.3: YEAR 2019 54

4. Table 5.4: YEAR 2018 55

5. Table 5.5: YEAR 2017 56

6. Table 5.6: YEAR 2016 58

7. Table 5.7: YEAR 2015 59

8. Table 5.8: YEAR 2014 60

9. Table 5.9: YEAR 2013 61

10. Table 5.10: YEAR 2012 62

11. Table 5.11: YEAR 2011 63

12. Table 5.12: YEAR 2010 65

Table 5.13: Amount Raised via IPOs Each Year [2010 –

Sr. No. Title of Chart Page No.

1. Chart 3.1: Primary Market 21

In today’s world running a business or having a 9 to 5 job with a

In today’s fast-moving and dynamic world, short-term investors face difficulty

1. To analyse the IPO performance of companies.

II. Selection of Year:

1.1 Sources of Data Collection

1.1.1 Secondary Data

1.2 Rational Behind the Topic

1.2.1 Challenges faced in IPO

1. Share price of a public company is exposed to the stock market

2. The interests and expectations of the minority public investors must be

3. Wide-ranging disclosure requirements and financial reporting

provides periodic financial reporting of scope and quality substantially in excess

4. Substantial investment in the IPO process

5. New responsibilities and restrictions for the management

1.2.2 Problems faced by an Investor

Problems faced by Investors in the Indian Capital Market:

4. Over Subscription of Shares

7. Takeovers and Mergers

8. Problems related to Settlement Mechanism

10. Unknown Risks

11. Limited Capital

13. Bad Timing

14. Not Getting Help

15. Not Getting Your Personal Finances in Order

1.3 CHAPTER SCHEME

CHAPTER 1: INTRODUCTION AND RESEARCH DESIGN

CHAPTER 2: REVIEW OF LITERATURE

CHAPTER 3: INTRODUCTION TO IPO MARKET

CHAPTER 4: APPLYING FOR AN IPO

CHAPTER 5: GROWTH AND DEVELOPMENT OF IPO MARKET IN

CHAPTER 6: ROLE OF IPO IN CAPITAL FORMATION

Seshadev Sahoo and Prabina Rajib (2010)1: attempted to specify the

Jagannadham Thunuguntla (2011)3: Published in the Dalal Street Investment

Ragupathy, M.B (2011)4: Initial Public Offering (IPO) is a milestone in a

Ganesamoorthy&Shankar (2012)6: Attempted to study the price behaviour of

Baluja Garima (2013)7: examined the efficacy of IPO grading mechanism by

S.Poornima, Aalaa J. Haji,Deepa (2016)11: Initial public offerings are gaining

Patel A (2016)13: “Determinants of Listing Day Performance of IPOs: Study

Gowtham Ramkumar (2017)14: In their article “Influences of stock market