PRESENTATION ON PERFORMANCE EVALUATION OF IPO

PRESENTED BY: JIGAR SONI

CONTENTS

What is IPO. Book Building Process. IPO Regulatory overview. Objectives of the study. Analysis of the report. Findings.

INTRODUCTION
What is IPO? IPO stands for Initial Public Offering. An IPO happens when a privately owned company issues shares of stock to be sold to the general public.  It is different from FPO

IPO-REGULATORY OVERVIEW
SEBI Eligibility Criteria Promoter’s Contribution & Lock –in requirement RBI/FIPB Approval under automatic route Listing Requirement SEBI Book – Building Guidelines

COMPANY Post Issue Stock Exchange Requirements Company’s Act

BOOK BUILDING PROCESS

Refers to collection of funds from the investors, based on price band Price is finalized after the Bid/Issue closing date The issuing company may issue securities to the public by 100% of the net offer to the public through book building process 75% of the net offer to the public through the book building process and 25% through the fixed price portion.

BOOK BUILDING PROCESS OVERVIEW
ISSUER COMPANY

Allocation
Listing of Securities on the Exchange

Appointment of BRLM

Filing of prospectus with ROC Investors bid for shares Pricing to be finalised

BRLM conducts due diligence

SEBI Comments & Pre-marketing with QIB

Drafting of Red Herring Prospectus

Road Shows

OBJECTIVES OF THE STUDY
 

To get the knowledge of IPO. To analyze the returns of IPO’s which were issued in the 1st quarter of 2007. To know the return of those IPO’s for 1 month, 3 months, 6 months, and 1 year. To know the market rate of return for the same period. To know the procedure for calculating the Standard Deviation, calculating Sharpe’s Ratio & the abnormal return.

RESEARCH METHODOLOGY

Our report is based on exploratory research.

We have used certain formula such as: Normal return. Abnormal return. Sharpe’s Ratio. Standard deviation.

SAMPLING PLAN

Universe:33 Companies of 1st quarter of year 2007. Sample: 24 Companies as they were listed on NSE

ANALYSIS
RETURNS ON LISTING DATE

ANALYSIS…
Comparison with Market Returns

FINDINGS

It can be observed that out of 24 companies, only 10 companies have given positive returns on the date of listing. Out of 24 companies observed, 9 companies have given positive returns for 1 month. As far as 3 months & 6 months returns are concerned, 15 companies have given positive returns. Only 10 companies were able to perform positive returns at the end of 1 year.

FINDINGS…

Market return indicates that, 11 companies had given positive return for 1 month. 3 months Market rate of return was positive for 21 companies. Market return was positive for 6 months for all 24 companies. For 1 year, all 24 companies were able to give positive returns.

FINDINGS…

Only 5 companies were able to give positive returns for all the periods. If date of listing is concerned then, ICRA Ltd offered highest rate of return at 143.41%. Highest rate of return was offered by ICRA Ltd. For one month and 3 months at 184.27% and 214.22%. For 6 months and 1 year, Orbit Corporation Ltd. Gave highest return i.e. 464.41% and 289.41%.

FINDINGS…

S.D. was lowest for Oriental Trimex Limited at 2.14, 1.62, 2.55, 3.88 for all the periods indicating that it is less riskier than other. S.D. was highest for Autoline Industries Limited at 56.7 indicating that it is the riskiest than any other security for 1 month. For 3 months, Advanta India Limited has the highest S.D. at 93.44 For 6 months, Orbit Corporation Limited was riskiest than any other scrip at 131.39

FINDINGS…

For 1 year, Orbit Corporation Limited had highest S.D. at 225.71%. Also, Orbit Corporation Limited has offered highest return for 6 month and 1 year.

SOURCES OF DATA

The data mainly was from Secondary source which include: * Websites * Magazines * News Papers

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