A CP Presentation On

A Study of Investment Decisions of Individual

Investor with regard to IPO's

Guided By:

DR. DEVENDRA H. LODHA

Prepared By:
Ankit Koshti (197150592026)
Hiral Savlani (197150592056)
 FLOW OF PRESENTATION
Objectives of the Study

Introduction of Stock Market

Introduction of IPO Investment

Literature Review

Research Methodology

Questionnaire Analysis & its Interpretations

Hypothesis Testing

Findings

Limitations

Conclusion

Bibliography 2
 OBJECTIVES OF STUDY

To identify the level of awareness among investors

regarding IPO investment.

To study the factors affecting while investment in IPO.

To identify the purpose of IPO investment

3
INTRODUCTION OF STOCK MARKET

4
 INTRODUCTION OF IPO INVESTMENT

History
Reasons for listing in IPO
Objects of offering new IPO
Factors deciding IPO price
IPO investment Strategies
Advantages & Drawbacks of IPO
Recently listed IPO

5
 LITERTAURE REVIEW
Fried & Hirsch, Hall & Hofer, Hisrich &
Jankowicz, MacMillian, Siegel,&
Subbanarasimha, Tybee & Bruno, 1994
Gervais and Odean (2001)
It has been argued that private equity
firms begin to add value to their investee
companies even before the initial
investment takes place through
considered evaluation and selection
procedures. These procedures identify
only the best prospects for investment and
together with the imposition of governance
and monitoring controls in investment
contracts lead to enhanced prospects of
survival and prosperity.
Several researchers have focused on the
particular role of market sentiment in IPO
performance. He found that if investors
have more overconfidence after market
gains then this is followed by increased
trading volumes and market depth.
6
Krishnamurti and Kumar (2002)
Ranjan and Madhusoodanan (2004)
Ellis (2006)
Working on the IPOs that listed between
July 1992 to December 1994 conclude a
mean excess return of 72.34% and indicate
that the time delay between offer approval
and the issue opening as an important
factor behind the under pricing.
From a study of 92IPOs offered during
1999-2003 document that fixed price offers
were under-priced to a larger extent than
the book built issues though the book built
issues were only figuring 24 in the sample
this was the first study comparing the fixed
price issues performance vis-à-vis book built
issues.
Finds a significant relationship between initial
IPO returns and trading volume and document
that cold IPOs have early sell trades by insiders.
However, the extent of ownership Changes
among the IPO methods remain unknown.
7
 RESEARCH METHODOLOGY
Research Type Quantitative Research
Research design Descriptive Single Cross Sectional Research
Sampling Technique Non Probability Convenient Sampling
Sample Area Ahmedabad city
Sample Size 250 Investors of Ahmedabad city
Data Collection Method Online Survey Method
Population Investors across Gujarat state
Primary Data The Primary Data has been collected by designing a Structured
  Questionnaire with the relevant questions to the project study
  and research.
Secondary Data
Reference Material, Book, Encyclopaedia, Magazine &
Newspapers
Type of Questionnaire Structured Questionnaire
Analytical Tools & • Charts & Graphs
Techniques • Tabular Presentation
• Chi-square Analysis

8
QUESTIONNAIRE ANALYSIS & ITS
INTERPRETATIONS

9
 Q 1 Age Q 2 Gender

Age Gender

4%
3%
22%
Female
43%
Male
57%
70%

10-20
21-30 Male
31-40 Female
41 and Above

10
 Q 3 Marital Status Q 4 Occupation

Occupation
M a ri ta l S ta t u s
Retired and
Salaried
others
24%
30%
Unmarried 139

Married 111 Busi-

nessman
Pro-
21%
fes-
0 20 40 60 80 100 120 140 160 sional
24%
Salaried Businessman
Professional Retired and others

11
 Q 5 Approximately Monthly Q 6 What is the purpose of IPO
Income Investment?

Approximately Monthly Income What is the purpose of IPO Investment?

120 110
100

80
65 65
41% Listing Gain
60
Long term Gain
59%
40

20 10
0
Below 2... 20001-3... 30001-4... 40001 and
a...

12
Q 7 What is the source of Q 8 What do you see before
Information you use before Investing Investing in IPO?
in IPO?

What do you see before Investing in

What is the source of Information you use IPO?
before Investing in IPO?

Friend Advice 34 Promoters

background
11% Sector performance
26%
Expert Opinion 73 Performance of ex-
35% isting companies
Premium Amount
28%
Electronic Media 109

Print Media 34

0 20 40 60 80 100 120

13
 Q 9 How long are you trading in Q 10 How do you come to know
stock and IPO’s? about the new IPO listing?

How long are you trading in stock and How do you come to know about the new
IPO’s? IPO listing?

107 110 16%

120 28%
100

80

60 26%
40 29
30%
20 4

0
0year- 2years- 5years- 10years and Through Broker Through Television
2years 5years 10years above Through Newspaper Through Friend

14
Q 11 Factors considered for IPO.

Factors considered for IPO.

21 65
Legitimacy 10
55
99
24
62
Historical Background 20
46 98
26 60
Legal Matter 11
43
110
11
82
New Project Risk and Prospects 11
56
90
16 70
Corporate Governance Practice 40
44
80
13 60
Key Share holder 25
53
99
15
63
Current Financial Position 28
43
101
26
82
Size of the IPO Issued 20
52
70
49
48
Future Prediction and Forcast 10
48
95
16
100
Board Member 17
26 91
3
5154
Market share 42
100
5 19
Company Goodwill 39 87
100
0 20 40 60 80 100 120

Very Low Consider Low consider Neutral High consider Very High
consider 15
 Q 12 Do you go by the grading Q 13 How much percentages
before Investing? have you gained on IPO listing?

Do you go by the grading before How much percentages have you

Investing? gained on IPO listing?
140 126
120

19% 100
80 72

60 47
40
81%
20 5

Yes No 0
Up to 10% 10% - 15% 15% - 20% 20% and
above

16
Q 14 How do you feel about the Q 15 What difficulties did you
procedure for IPO’s? face after applying IPO’s?

How do you feel about the pro-

cedure for IPO’s? What difficulties did you face after applying
IPO’s?
Lengthy 110
11% None of the above
Dif- Easy
ficult 34%
24% Delay in crediting allotted 54
shares to your demat Account

No Clarity in allotment 58

Refund Problem 28
Complicated
32% 0 20 40 60 80 100 120

17
Q 16 You always take the help of Q 17 Is it better to invest in IPO
a broker while investing in IPO. or Pick the same stocks on
listing?

You always take the help of a broker Is it better to invest in IPO or Pick the
same stocks on listing?
while investing in IPO. 77
74
80 51
48
60
40
Strongly Agree 20
0
Agree
12% 13% Neutral
20% Disagree
29%
Strongly
26% Disagree

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 HYPOTHESIS TESTING
OCCUPATION AND COMPANY GOODWILL:

H0: There is no significance relation between occupation and company goodwill.

H1: There is significance relation between occupation and company goodwill.

Chi-Square Tests Interpretation:

 The Above Analysis represents that there is

significant relation between Occupation and
Asymptotic
Significance Company Goodwill.
  Value df (2-sided)
Pearson Chi-Square 16.533a 9 .057
 From Above Table We can see that
significant level is not less than 0.05 so
Likelihood Ratio 17.938 9 .036 alternative hypotheses is accepted.
Linear-by-Linear .469 1 .494
Association

N of Valid Cases 250    

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APPROXIMATE MONTHLY INCOME AND CURRENT FINANCIAL POSITION:

H0: There is no significance relation between approximate monthly income and current financial
position.

H1: There is significance relation between approximate monthly income and current financial position.

Chi-Square Tests Interpretation:

 The Above Analysis Represents that there is

significant relation between approximate monthly
Asymptotic income and current financial position.
Significance
  Value df (2-sided)  From Above Table We can see that significant
Pearson Chi-Square 14.182a 9 .116
level is not less than 0.05 so alternative

Likelihood Ratio 13.631 9 .136 hypotheses is accepted.

Linear-by-Linear 3.422 1 .064
Association

N of Valid Cases 250    

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WHAT IS THE PURPOSE OF IPO INVESTMENT? * COMPANY GOODWILL:

H0: There is no significance relation between What is the purpose of IPO investment and Company
Goodwill.

H1: There is significance relation between What is the purpose of IPO investment and Company
Goodwill.
Chi-Square Tests Interpretation:
Asymptotic
  Value df Significance  The Above Analysis represents that there is
(2-sided)
significant relation between What is the purpose
Pearson
7.281a 3 0.063 of IPO investment and Company Goodwill.
Chi-Square
 From Above Table We can see that significant
Likelihood
7.293 3 0.063
Ratio level is not less than 0.05 so alternative
Linear-by- hypotheses is accepted.
Linear 1.700 1 0.192
Association

N of Valid
250    
Cases

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WHAT IS THE SOURCE OF INFORMATION YOU USE BEFORE INVESTING IN IPO? * SIZE
OF THE IPO ISSUED:

H0: There is no significance relation between What is the source of information you use before investing in
IPO and Size of the IPO issued.

H1: There is significance relation between What is the source of information you use before investing in
IPO and Size of the IPO issued.
Chi-Square Tests Interpretation:
Asymptotic
  Value df Significance  The Above Analysis represents that there is
(2-sided)
significant relation between What is the source of
Pearson Chi-
19.268a 9 0.023 information you use before investing in IPO and
Square

Likelihood
Size of the IPO issued.
18.986 9 0.025
Ratio  From Above Table We can see that significant
Linear-by- level is not less than 0.05 so alternative
Linear 4.997 1 0.025
Association hypotheses is accepted.

N of Valid
250    
Cases

22
WHAT DIFFICULTIES DID YOU FACE AFTER APPLYING IPO’S? * CORPORATE
GOVERNANCE PRACTICES:

H0: There is no significance relation between What difficulties did you face after applying IPO’s and
corporate governance practices.

H1: There is significance relation between What difficulties did you face after applying IPO’s and
corporate governance practices.
Chi-Square Tests Interpretation:
Asymptotic
  Value df Significance  The Above Analysis represents that there is
(2-sided)
significant relation between What difficulties did
Pearson Chi-
2.562a 9 0.979 you face after applying IPO’s and corporate
Square

Likelihood governance practices.

2.634 9 0.977
Ratio
 From Above Table We can see that significant
Linear-by- level is not less than 0.05 so alternative
Linear 0.000 1 1.000
Association hypotheses is accepted.

N of Valid
250    
Cases

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 FINDINGS
From the age perspective, 176(70.40%) investors age between 21-30 years.

From the gender wise, 143(57.2%) respondents are male investors.

From the marital status perspective, 139(55.6%) investor are unmarried.

From the occupation wise, 75(30%) investors are retired and others.

From the annual income group wise, 110(44%) investors monthly income between Rs.
20,001 to Rs. 30,0000.

147 (58.8%) investors are investing for the purpose of listing gain.

109 (43.6%) investors use electronic media as a source of information for investment.

88 (35.2%) investor’s looks for performance of existing companies before investing.

110 (44%) investors are trading in IPO from 2 years to 5 years.

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 Through television 76 (30.4%) investors come to know about IPO.

 100 (40%) respondents are considering very high factor of Company Goodwill for
IPO.

 91(36.4%) respondents are high considering Board of Members as a factor for

IPO.

 10 (4%) respondents are neutral about Future Prediction and Forecast for IPO.

 82(32.8%) respondents are low considering Size of the IPO Issued for IPO.

 101(40.4%) respondents are high considering Current Financial Position for IPO.

 13(5.2%) respondents are very low considering Key Share holder for IPO.

 44(17.6%) respondents are neutral about Corporate Governance Practice for

IPO.
25
 56(22.4%) respondents are very high considering New Project Risk and Prospects
for IPO.

 26(10.4%) respondents are very low considering Legal Matter for IPO.

 62(24.8%) respondents are low considering Historical Background for IPO.

 10(4%) respondents are Neutral about Legitimacy for IPO.

 202(80.8%) respondents are grading before investing in IPO.

 126(50.4%) respondents gained 10% to 15% from IPO listing.

 85(34%) respondents say that the procedure for IPO’s is easy.

 72(28.8%) respondents are taking help of a broker while investing in IPO.

 77(30.8%) respondents say that partly invest in IPO and pick the stock on listing is
better. 26
 LIMITATION

For the purpose of study and present report data was collected and interpreted with
utmost reliability in consistency but still there are various limitation which are as follows:

 The data given by the respondents are subjective matter and may change from
person to person as a result generalization made may not be universally acceptable.

 The study depicts the present scenario in Ahmedabad city and result may vary from
city to city.

 Data of the questionnaire depends upon the beliefs and partiality of investors and may
be respondent bias.

 May the data have given by the respondents are incorrect.

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 The study is limited to only 250 responses only.

 The present study is restricted to information collected about

Decision of Individual Investors with regard to IPOs with the help of
questionnaire.

 The study is always subject to time horizon, after a period of time

newly collected data may so differently results.

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 CONCLUSION
The present study is an in-depth study of investment decisions of
individual investors with regards to IPOs was done and analysis has been
made with the help of various statistical tools. The collected data have
been interpreted and then the following conclusions have been drawn.

 From finding I found that majority of investors are male and they are
young and educated.

 Most of the traders are retired and others & their monthly income
between Rs.20,001 to 30,000, and their trade experience in investment
are between 2 years to 5 years.

 I concluded that majority investors are knowing about new IPO listing
with the help of television and they look for the performance of existing
company before investing in it.
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 Majority of investors are highly considered company goodwill
and key shareholders as well as size of IPO and they also
highly concern with the market share and legal matters along
with new project risk and prospects.

 Majority of investors are observed current financial position as

factor to be considered and also observed that they are not
worry about future prediction and forecast.

 Majority of investors feel the procedure of IPO is easy but some

faces the problem of clarity in allotment after applying for IPO.

 Majority of investors agree to take broker advice while investing

in IPO and they also do partly investment in IPO and pick the
stock on listing.

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 BIBLIOGRAPHY
 https://www.investopedia.com/terms/i/ipo.asp

 https://en.wikipedia.org/wiki/National_Stock_Exchange_of_India

 https://en.wikipedia.org/wiki/Stock_market

 https://www.nirmalbang.com/knowledge-center/all-about-equity-market.html

 https://www.angelbroking.com/research/fundamental-research/latest-ipo

 https://www.mbaknol.com/business‐finance/features‐of ‐option ‐contract/

 https://www.indianivesh.in/kb-blog/what-is-ipo

 https://en.wikipedia.org/wiki/Initial_public_offering

 https://www.moneycontrol.com/glossary/ipo/what-is-an-introduction_831.html

 https://www.5paisa.com/school/introduction-to-stock-market

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THANK YOU

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