MINOR PROJECT REPORT

ON

TO ANALYSE THE PERFORMANCE EVALUATION OF INITIAL

PUBLIC OFFERINGS IN INDIA

SUBMITTED TO
AMITY UNIVERSITY ONLINE

SUBMITTED IN THE PARTIAL FULFILLMENT OF THE

REQUIREMNET FOR THE AWARD OF DEGREE

MASTER OF BUSINESS ADMINISTRATON

SUBMITTED BY
PRAKASH NELYADDI MANJU SHETTY

ROLL NO. A99202120001526(EL)

ENROLLMENT NO. A99202120001526(EL)
 ABSTRACT
Capital market in any nation plays a vital part in supporting innovative advance and in
financial advancement by channeling reserves for venture in beneficial resources,
contributing to long term development prospects of the economy. The coordinate impact
of capital showcase is seen within the development of corporate segment that have
decreased the subordinate on bank as a source of finance to rise within the capital market.
Hence, this research main aim is to evaluate listing day, short term and long term
performance of IPOs and study the factors affecting IPO purchase decision of the Retail
Investors. For the purpose of collection of primary data personal interview of respondents
were conducted. The secondary data were collected from sources like NSE & Chittorgarh
websites, financial journal etc. Selected 10 Companies were considered which had raised
their public issues only in National Stock Exchange (NSE) from 2016 to 2019.
Company’s current stock price was taken as closing price. The findings revealed that
Investors today are much aware of different investment options available in the market
and they take market sentiments into consideration before taking decision to invest
because they want security and safety of investment principle in the long term as well as
short term.
 INTRODUCTION
Capital markets play an important role in supporting the technological and economic
development of all countries, directing investment in manufacturing facilities, and
thereby contributing to the growth scenario of the economy. The shortest effect of capital
markets can be seen in the expansion of the commercial industry, which has reduced its
trust on banks as a source of funding for its prosperity in capital markets.

It consists of a primary market and secondary market. The main market is the
introduction of new products by the corporate sector, such as stocks, preferred shares and
fixed income securities. Central & state governments, various PSUs, state energy
commissions, and other agencies such as port trusts also issue bonds/debt securities.

The primary market for the public offering of prospectus securities is the retail market
and has no physical location. The values refer to the investment community. The
secondary market is a market for the settlement and trading of already issued securities.
Investors sell securities through registered brokers/sub-brokers. Investors looking to
purchase securities purchase the securities through brokers/sub-brokers that are registered
with the exchange. It can be a physical location, such as an exchange or trading platform.
Securities have been traded since 1995 and online trading is also growing in India.

IPO (INITIAL PUBLIC OFFERING)

IPOs are the first source of funding for their projects from the general public. In return,
the business entities provide investors with the company's stock. An IPO is a way for a
company to raise fund from investors for upcoming projects and listing on the Indian
stock market. It is also elaborate that an initial public offering is a public offering of
securities on the primary stock exchange.

DEFINITION:
"IPO is an acronym for initial public offering. As the name implies, the company goes
public for the first time and also known as public offering. IPO is the first offer by the
owner to the shareholders.”
 “The first security a company issues after it is incorporated or when it is transformed
from a private company to a publicly traded company is called a “public offering” or
“IPO”. Funds rising from an IPO are also known as a company public going.

PRICING OF IPO
In 1992, the Indian primary market entered the era of free pricing. Securities Exchange
Board of India do not play role in setting prices. The issuer consults with the commercial
bank to determine the rate based on market demand. The proposal document contains
details of the particulars that the issuer and merchant banker are taking into account when
setting the price. The parameters include earning profit share, PE multiples, net worth
return and comparisons of these parameters with issuer organizations.
Based on price, issue can be classified into following
1. Fixed price
2. Book building
Fixed price Issue: Companies set a fixed price at which to sell their shares to investors.
Investors know what the share price is before the company goes public is called fixed
price process.

Book Building Issue: The underwriting process is called finding out a price by offering
to investors and then asking them to offer a price is called the book binding process. It is
considered one of the best ways to value primary market bonds. This is the most
recommended method by all stock exchanges and is therefore adopted by all
industrialized countries.

Who decides the Price Band?

Company with help of lead managers (merchant bankers or syndicate members) decides
the price or price band of an IPO. SEBI, the regulatory authority in India or Stock
Exchanges do not play any role in fixing the price of a public issue. SEBI just validate the
content of the IPO prospectus. The company sets the price of the IPO with the help of
senior management (an investment bank or a member of the organization). Securities and
 Exchange Board of India or the stock exchange have no role in fixing of IPO price. SEBI
is only checked the docuements of IPO proposal. Companies and executives do a lot of
research and the analysis before deciding on an appropriate IPO price. Companies have a
higher risk of IPO failure if they ask to be higher premium. Investors often do not like a
company or the issue price, and it is not applied, causing problems with non-registration
or non-registration. In this case, the company suspends the IPO or revises the issue price.

TYPES OF INVESTORS IN IPO

As far as an IPO is concerned, the total shares issued to the public are divided into 3
major parts for 3 different categories of investors. They are: 
1. Educated institutional Investor
2. Non Institutional Investor.
3. Retail Investor
a) Qualified Institutional Investors: All companies in the following categories are
considered NPOs to participate in the initial issuance process.
1) Scheduled Commercial Bank
2) Investment Trust
3) FIIs registered with Security Exchange Board of India
4) Multilateral and bilateral financial institutions.
5) Venture capital fund registered with Security Exchange Board of India.
6) Foreign venture capital investors registered with Security Exchange Board of India.
7) State industrial development company.
8) Insurance company registered with the Insurance Regulatory Agency (IRDA).
9) Insurance fund with at least Rs 25 Crore.
10) Pension fund with a minimum of Rs 25.
These companies do not have to register with Security Exchange Board of India like the
quality institutional buyers.

b) Non Institutional Investor:-These are the investor whose application size is more
than Rs. 2 lakh e.g. Individual Investors NRIs, Societies & trusts. At least 15 % of total
offer size can be reserve for this category. They are also called High Net worth
Individual (HNI)under this quota resident Indian Individual, HUFs, Companies, NRIs,
Societies ant trusts. These are the people or organizations that manage their own money,
usually to plan for retirement or to save for a large purchase.
c) Retail Investors :-Individual Investors who buy and sell securities for their personal
account, and not for another company or organization is defined as Retail Investor .
Retail Investor buy much smaller quantities than larger institutional investors. These are
the investor whose application size is less than Rs. 2 lakh eg. Individual NRIs, HUFs
Minimum 35 % of total offer size can be reserve for this category.
 REVIEW OF LITERATURE
Sheth and Christian (2022) examined and studied the growth return and performance of
IPO of National Stock Exchange. The secondary data was collected from 30 IPO
companies who were listed in 2019 in National Stock Exchange. The result revealed that
IRCTC, Burger king and Happiest Mind were major IPO companies, which gain
maximum return in the year 2019.

Abubakar and Hakim (2021) studied the impact of IPOs on Indian stock market. The
study consists six IPO companies that listed in 2009. It is found from the results that
negative impact of IPOs also affected the performance of Indian stock market.

Babu and Dsouza (2021) examined the performance of Indian IPOs in the short term.
The selected fifty two IPOs listed in the National Stock Exchange during the year 2018 to
2020 were consists for the research. It is found from results that the more than
subscription affects the IPO performance and attributes issue price and promoters’
holdings do not influence initial public offering return.

Khan et al., (2021) compared and examined the short term and long term performance of
IPOs. Twenty seven companies who raise their issues in the 2016 were considered for
the research. It is found from the paper that there is significance different between short
term and long performance of IPOs.

Mangala and Dhanda (2021) analysed the influence of earning management during IPO
on the opening day return. The 511 NSE and BSE IPOs that listing between 2013 to
2019. It is found from results that earning management influence opening day return of
IPOs.

Mazumdar and Saha (2021) explored the association between fear factor of covid-19
and short term performance of selected IPOs. The research is consists only 2020 IPOs
who were listed in New York Stock Exchange. It is found from research that Covid-19
fear had a strong impact on the short term performance of the IPOs.
Munira and Surti(2021) analysed the perception of investors towards Initial public
officer.A sample of 100 investors was selected from Surat region. The findings showed
that, in terms of gender, people who invest in IPOs have awareness of the IPO process.

Prajapati et al., (2021) analysed the performance of IPOs of BSE. The research is
constraint only on Bombay Stock Exchange (BSE). A sample of 217 IPOs was selected
from the year 2009 to 2019. It is found from analysis that majority of the IPOs is open
price is greater than listing price.

Arora and Singh (2020) analyzed the factors that determine the excessive Initial Public
Offering (IPO) subscription of SMEs in India. This study used intersection data to
examine 403 IPOs of Small and Medium enterprises. The results show that stock price
and listing delay have a negative effect on the number of investors.

analysed the determinants of oversubscription of SME initial public offerings (IPOs) in

India. The research employs cross sectional data to examine 403 SME IPOs. The results
revealed that while issue price, pricing mechanism, listing delay negatively influence
oversubscription; firm size, underwriter reputation, hot market and under pricing have
been divulged to positively influence oversubscription. 

Ashwani and Jyoti (2020) examined the performance of IPO’s are analyzed based on the
comparison of issue price with closing price on the day of issue. From the year 2015 to
2019 which are listed in National Stock Exchange (NSE) India, most of the investors
always prefer to purchase securities at a lower issue price and the comparison will be
made with the closing price. The analysis of data using correlation shows whether there is
a relationship exists between issue prices and issue size.

Kumar and Priya (2021) evaluated the short term performance of NSE IPOs. Secondary
data was collected from National Stock Exchange and Chittorgarh websites. The findings
revealed that National Stock Exchange IPOs were underpriced between short term run.
 RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

 To evaluate listing day, short term run and long term run performance of IPOs.
 To examine the relationship between short term and long term run performance of IPO.

RESEARCH DESIGN
The design of the study is descriptive as it defines fact & features association with the
people buying products and services from shopping malls. Descriptive study is obtained
data about the present position of the phenomena to defined "what exists" with respect to
variable in a given location.

DATA COLLECTION METHODS

The secondary data were used for this study.

Secondary data
This data can be obtained through books, journal, websites and previous reports. Selected
10 Companies were considered which had raised their public issues only in National
Stock Exchange (NSE) from 2016 to 2019. Company’s current stock price was taken as
closing price.
 DATA ANALYSIS AND INTERPRETATION
TABLE 4.1 PERCENTAGE WISE CHANGES IN IPO ON LISTING DAY
% wise changes
S.No. Name of the companies Price Close
in IPO prices
1 Parag Milk Foods Ltd 215 247.8 15.26%
2 RBL Bank Ltd 225 299.3 33.20%
3 Varun Beverages Ltd 445 461.9 3.80%
4 Matrimoney.com Ltd 985 901 -8.51%
5 Partaap Snacks Ltd 938 1173.3 25.62%
6 Amber Enterprises India Ltd 859 1237.25 44.30%
7 Hindustan Aeronautics Ltd 1215 1128.35 -7.30%
8 Rail Vikas Nigam Ltd 19 19.5 0.26%
9 Polycab India Ltd 538 655 21.75%
10 Prince pipe and fitting Ltd 178 166.6 -6.40%

50.00%

40.00%
Percentage wise changes in IPOs

30.00%

20.00%

10.00%

0.00%

-10.00%

-20.00%

Figure 4.1 Percentage wise changes in IPO on listing day

The table clearly depicts that the Amber enterprises has shown highest growth return of
44.30 percent followed by RBL Bank (33.20 percent) and Partaap Snacks Ltd (25.62
percent). On other hand, Matrimony.com ltd has a negative growth return of -8.51
percent. It is also found from the table that Matrimony.com face heavy loss in the listing
day of IPO.
TABLE 4.2 AVERAGE SCORE AND PERCENTAGE CHANGES OF SELECTED
IPOS ON THE BASIS OF SHORT TERM PERFORMANCE
SHORT TERM PERFORMANCE
S.No
Name of the companies Listing 1 3 6 Average %age
.
Day Day Month month Price Changes
1 Parag Milk Foods Ltd 215 215 319 268.5 267.5 24.41
2 RBL Bank Ltd 225 225 363.05 476.45 354.8 57.70
3 Varun Beverages Ltd 445 445 404 485 444.6 -0.074
4 Matrimoney.com Ltd 985 985 916 810 903.6 -8.25
5 Partaap Snacks Ltd 938 938 1225 1320.5 1161.6 23.79
6 Amber Enterprises India Ltd 859 859 1138.7 950.7 982.8 14.41
7 Hindustan Aeronautics Ltd 1215 1215 865 830 970 -20.16
8 Rail Vikas Nigam Ltd 19 19 26.2 22.95 22.7 19.56
9 Polycab India Ltd 538 538 614 716.9 622.9 15.79
10 Prince pipe and fitting Ltd 178 178 94.6 109.75 127.4 -28.39

80

60
Percentage wise changes in IPOs

40

20

-20

-40

Figure 4.2 average score and percentage changes of selected ipos on the basis of short
term performance
It is found from short term performance analysis that RBL bank Ltd has highest growth
return of 57.7 percent followed by Parag Milk food ltd (24.41%) and Partaap Snacks Ltd
(23.79%), whereas prince pipe fitting faces loss in short term performance with return of
( -28. 39%).
 TABLE 4.3 AVERAGE SCORE AND PERCENTAGE CHANGES OF
SELECTED IPOS ON THE BASIS OF LONG TERM PERFORMANCE
LONG TERM PERFORMANCE
S.No %age
Name of the companies Listing Long run
. 1 year 2 year 3 year
Day performance Chang
es
1 Parag Milk Foods Ltd 215 241.5 351 243.25 278.58 29.57
2 RBL Bank Ltd 225 536 626.95 329 497.31 121.02
3 Varun Beverages Ltd 445 510 769.95 761 680.31 52.88
4 Matrimoney.com Ltd 985 548 548 597 564.33 -42.70
5 Partaap Snacks Ltd 938 536 626.95 329 497.31 -46.98
6 Amber Enterprises India Ltd 859 744.1 1535.5 2565 1614.86 87.99
7 Hindustan Aeronautics Ltd 1215 743.45 522.2 985.5 750.38 -38.24
8 Rail Vikas Nigam Ltd 19 18.35 29.15 34.75 27.41 44.29
9 Polycab India Ltd 538 735.5 1403.6 2607.35 1582.15 194.08
10 Prince pipe and fitting Ltd 178 299.75 698 664.25 554 211.23
250

200
Percentage wise changes in IPOs

150

100

50

-50

-100

Figure 4.3 average score and percentage changes of selected IPOs on the basis of
long term performance

The table depicts the long term performance of IPOs. It is found from analysis that Prince
Pipe and fitting Ltd and Polycab India Ltd have demonstrated the growth return of 211.23
and 194.08 percent from the listing day. When compared to short term performance
Prince Piper and Fitting Ltd have shown negative growth return. On other hand Partaap
Snack ltd and Matrimony.com Ltd have shown negative growth return of -46.98 and -
42.70 respectively.
TABLE 4.4 SIGNIFICANCE DIFFERENCE BETWEEN SHORT TERM RUN
AND LONG TERM RUN PERFORMANCE

Null Hypothesis: There is no significance difference between short term and long term
performance of selected IPOs.
Alternative Hypothesis: There is a significance difference between short term and long
term performance of selected IPOs.

Regression model was applied to see the significance difference between short term
performance and long term performance of selected IPOs. The calculated R2 value shown
that there is 47.90% impact of independent variable on dependent variable. It is also
found from the table that anova test value (2.382) is higher than significance level of
0.05. The result shows that there is no significance difference between short term and
long term performance of selected IPOs.
 SUMMARY
 After the completion of the project, it would like to conclude that the IPO is no longer a
risky investment, as Securities Exchange Board of India plays an important role in risk
management and investor financing. According to this research, an IPO can be a good
investment option as it provides 10% to 20% return for of 68% investors.
 From the analysis it is concluded that Prince Pipe and fitting Ltd and Polycab India Ltd
have demonstrated the growth return of 211.23 and 194.08 percent from the listing day.
When compared to short term performance Prince Piper and Fitting Ltd have shown
negative growth return. On other hand Partaap Snack ltd and Matrimony.com Ltd have
shown negative growth return of -46.98 and -42.70 respectively.
 It is found from short term performance analysis that RBL bank Ltd has highest growth
return of 57.7 percent followed by Parag Milk food ltd (24.41%) and Partaap Snacks Ltd
(23.79%), whereas prince pipe fitting faces loss in short term performance with return of
( -28. 39%).
 The analysis clearly depicts that the Amber enterprises has shown highest growth return
of 44.30 percent followed by RBL Bank (33.20 percent) and Partaap Snacks Ltd (25.62
percent). On other hand, Matrimony.com ltd has a negative growth return of -8.51
percent. It is also found from the analysis that Matrimony.com face heavy loss in the
listing day of IPO.

SUGGESTIONS
1. About forty percent of investors have learned about IPOs through agents. Therefore, the
company must maintain a good relations with the agents and maintain faith them in
relation to the organization.
2. Company reputation, market share, agent's advice and media factors are playing
important role in investment of IPO. Companies should pay more attention to these
factors. Media should also be used as an important tool to create a positive image in the
mind of investors. Because the media is one of the most popular elements.
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 http://www.bseindia.com/
 http://www.nseindia.com/
 www.chittorgarh.com