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 Listing Requirement
SEBI
Eligibility Book –
Criteria Building
Promoter’s Guidelines
Contribution & COMPANY
Lock –in
requirement Post Issue
Stock
RBI/FIPB Exchange
Approval under Requirements
automatic route 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 Allocation
COMPANY Listing of Securities on the Exchange
Filing of prospectus with
Appointment of BRLM ROC
Investors bid
for shares Pricing to be
SEBI Comments &
finalised
BRLM conducts due Pre-marketing with
diligence QIB
Drafting of Road
Red Herring Shows
Prospectus
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
