A Study on Indian IPO's

7/31/2019 A Study on Indian IPO's

1/67

SUMMER INTERNSHIP PROJECT

On

A Study on Indian IPOs

Submitted By

Udit Bubna

Roll No. 201168

FMG XX

Under the Guidance of

Prof. Vinay Asthana

FORE School of Management

FORE School of Management, New Delhi

B-18 Qutab Institutional Area

New Delhi


2/67

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SU

MMER

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FORE

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mitted B

it Bubna

No. 20116

MG XX

he Guidan

Vinay Ast

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7/67

The proIndia frofocusesIPO. TmoneyIPOs isyears.

In orderreferreddifferentreturnsunderstnumber

periods.time. Thlast 5 y

The IPconsistBankingreturnsresultshalf dec

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comparExpectasome in

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ect on Am 2007 toon the rethe initialose fromsued has

to write th. The perftime fram

were calcnding theof IPOs

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s were alnt performSector wrom Publihows that

ade.

ject enligry Marketen and frry markete. The rendary Ma

er part oed to knoas overwces towareir decisi

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part of theysis of the

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is report vrmance o

es of Opeulated froIPO markgiving pos

gs show treturns f

so segreging Industrre found tSector IPPublic Se

tens the rperformanm each inwas chosults show tket for alm

the repothe investelming ass the typen to inve

e secondactual resdings.

report deProject.

ecutidian IPOsng this perthese IPOproject talrket sinceile the m

rious resethe IPOs

ing Day, 1the issu

t at differeitive retur

hat numbeom IPOs

ted accorin last 5be mosts and Pri

ctor IPOs

eaders ofces. In orddustry 1 cn. The rethat Primarost all the I

t deals wor behavioit collectedof IPOs,

t in Prima

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ls with Co

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arch papewas evalMonth, 6

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ith the Prwhile inv90 respohe returnsry Market.

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8/67

Conte

ACKNOW

EXECUTIV

CHAPTERINTRODU

1.1PRO

1.2COM

1.3OBJ

1.4RELE

CHAPTERLITERATU

CHAPTERMETHOD

3.1RESE

3.2DAT

3.3SAM

3.4DAT

3.6FIEL

3.7LOC

3.8UNI

CHAPTERSECONDA

4.1FUN

4.2SUM

4.3ANA

4.4IND

4.5IND

4.6SEC

4.7COM

4.7.

4.7.

4.7.

4.7.

4.7.

4.8ANA

CHAPTERPRIMARY

5.1SUR

5.2CRO

5.2.

5.3CRO

5.3.

5.4CRIT

ts

EDGMENT.....SUMMARY......................TION.............

ECTBACKGROU

PANYBACKGRO

CTIVEOFTHEST

VANCEOFTHES

....................EREVIEW.........................LOGY............ARCH

METHOD

COLLECTION...

PLESELECTION..

ANALYSIS.......

EXPERIENCE....

LEOFTHESTUD

ERSEOFSTUDY.

....................YDATAANA

DSGENERATEDB

MARYOFRETUR

LYSISOF

IPOSR

STRYWISEDIST

STRYWISEANA

ORWISEANALY

PARINGRETURNReturnAnalyReturnAnalyReturnAnalyReturnAnalyReturnAnalyLYSIS&DISCUSSI

....................DATAANALYSEYRESULTS&A

STABULATION

ApplyingChiSTABULATION

ApplyingChiERIAFORINVESTI

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D....................

ND..................

DY.................

UDY................

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LOGY...............

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YSIS..............IPOS............

SOFIPOSINL

ETURNSAT

VARYI

IBUTIONOFIPO

LYSISOFIPOS...

SIS...................

INPRIMARYM

isofAutomoisofITCompisofTelecomisofConstrucisofBankingONOFPRIMARY

.....................

IS..................NALYSIS............

FEXPERIENCEIN

SquareTestofFEXPECTEDRET

SquareTestofNGINIPOS......

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ST5YEARS.......

NGTIMEFRAME

S....................

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.......................

RKET&SECOND

ileCompanieniesinIndia..unicationsC

tionCompaniCompaniesinSECONDARYM

.....................

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INVESTING&PRIndependencRNSANDPREFEIndependenc.......................

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ARYMARKET....inIndia...............................

mpaniesinInsinIndia.......India..............ARKET.............

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EFERREDSECTOR.....................RREDSECTOR...............................................

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5.5EXTE

CHAPTER6.1MAJ

6.2CON

6.3SUG

6.4LIMI

REFERENC

APPENDIC

APPENDI

APPENDI

RNALFACTORS

....................

ORFINDINGS.....

CLUSION...........

GESTIONS..........

ATIONS...........

ES..................ES..................XA:LISTOF240

XB:SURVEYQU

FFECTINGSTOCK

.....................

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IPOS.............

STIONNAIRE......

MARKET..........

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.....50......50

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.....54......54

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List of

FIGURE1:

FIGURE2:

FIGURE3:FIGURE4:

FIGURE5:

FIGURE6:

FIGURE7:

FIGURE8:

FIGURE9:

FIGURE1

igures

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PIECHARTOF

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PUBLICSECT

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List of

TABLE1:

TABLE2:

TABLE3:

TABLE4:

TABLE6:

TABLE7:

TABLE8:

TABLE9:

TABLE10:

TABLE11:

TABLE12:

TABLE13:

ables

UNDSGENER

UMMARYOF

O.OFIPOS

AST5YEARSI

ETURNSFRO

ETURNSFRO

ETURNSFRO

ETURNSFRO

RETURNSFRO

CROSSTABUL

CROSSTABUL

LISTOF240I

TEDBYIPO'S

ETURNSOFIP

IVINGRETUR

POINDUSTRY

AUTOMOBIL

ITSECTORIN

TELECOMMU

CONSTRUCTI

MBANKINGS

ATIONOFEXP

ATIONOFEXP

PO'SISSUEDI

OVERYEARS.

O'SINLAST5

SATDIFFERE

WISE...........

SECTORINP

PRIMARYAN

NICATIONSSE

NSECTORIN

CTORINPRIM

RIENCEININV

CTEDRETUR

LAST5YEAR

...................

YEARS.........

TTIMEFRAM

...................

IMARYANDS

SECONDARY

TORINPRIM

PRIMARYAND

ARYANDSEC

ESTINGANDP

SIN1YEARA

S.................

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ES..............

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CONDARYM

MARKET.......

RYANDSECO

SECONDARY

NDARYMAR

REFERREDSEC

NDPREFERRE

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RKET............

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DARYMARKE

ARKET.........

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TOR..............

SECTOR.......

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....54


12/67

Introd

1.1Pro

Initialsecuritistock eto invesimportatap acompan

make afurtherand the

Investinhigh eleThe rul

Is highemanage

objectivadvantacan be

Advant

9 T

9 T

9 It

9ac

ction

jectBack

ublic Offs by a cochange. Inors on a pt objectivide rangey for futur

lot of monxpansionnew share

g in IPO hment of ris

r the risk,ment obje

s. Both hge for bottudied fro

ges for Co

he cost ofanks for mhe compa

helps theapital Venhen a co

ppreciatioompany.

round

ring (IPO)pany, wh

other worublic stockof an IPOof invest

e growth

y from theand develholders get

s its own sis involve

higher thetives and

ave a lotthe comp2 viewpo

mpany

an Initial Pany years.y need no

companyures etc inpany sellsof the sha

CH

is the firsich is follos, it refersexchange,is to raisers who wnd develo

sale of itspment. Tha right to f

et of advad, if succe

returns. The investo

f risk invony and thints for th

blic Offer

require p

to tap widorder to raits stock pre price du

PTER

public offed by th

to the firstwith an intcapitalforould provipment. C

shares whie companuture profit

tages andsful, it can

he compar looks for

lved. But tinvestorse compan

is low as c

ying back

range ofise huge aublicly, thee to marke

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ering of elisting of

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ch it tries tis not re

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mpared t

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investors lmount ofre is also tt factors n

uity sharea companompanysise new cny. It helpolumes ofing for an

o anticipatuired to rd by the c

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n IPO witt keeping i

ment alsoicance of ie investors

costs of b

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ike FIIs,oney.e possibilit directly r

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or conves sharesommon spital. Thea compacapital tIPO stan

how to uspay the cmpany.

e on oner rate of re

its own sn mind his

comes witnvesting in.

orrowing it

etail Inve

y forlated to th

| 12

rtibleon aaresmosty tothe

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e forpital

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et ofown

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13/67

Advant

9

l

9 Tt

The pricfailure oan IPOgeneratsufficieIPO invinstituti

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IPO Ma

The Inditill 2009offers. Iyear. IPPoliticalgoing th

ges for Inv

ne of the lw price wostly IPOhe speculan long te

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interest it capital foolves thenal invest

ricing is othe Initialadditionasignifican

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g all the o

ket in Indi

an IPO m-2010 441

the yearO marketInstability

rough diffi

estors

crative thiich is benare unde

tive investrm gains.

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the markr the comunderwriters.

ne of theoffer Pric

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en a particwilling to priters to kefered shar

rket is one8 compan2007-2008in India haand Globult times,

ngs about Ificial for inpriced.rs are inte

y critical aare many

ld be madt and at tany. Thes arrangi

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lar stock iay. It is mep their ples then it

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rested onl

pect andfactors the to reache same tirocess forg share p

on waysdays closhen it firsho havelts in losseen offere

s made avre risky thdge to sel

is likely to

ising maraised Rs.crore wereen volatilDuring 20d through

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in the sho

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f pricing aing price.becomeseen allocof signific

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l shares.lose its m

kets for th176449 craised hi

e pertaini08-09 wheIPO in Indi

enerally ofl rise in pr

rt-term pot

impact one considerice that isd be highg an opti

ommitment

n IPO, it iUnderpricepublicly trated sharent amounher rate

e public atricing. Asven if theyrketable v

investors.rore throuhest amog to Econn the gloa was only

Pag

fers it at aice of stoc

ntial rathe

the succeed while prlow enounough toal price fos from le

the differd IPO helded. Thisat the offof capital

a greaterresult it ware succe

alue to a

Since 199gh initial pnt in anymic Condal marketRs. 2082

| 13

ery, as

r

ss oricingh to

raiser theding

ences toightringthat

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ition,wasrore


14/67

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15/67

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| 16

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17/67

and coindustryreaders

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| 17

kinghelp

IPO.

ions.rket

es inpast


18/67

Litera

Over thIPOs.(1969)underpduringperformin an IPto an alnamed

the mVaidyastudy oexchan

Benvenbe reduand uncompetinumber

positivelinformatfirm and

In the Ievaluat1991 toThiripal1995. Kshort-te

Saurabevaluatinitial punderp

ureRev

years mhere haveeported urformance975 to 1

ed as comand reta

ready listeMoney lef

ney theathan (2055 firms le in India.

iste andced if diffeinformedtive outcoof uninfor

y related tion producgross pro

dian contd the perfMay 1995aju studyakati (199m under p

Ghosh (s the stocblic offerinrformance

ew

ny studiesstudies rder pricinby using84, he shared to thning it for t

firm. Pat on table

firm coul09) foundisted on N

pindt (19rentiation iinvestors.e in IPO

med inves

the incretion whileeed from I

xt Shah (rmance ofstating 10ere more) who res

ricing is 36

005) Thek returns ags from 1in the long

CH

have beelated to tto the ex

a sampleowed that

already lihe next thrde and V, this tells

generataverage uational St

9) suggestdone pri

Saundersarket res

tors. Che

se in thenegativelyPO.

1995) &IPO. Whil.6% retur

related to tearched 5.6% while l

post offerind operati90 to 200run of the

PTER

conductee under ptent of 11f 1526 cin the lonsted firms.ee yearsidyanathathat higher

throughderpricingck Excha

ed a modr to the al(1990)

ulted frommanur (

number ofrelated to

adhusooShah stu

s in IPO ohe long ter00 IPOs fong term o

ng performg perform. He docu

Banking In

2

on the pricing of t

, Jay R.mpanies tg run IPORitter alsoould give l

(2009) ethe amou

higherof 22% oge (herea

l by whichlocation ofupportedsmall num993) prop

investorsthe proba

anan anied 2056

ver short-tm returnsrom 1993ver pricing

ance of Iance of thmented thdustry sha

rformancee IPO ReiRitter (199hat wentfirms sigcommenteower returplained tht of under

ffer pricethe day

ter NSE),

level of ushares bethat undeber of infoosed that

f the IPOility of bei

Thiripalrtocks listirm. Madhrom the IPto 1996 dis 40.8%.

O from Be Indian Bt there waes.

Pag

& relevanlly and Ha1) documublic in Uificantly ud that inves as compe phenompricing gr

. Pandef listing ina leading

der pricinween infor pricingrmed and lunderprici

and the cg a high

ju (1997)g from Jasoodanan

O from 19cumented

nking Indnks that

s no signif

| 18

e oftfieldnted.S.A.der-

stingarednonater

andtheirtock

canmedis aargeg is

st ofalue

alsouaryand2 tothat

stryade

icant


19/67

In Indiafrom that very

due toSahooIPO isspricingare buywho bomonths.shows tIPOs thto the e

One ofVellamIndia bsharessharesprice. Hissue, iperform

many cominvestors.igh rates,

market forPrabinaued betweas 46.55

ing througght the sFew of t

e similar ft hit thetent of 72.

the latestl Collegetween 20fter a moere tradi

e also stahis study

ance of the

panies unAs a resulgiving goo

es of deRajib (201en 2002

in thesesubscript

ares on lie studies

indings likearket bet

34%.

studies iof Engin4 and 20th, 1 Yeag below thed the beit was moIPOs was

er price tt on the lisd returns, t

and and0) on Indi2006. T

hares. Thiion offer asting dayconductedKrishnaeen 1992

this regering an8. The st& 3 Year

e issue prist return frre than 55mixed in

eir issue iting day thhe prices

supply. An IPO marey studiestudy als

e earningf IPO arebefore Seurti andand 1994

rd is bytechnolo

udy wass. He docce & 100om an IP% returnsis analysis

order toe share pritable dow

study wasket 2010, i92 IPOssuggeste

positive reearnings

shadev Sumar (20emonstrat

.C.Johngy; he stone by amented thhares wecomes i

from the I.

et maximce of the c

after few

conducten which thand repo

d that thosturns, butnegative rhoo & Pra2) workinge that the

Sasi Kumdied 275 Ialyzing that out of 2e trading

the firstO. Howev

Pag

m subscriompaniesdays of tr

by Seshy analyzeted that uinvestors

those inveturns up tbina Rajibon a sam

under prici

ar, ProfePOs issue prices o75 shares,bove the ionth afte

er the lon

| 19

ptionpending

devthenderwho

storso 12alsole of

ng is

sor,d inthe165

ssuer the

run


20/67

Metho

3.1Res

The resof IPOSecondSome rAll IPOMonth,IPOs

applied

The reswhich tThis willdividedprofitabl

Primarinvestinqualitatisurvey

to invesasked twill help

3.2Dat

The datutmost

For the

In orderSecondwere redifferentcompar

ology

earchMe

earch A Ss issuedary Datasearch paperforma

6 Months,ere calcul

to have m

earch alsoey belonghelp in kn

on the basie to invest.

Researcin an I

e, as it wn attempt

t their morank the fin getting i

aCollecti

a collectioccuracy k

purpose of

rimary Soecondary

to collectry Data verred in otime framd with oth

hodology

tudy on Irom 2007as collect

pers werence were1 Year, 5ted from

re in depth

includes sand thenwing the

s of Public

h was alO. The

ill help inwas made

ey in an Iactors thatnsights int

n

for projeeping in m

data colle

rcesources

the data brious onli

der to cones and for sites to

CH

dian IPOto 2011.

ed from valso referrnalyzed oears and

the Issue

analysis.

egregatingtudying thest perforSector &

o conducturvey focegregatinto find out

PO & whiaffect theithe inves

t A Studind the im

tion, two d

oth Primare websiteuct propedifferent i

onfirm its

PTER

has beeDuring t

rious webd so as t

n the basithe pricesPrice & t

the IPOstrends ining indus

rivate Sec

ed to finused mor

differentthe criteri

h type ofinvestme

ors buying

y on Indiortance of

ifferent so

and Sec, journals,

r analysis.ndustrieseliability.

3

carried oe periodites in ordprovide sof return

as on Maen some

on the bathe returnry in last 5or, so as t

out theon qua

aspects othat inve

IPO do tht decisiondecisions.

n IPOsthe projec

rces were

ndary resresearchThe dataor last 5

ut to find t240 IPOer to comome insigh

on Openi02,2012.

statistical

sis of diffes from diffyears. Thfind whic

investorstitative dainvestortors consi

y prefer.on IPOs.

has been.

adopted fo

arch wasapers & an IPOs wears. The

Pag

e performwere is

lete the rets on the tng Day, afThe returneasures

rent industrent indusIPOs aresector is

behaviorta ratherehavior. Iered impo

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r the study

conductedcademic bas collectedata was

| 20

anceued.port.opic.ter 1s onere

ry tories.alsoore

hilethan

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with

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21/67

Secondinformattables i

For Pri

clientsDocumThe purBoth nresponwithincross tainvestorsome c

3.3Sa

The sahavingrespondselectea resultamongmethodwere 90

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ary Rese

f Sharekhnts. The spose of theminal anents of dweeks. T

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pleSelec

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aAnalysi

lysis oftime fra

nding andt the retur

ey resultsther the Rhosen bybetween tharts while

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purpose ofpeople. T

as workeing the IPdary Anal

arch an o

an and onrvey wassurvey wa

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od adoptounts ora resultucity of ti

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nce

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applied wcted andrs. Chi Ss of the sa by graph

mat Accouwas perfor

excel sthe dataeasier un

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ith Chi Sqears of E

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have ansample won only. T. As a rethin 2 we

calculatingesented ialso been

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e requiredeek in dif

t importaepresente.

social n

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| 21

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22/67

The solhelpedResearget the

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nd emploacross th

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walan Brathe compion only.

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| 22

atedary

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Thethe

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unde of


23/67

Secon

4.1Fu

The ab2010. Ocomparbecaus

aryDat

dsGener

ve table sne can ead to the 9people h

Analysis

tedbyIP

Tabl

ows the nily interpr

0s but theave starte

Years

1993-9

1994-9

1995-9

1996-9

1997-9

1998-9

1999-0

2000-01

2001-0

2002-0

2003-0

2004-0

2005-0

2006-0

2007-0

2008-0

2009-1

CH

s

1: Funds Ge

. of IPOst that sincfunds raibelieving

IP

APTE

nerated by IP

issued ane 2000 theed by thethat inve

Issued

692

1239

1357

717

52

18

51

114

7

6

21

23

79

77

85

21

39

4

's over Year

funds rosno. of IPhave inc

ting mon

Amount(cror

786

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104

40

271

272

120

103

343

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109

285

425

208

246

s

e from theissues h

reased may in IPO

Raisedes)

4

2

4

9

8

9

2

2

9

4

9

6

4

5

2

6

Pag

since 19ve reduc

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| 23

3 tod asainlyood


24/67

investmbecausas majoimproveNovem

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be seenThe avday. Thlowest ffor all tnumbertotally dsome re

ent opportof a glob

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er 2010 I

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that averarage reture currentom any ot

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nity. Duril slowdowts banks

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eturnso

Table 2:

eningDay

5.45

0.09

4.11

86.25

7.08

ows the a

ge returnsn after 1 yscenario lher time priods afte

are givingthe openin

any othe

g the yea. Peopleround there IPOs

est IPO ti

IPOsin

Summary of

1 Month

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66.67

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erage retu

from IPOear of issuoks worseriod. It ca1 year t

negative rday as it

time fram

r 2009 IPtarted havworld lostwere issull date CO

ast5Yea

eturns of IP

6 Month

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463.14

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rns from th

eep on dee is -23.0as averaalso be in

e medianturns to thshows tha.

s in Indiaing negatiillions of dd and mAL India

s

's in Last 5 Y

s 1

-2

-4

72

34

-9

e IPO on

reasing wi% while it

ge returnterpreted tis -46.10e investormore tha

dried upe views oollars. As tre fundsas issue

ears

ear

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ifferent tim

th increasis 5.45%rom 240 Ihat the me

showing. However50% of s

Pag

ll of a suStock Ma

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urrently

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103.48

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e frames, i

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| 24

denrketsd to. In

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25/67

4.3An

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Openin

After 1

AfterMont

After 1

Curre

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Only 44 c.

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Table 3: No.

ill 10%

. %

14

8

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3

3

ows the ray 2012.shares gi

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performanmuch une companmpanies a

nsatVar

of IPOs givin

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No.

35 1

31 1

14 5

10 4

8 3

turns of thAs you caving negatiurns, therares givinand curre

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y becausereflected i

t the short

ce in the lertainty as perfor

re able to

ingTime

g Returns at

R

0% 30

% No..58 19.92 13

.83 10

.17 14

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e IPO fromobserve

ve returns,is an incmore tha

tly there o

s on sharares givinperiod. Thof under pn the long

term perf

st 5 yearsbout theance as aive some

Frames

ifferent Tim

eturns

to 50%

%

7.92

5.4

4.17

5.83

2.08

Openingrom the laout of 240

rease of50% retu

nly 25 sha

es were gpositiveshares a

ricing of shrun as the

rmance of

or so. Thiarket, poresult sha

returns to t

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43 17

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25 10

ay, 1 Most columnIPOs curr7 (32%) srns were ares giving

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the IPOs

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Pag

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.67 182.42 196

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openingthe listing

ely to givecompany.

et forces

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| 25

gativeeturn

%

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60.83

67.08

75.83

81.67

s, 1time% of

theg asthan

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26/67

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21

1

g

ations

| 26

erenies

6


27/67

4.5Ind

Industry

Auto

Agro

Banking

Brewerie

Castings

Cement

Ceramic

Chemica

Construc

Distilleri

Edible O

Electrica

Enginee

Finance

Food Pr

Glass

Hospital

Hotels

IT

Jeweller

Leather

MediaEntertai

Minning

Oil Drilli

Packagi

Paper

Personal

Pharma

Plastics

Power

stryWis

s

ls

tion

s

ils

ls

ing

cessing

ment

g

g

Care

eAnalysi

T

No.Compan

4

3

4

1

2

3

4

6

35

1

2

1

10

12

1

1

2

3

24

5

1

13

4

2

6

1

2

10

3

17

ofIPOs

ble 4: Last 5

ofies

O

1

-1

3.

-9

-4

11

-2

1

4.

-1

-4

2

7.

4.

4

-2

-6

-1

3

-7

-1

-1

-1

-3

-1

6

-7

-6

1

1

Years IPO In

p Day 1

.19 -2

0.57 -3

72 6.

.25 -1

2.3 -5

3.26 1

1.82 -2

.59 2

45 0.

7.39 -2

1.01 -5

.29 -1

68 -3

75 1.

.33 6

9.13 -5

.99 -9

.04 -7

.01 31

.41 0.

2.5 -2

2.89 -1

7.23 -2

5.31 -3

4.85 -1

.33 -1

7.01 -7

.15 -9

.51 -2

.09 7.

ustry Wise

Month 6

4.89 -

0.67 -

16 2

1.20 3

7.23 -

5.65 4

6.15 -

.49 8

45 2.

1.44 -

4.34 -

3.71 -

.8 -

61 -1

.33 -

6.09 -

.03 -

.64 3

.95 8.

42 1

6.63 -

3.07 -1

9.31 -

5.05 -

0.77 -

7.5 -

5.96 -

.51 -

7.5 -

64 -1

onths1

5.78 -

.55 -

.32 1

.80 6

6.12 -

.63 -

8.21 -

.2 4

52 -

1.88 -

2.65 -

5.57 -

0.82 -

8.69 -

3 -

8.35 -

9.18 -1

.4 6

28 1

.35 -

5.38 -

1.42 -

1.14 -

9.24 8

4.49 -

8.83 -

4.94 -

2.12 -

1.27 -

5.44 -

Pag

Year C

1.75 -

8 3

9.45 2

6.20 7

0.68 -

6.79 -

5.53 -

2.43 -

2.86 -

7.43 -

4.18 -

7.34 -

5.38 -

1.57 -

6.33 -

6.96 -

8.59 -

1.08 5.

.09 -

.73 5.

7.69 -

3.98 -

2.62 -

.29 2

3.27 -

9 -

5.62 -

0.22 -

1.07 -

2.25 -

| 27

urrent

1.88

.23

.23

3.95

3.03

1.58

6.11

7.39

4.04

5.89

3.2

6.12

7.68

1.33

7.04

1.05

1

2.28

9

8.94

3.51

.52

.77

0.03

7.23

7.275

0.7

9.69

4.7


28/67

Printing

Retail

Rubber

Shipping

SteelTelecom

Textiles

Transpo

Diversifi

The abThereIPOs wIT secto

There hChemicirrespecvery hichemicCompadifferentJubilant

The coattractivin the mgiving sIndustry

The bes1 montearning

IndustriTeleco

negativcomplet

In the laInstabiliseen th

munications

t

d

ve table sere 240 IPere issuedr (24) and

ave beenls, IT an

tive of timh returnsls, coatinies weretime fra

Food, Gra

struction se as this inarket. Theome returas both in

t returns f. The pattare very

s likemunicatio

in any giion, Expiri

st 5 yearsy, Corruptiprices of

1

1

1

1

96

21

1

16

hows the sOs belongby Constrhen the te

some conDiversifi

, marketmainly dus, dyes,best amones. Someita India &

ector has idustry is hshare prics in initialustries ar

r all mostern in all teager as

Personals were w

en time frg of Paten

many comon, Inflatioheir share

-1

-2

-2

-2

2-1

1.

-8

21

ector-wiseing to 39ction Secttiles indus

istent perd; returnsonditionsto increa

igments,g the lot

of the bAdvanta.

ssued theighly depes in Const6 months.related to

ll the induhe IPOs icompared

Care,orst perfor

mes. Thes & no ne

panies havn & High.

4.77 -5

2.41 -4

6 -3

.07 -6

.47 7.0.17 -2

6 -3

8.9 -8

.84 1

returns foifferent inor taking ttry (21).

orming inin these

& recessise in thesoaps, cos their rest perfor

most no. odent on mruction secSimilar peach othe

tries weressued in lo short ru

rinting,ming shar

Pharma Iinvention

e becomeorrowing r

8.14 -

5 -

4.29 -

.21 4

04 -13.44 -

.6 1

8.73 -

.84 3

all the IPustries. Ine count to

ustries inindustriesn. The chemand ofmetics &turn wasing comp

f IPOs buarket condtor declinettern was

r.

seen durist 5 yearterm retur

Pharmaces, as thei

dustry is fin the field

victims ofates, as a

5.58 -

8.15 -

6.71 -

.34 4

.26 -8.75 -

.05 -

3.41 -

.86 1

s issuedthe last 535, it was

last 5 yeahave alw

emical indorganic cpolymer.onstantlyanies in t

the returnitions, supd heavily aalso seen

g the Opesuggests

ns.

ticals,r returns

acing dileof Medical

lobal Sloresult the

Pag

5.93 -

1.19 -

7.89 -

5 3

9.97 -6.05 -

-1

1.82 -

7.16 7

in last 5 years maxifollowed b

s like Ceys been tstry hasemicals,he Diver

increasingis sector

s were notliers & liqfter 1 yearin the Ce

ing day &that long

ngineeringere const

ma due t.

down, Polffect can

| 28

8.79

7.7

5.29

.68

4.513.71

9.16

4.59

.3

ars.umthe

ent,hereivengro-ifiedwithwas

thatidityafter

ent

afterterm

&antly

stiff

iticaleen


29/67

4.6Sec

Sector-

Sector

Public S

Private

The abthere wSector.

The taband Prihave bhas beeat -37.1their sh

orWise

ise Retur

No.Sha

ctor 16

ector 240

ve pie chre 224 IP

le given aate Sectoen constan declining% while are prices.

nalysis

Figure 1: Pi

s

ofres

O

11

5.

rt shows tOs issued

ove analyIPOs. Tht over allwith time.

t the same

Chart of Pub

ening Day

.65%

6%

he dominain this se

zes the avresults cl

time framThe curretime Publi

14

Secto

lic Sector an

1 Month

15.93%

-2.69%

nce of Pritor as co

erage retuearly favos. While tt returns frSector IP

226

rWise

Private Sect

6 Months

15.45%

-5.91%

ate Sectopared to

rns from tPublic See returnsom PrivateOs were g

or IPO's

1 Year

7.13%

-24.92%

IPOs in l16 IPOs is

at of Publctor IPOsfrom PrivaSector IP

iving retur

Pag

Current

14.05%

-37.18%

ast 5 yearsued by P

ic Sector Ias their ree Sector Is are vers of 14.05

Private

Public

| 29

, asublic

POsurnsPOs

lowon


30/67

The reconsideas highIPOs.

ult of lastred saferas Private

5 yearslesser vol

Sector IP

clearly favatile. Thous but still

ors the Pgh the retuit is not wo

blic Sectrns from Prth the risk

r IPOs aublic Sectinvolved i

Pag

s they car IPOs arPrivate S

| 30

benotctor


31/67

4.7Co

4.7.1R

The abMarutiMahindon its lisame In

Over neTATArespecti

Howevewhile Tprices.

O

paringR

turnAnal

Table

ve tableuzuki Ltd

a & Mahinting day

dustry wer

xt one yeaotors andvely, Marut

r after 5 yTA Motorhe current

Time Peri

Previous C

isting Day

ening Day

1 Month P

1 Month Re

6 Month P

6 Month Re

1 Year Pri

1 Year Ret

5 Year Pri

5 Year Ret

Current P

Current Ret

eturnsin

sisofAut

5: Returns fro

nalyzes tIPO was lra was isas 42.61negative

the returnMahindrai Suzuki Lt

ars from i& Mahindsituation o

N

od M

lose

Price

eturns

rice

urns

rice

urns

ice

rns

ice

rns

ice

urns

rimary

mobileCo

m Automobil

e returnsaunchedued in 90

while thon the sam

s have beained lotshare pri

sue Marutra share pf all the thr

w Issue

aruti Suzuki

115

164

42.61%

197.05

71.35%

439.95

282.56%

428.1

272.26%

569.05

394.82%

1289.45

1021.26

arket&

mpaniesi

e Sector in Pr

from the tn July 9,. This shoreturns f

e day.

n very volf grounde improve

i was givinices haveee scrips l

Liste

Ltd TA

econdary

India

imary and Se

op compa2003, whil

s that theom alread

tile for all to as to gid by more

return ofnot shownoks better

Compani

TA Motors

212.75

209.2

-1.67%

245.5

15.39%

466.3

19.17%

415.6

95.34%

404.55

90.15%

301.4

41.66%

Market

condary Mark

ies in aute IPO ofreturn fro

y listed co

he three ce returnsthan 2 fold

395% fromany improthan befor

s on Stoc

M

1

1

-2

1

1

4

14

5

19

5

21

6

30

Pag

et

mobile sATA MotMaruti S

mpanies i

mpanies,f 95% & 1.

its issueements ine as all of

Market

& M

70.9

66.1

.81%

9.65

.82%

23.2

7.63%

10.7

8.82%

34.3

2.63%

87.6

2.34%

| 31

ctor.rs &zukithe

hile99%

rice,theirhem


32/67

are giviMahind

Thoughover thshows tLtd cle

consist

200.00

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

g returns,a giving 41

marketsyear pla

he trend orly stands

nt basis.

OpDa

with Maruti% & 302%

Figur

re same fa crucialreturns foout from

aruti & Ma

y 1M

Maru

giving higrespective

2: Line Cha

r every crole in ther all the ththe other

hindra sho

nth 6

Auto

tiSuzukiLtd

est returnly.

t of Auto Sec

mpany, tmoveme

ee Auto Cwo comp

s the up

onths

ectorT

TATA

s of more t

tor Compani

eir annualt of shareompaniesnies in gi

ard trend

1Year

end

otors

han 1000

s

results aprices. Th

since 2003ing maxi

uring all th

5Year

M&M

Pag

, while TA

d performe above g, Maruti Sum return

e time fra

Currently

| 32

A &

anceraphzuki

s on

es,


33/67

4.7.2R

Tim

Pre

Listing

OpeR

1 Mo

1 Mon

6 Mo

6 Mon

1 Y

1 Yea

5 Y

5 Yea

Curr

Curre

The ablisted cwas thetimes ragathere

TCS IPissue prby arou16% asday. Hoare givileader b

turnAnal

T

Period

v Close

Day Price

ing Dayturns

nth Price

h Returns

nth Price

h Returns

ar Price

r Returns

ar Price

r Returns

nt Price

t Returns

ve table smpanies ibiggest I

ising arouhuge res

on its oice of Rs.d 2% in ta result itever afte

g returnsy trading a

sisofITC

able 6: Retur

New Iss

T

8

98

16.

102

21.

137

61.

132

55.

52

-37.

120

41.

hows thethe sameCompany

d Rs. 350onse in th

ening day50, wheree intra-da

is difficult ta year off 45% & 3

t Rs. 1322

mpaniesi

s from IT Se

e

S

0

7.5

8%

8.95

5%

0.15

9%

2.05

4%

8.5

82%

0.35

2%

nalysis ofsector. Tin India,0 crore. E

eir respecti

gave returs the alretrading. I

o compareissue of IP1% respegiving 55

nIndia

tor in Primar

isted Com

Infosys

1562

1535

-1.73%

1613

3.27%

2162.3

38.43

2271.3

45.41

2096.1

34.19

2391.9

53.13

TCS IPOS IPO was a resultarlier IPOve IPOs.

ns of 16.1dy listed c

t also shothe result

O the situatively fromreturns in

and Second

anies on S

Tec

issued inhighly an

the IPOlike Infos

% as it clompaniess the undof other

tion looksthe issue1 year.

ary Market

ock Market

HCLhnologies

23.85

317

2.12%

348.8

7.70%

326.8

0.91%

425.7

1.45%

307

5.20%

78.05

7.61%

August 20ticipated Ias oversus, Wipro

sed at Rsin the samer-pricingompaniesifferent asate, while

Pag

Wipro

577

565

-2.08%

582.15

0.89%

677.9

17.49

364.35

-36.85

544.5

-5.63%

404.15

-29.96

4 with alrO in 2004scribed bHCL had

. 987.5 frosector de

f TCS scrion the opInfosys &TCS is sti

| 33

eadyas it6.5

also

m itsclinep byningHCLll the


34/67

In 2009,all the Ibiggest37%, wrespecti

The curgiving tis followthan thcoupleconstan

The ITinvestorthe aboall the c

the modisappo

60

40

20

0

20

40

60

80

, 5 years asector c

loser as itile Wipro

vely.

rent perfore highested by HCother twof years.

tly negativ

sector cos have eare mentionompanies

t consisteinting shar

OpDay

ter the issmpanieshare price

& HCL wa

mance ofreturns as

technologcompanieipro has bduring dif

Fig

mpanies hned hugeed compaare very v

t share gias its ret

1Month

TCS

e of TCSaring Infoplunge donot as v

hese comit share priies which is since theen low perent time

re 3: Line Ch

ave beenmounts bies have blatile in th

ing returnrn was bel

6Mont

ITSe

Infosy

IPO & duriys were gn to Rs. 5

latile and

panies in tces increas giving re

issue berforming

frames.

rt of IT Sect

the mostinvesting

een a sucgiven tim

s on regulow zero o

hs 1

torTre

HCLT

ng the gloiving nega28.5 givinheir retur

he year 2ed by mo

turns of 4ause of itcrip in thi

r Companies

profitablein these cessful ovee period.

ar intervalall the oc

ear

d

ech Wi

al slowdotive returnnegative r

s were -5.

12 showse than 50%. TCS relow perfosector as

companiempanies.

r the yearsowever In

while Wiasions.

5Years

ipro

Pag

n the pric. TCS waeturn of ar3% & - 5.

that Infossince 20

turns are lrmance init returns

in Indiahe IPOs

. The trenfosys has

ro has be

Current

| 34

s ofthe

und20%

s is4, it

owerpastere

andof alls foreen

en a


35/67

4.7.3R

Tim

Pre

Listin

Opening

1 M

1 Mon

6 M

6 Mon

1 Y

1 Ye

5 Y5 Ye

Curr

Curre

The abcompanthe sam

on its lissharesin the st

The reTelecothe coHoweve

turnAnal

Table 7: R

e Period

v Close

Day Price

Day Return

nth Price

th Returns

nth Price

th Returns

ar Price

r Returns

ar Pricer Returns

ent Price

nt Returns

ve tableies like Bhe Industry.

ting day rit issue pri

ock prices

turns bemunicatiopanies exr the situa

sisofTele

turns from T

New I

IdeaCellul

75

85.5

s 14.0

95.4

27.2

122.4

63.2

97.5

30.0

93.925.2

81.6

8.87

nalyzes tarti Airtel,The IDEA

e to Rs. 8ce. Howevof the othe

ame mos compan

cept Bhartiion looks

communic

lecommunic

O

rBha

3

3

3

5 4

1

3

3-

2

-1

e returnsRelianceCellular w

.55 givinger on ther companie

e compaies stocksAirtel weifferent af

ationsCo

tions Sector

Listed C

rti Airtel

1.38

75.1

.80

0.48

.29

3.78

7.27

5.65

.95

38.96.22

8.05

7.52

of New Iommunicaas listed o

14.07% reame days in same

rable aftewere perfe givinger 5 year

paniesin

in Primary an

mpanies o

ReliancCommunic

434.1

422.8

-2.60

415.6

-4.26

544.3

25.39

543.35

25.17

94.75-78.17

65

-85.03

O Ideations & Tn March 0

urns to thot much oindustry.

r 1 yeaorming vigore thanfrom issu

India

d Secondary

n Stock Ma

etions Com

ellular anTA Comm, 2007. T

Investorsf the move

r whenorously in0% retur

e of Idea

Pag

Market

rket

TATAmunication

374.1

368.6

-1.47

408.75

9.26

408

9.06

457.35

22.25

235.95-36.93

210

-43.87

already lunicationse Idea Ce

who bougment was

ll thethe markes after 1ellular IP

| 35

istedfromllular

t theseen

ajort. Allear., as


36/67

Reliancnegativwas fixethe othe

The tre

Cellularreturnscompanseen inof misre

The wocompansituatiomajor st

100

80

60

40

20

0

20

40

60

80

Commureturns o

d to onlyr compani

ds look si

has beenhroughouties returnReliancepresentati

rst situatioies sharesthe India

ocks are tr

OpDay

icationsf 78.17%s. 75, it ws were str

Figure 4:

milar for a

the most. Howeverercentageommunican of facts.

n for all twere tradiEconomy

ading in th

1Month

Teleco

Id

TATA C36.93 re

s able toggling.

ine Chart of

ll the com

consistentafter 1 Yestarts fallitions due t

he 4 comng at theiris struggliir lowest p

6Mon

munica

ea Airt

ommunicaspectively.ive some

elecommuni

anies wit

share inr, there wg down. D

o 2G Sca

anies walowest levg to stabil

rices.

ths 1

tionsIn

l Relia

ions ranAs the is

returns to i

cations Com

in the giv

all the tims major suring thes

case as t

seen inls in pastize the ma

Year

dustry

nce TA

into heavyue price fts investor

anies

n time fr

e periods,ift in the p5 years s

he compa

May 201to 6 year

rkets situa

5Years

rend

TA

Pag

losses gr Idea Ceeven wh

mes. The

giving pottern as aeepest fally was acc

, when al. In the cuion, as a r

Current

| 36

ivingllularn all

Idea

itivell thewas

used

l therrentesult


37/67

4.7.4R

Ti

Pr

Listin

Openin

1 M

1 Mo

6 M

6 Mo

1 Y

1 Ye

Cur

Curr

The abDLF IP2008 bpeak. Tcompan

Unlikereturns& L&T.started t

In 2008So inCompastock pr

turnAnal

Table

e Period

ev Close

g Day Price

Day Retur

onth Price

nth Returns

onth Price

nth Returns

ear Price

ar Returns

rent Price

nt Returns

ve table aon July

cause thahis can alies in Janu

ther indusrom DLFhe initial r

o increase

there was008, afteies. The iices plung

sisofCon

: Returns fro

New I

5

ns

5

1

11

11

41

-2

1

-6

nalyzes th007. Man

t was theso be veriary 2008,

ries analynd other c

eturns frowith the ti

a huge cri1 year t

mpact cand down pe

tructionC

Constructi

sue

LF

25

0.05

.58

80.5

0.57

35.75

6.33

4.55

1.04

9.45

3.91

e returns fIPOs in

phase whied by lomonths a

ed beforeompanies iDLF on ite period

is in Amehere wasalso be s

rtaining to

ompanies

n Sector in P

isted Com

GMR Infr

77.19

75.21

-2.57

82.82

7.29

124.43

61.20

44.28

-42.64

19.8

-74.35

rom the cconstruction construking at thter the lau

there wasn secondalisting dasoon DL

ican Econdecline i

een in Inddeplorable

inIndia

rimary and S

panies on

a P

1

nstructionn sector wtion or ree returnsch of DLF

not muchry market lwas justwas givin

my, shakistock p

ia as majmarket co

condary Mar

tock Mark

nj Llyod

78.55

264.5

-5.04

348.8

25.22

77.55

07.34

228.4

18.00

46.05

83.47

sector aftas launchl estate siven by tIPO.

f a differeike GMR I.58% howmore tha

g other cices of thr construcditions.

Pag

et

et

L&T

1129.

1165.

3.2

1224.

8.3

2122.

87.8

1349.

19.4

118

5.2

r the laund during 2ctor wase constru

ce seen ifra, Punjver the re100% ret

untries ase Construion comp

| 37

8

8

5

2

5

h of007-t its

ction

thelyodurnsrns.

well.ctionnies


38/67

The abtrend isindividumonthsthan 10

Lloyd alrespecti

The curlowestmaterial

In the loas com

100

50

0

50

100

150

ve chart ssimilar fol companof launch% in just

so gave 1vely.

rent positiossible p

s, increase

ng run theared with t

OpDay

Figur

ows the trr all the cies. For alof DLF IP

months, t

07% retur

n for all tices. Thein interest

e was nothe compa

1M

Trends

DLF

5: Line char

ends in froompaniesl the com. This wa

he same t

s, followe

e companmajor rearate & low

much of aies in sec

onth

inCons

GMRIn

of Construct

m Construand no manies the

s the timeend was a

by L&T

ies looksson behinliquidity in

differencendary mar

6Months

ruction

fra Pu

ion Compani

ction Comajor deviabest perfperiod whlso seen i

and GMR

orse as tthis is i

market.

seen in thket.

1Y

Compa

jLlyod

s

anies in laion has brming phan DLF retother co

with 87%

ey are allncrease in

returns fr

ar

nies

L&T

Pag

st 5 years.een seense was afurns waspanies as

& 61% re

trading atprices of

m a new i

Current

| 38

Thefromer 6ore

Punj

urns

theirraw

ssue


39/67

4.7.5R

Tim

Pre

Listin

Opening

1 M

1 Mon

6 M

6 Mon

1 Y

1 Ye

5 Y

5 Ye

Curr

Curre

The abis Yesand Axcalculat

As seegivingforthcoback 74any maBank.

Howevein Banki

turnAnal

Tabl

e Period

v Close

Day Price

Day Return

nth Price

th Returns

nth Price

th Returns

ar Price

r Returns

ar Price

r Returns

ent Price

nt Returns

ve table dank whos

is Bank ad from Jul

in earlier0% returning year a

.89% to insive incre

r after yeang Sector

sisofBan

e 9: Returns f

New Is

Yes B

45

58.

s 30.0

71.5

59.0

74.2

65.0

78.

74.8

285.

534.

319.

610.

picts the rIPO was

re the stoy 13, 2005

companieon its is

s the stocvestors onse in their

s Yes Banare flourish

ingComp

rom Banking

ue List

ank I

0

5

0

5

0

9

5

3

7

4

eturns frolaunchedcks tradinwhen Yes

s, the opeue price.price kepttheir inveprices and

k IPO, situing as thei

aniesinIn

Sector in Pri

ed Compa

ICI Bank

424.45

445.95

5.07

504.7

18.91

583.9

37.57

496.1

16.88

898.6

111.71

795.7

87.47

Bankingn July 13,

in theBank IPO

ning day rThe samon risingtment. Hotheir retur

ation looksr returns h

dia

ary and Sec

ies on Sto

HDFC B

131.5

128.8

-2.01

131.6

0.08

146.3

11.31

149.4

13.63

413.0

214.0

487

270.2

ector in I2005 whilecondaryas listed.

eturns watrend w

nd after 1wever thes were ve

more desive excee

ndary Marke

k Market

nk Axi

2

3

1

1

3

2

dia. The NHDFC B

Market. T

very higs seen foyear the sother bany low as c

rable as alled many ti

Pag

s Bank

268

66.1

0.71

60.85

2.67

17.25

8.38

73.1

1.90

00.10

85.11

63.8

59.63

ew Issuenk, ICICI

he returns

for Yesr Yes Batock was gs did notmpared to

the compmes their i

| 39

tockankare

ankk inivinghowYes

niesnitial


40/67


41/67

4.8An

The purwas toinvestin

From thConstruthat invMarket.

For all tprice risinvestoritself. D

returnsstill the

Howeverecoverbefore.is neithTelecoit has bSector tas thescompan

On theIndustriRun &the com

lysis&Di

pose of asee that

in some

e results sction Industing in P

he major ies to 50%s can earnring initial

as in Primeturns we

r in long Rwell ands now du

er underpmunicatiocome eq

he IPO hae compaies.

basis ofs that invhort Run.panies. As

scussion

alyzing allhether invther comp

own in abtry, Telecimary Mar

ndustries tof the issuhuge am

six month

ry Market.e always h

un i.e. aftelso the cto marke

riced nors & Constivalent toe alwaysies retur

n overallsting in anHowever ta result thi

fPrimar

the aboveesting in aany in sam

ve tablesmmunicatiket has be

at have bprice with

unt by invcompanie

Though sigher in Ne

r 1 year, smpany inforces th

overpricedruction Se

econdaryad an eds have a

understanIPO has be returnss inferenc

&Secon

Companin IPO ine industry i

of Five Indons Industen more p

een analyin 6 monthesting duris in Secon

ome compw Issue M

cenario loIPO markcompany

. As a retor the retMarket Re over itslways be

ing it haseen morelso depencannot be

aryMar

s in Primrimary M

n Seconda

ustrys i.e.ry & Bankrofitable th

ed it hass of the lang subscriary Mark

anies havrket.

ks little difet showshas startesult it harns of IPOturns. Butontemporn greater

been fourofitable f

d upon thegeneraliz

et

ry and Serket morery Market.

Auto Induing industran investin

been founnch of an Iption or ont struggled

performe

erent as omore reali

to tradebeen s

has declinin Auto Sries in Sethan the

nd from tr an investindividuald for all th

Pag

ondary Mprofitable

try, IT Indwe foun

g in Seco

that thePO. As a rthe listingto give as

really wel

her comptic pricesn the priceen that ie after 1 yctor & Baondary Malready l

e aboveor both inperforman

IPOs.

| 41

rketthan

stry,out

dary

tockesultday

high

l but

niesthanthatIT,

ar &kingrket

isted

ivenonge of


42/67

020

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7: Pie Chart

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| 42

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of Sample


43/67

5.2Cro

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5.2.1A

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ss Than aeen 1 to

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esult show

prefer to iost all thprefer Pury Data cnsistent re

ht be a fsistent pe

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erience in

erience in I

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10: Cross Ta

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YearYears

0 YearsYears

tal

n links twg & the se

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s that out

nvest theirresponde

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ctor that prformancee Sector I

SquareTe

Investing I

Investing I

eriencei

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rPublicIPO

22

1

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importanttor preferr

ere betwerted invese investin

g for more

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money innts irrespIPO to inich showerent time

eople havand lesserOs but th

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PO is inde

O is depe

nInvesti

perience in In

SectorI

35

3

results ofd by an in

n the ageing a yearfor more

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rivate Secctive of test. Thisd that in lfra

Documents

A Study on Indian IPO's