Financial Management
Financial Management
Financial Management
ANALYSIS
AT
A Project Report
2019-2021
CERTIFICATE OF ORIGINALITY
I Pooja of Master of Business Administration and Semester - III would like to declare
that the project report entitled INVESTMENT IN INITIAL PUBLIC OFFERING AND
ITS ANALYSIS Submitted to Bharati Vidyapeeth University Pune, School of Distance
Education Pune, Academic Study Centre BVIMR New Delhi in partial fulfillment of the
requirement for the award of the degree. It is an original work carried out by me under
the guidance of Dr. Prabir Kumar Dash. All respected guides, faculty member and
other sources have been properly acknowledged and the report contains no plagiarism. To
the best of my knowledge and belief the matter embodied in this project is a genuine
work done by me and it has been neither submitted for assessment to the University nor
to any other University for the fulfillment of the requirement of the course of study.
Pooja
Summer training needs a lot of dedication concentration and hard work of the students
and also it should be garnished with the topping of good guidance. I am deeply indebted
to all of them for excellent ideas and assistance.
The successful completion of this report would not have been possible without
the co-operation and support of Mr. Harvansh Lal Pal, Mr. Dash, and many other staff of
Alankit Assignment Limited for guiding me throughout the project.
Many souls and brains have contributed to the accomplishment of the project.
For their invaluable suggestions and comments I wish to thank them all.
I regard my sincere and heartful thanks to my guide Dr. Prabir Kumar Dash
my faculty guide. I am indebted to him for his valuable interest in involving me in this
project. Once again I express my deep thanks to him.
Pooja
DECLARATION
The facts presented here are correct and true to best of my knowledge and belief.
POOJA
TABLE OF CONTENTS
PREFACE………………………………………………………………..……
EXECUTIVE SUMMARY……………………………………………….….1
CHAPTER 1: INTRODUCTION……………………………………………
1. Company Profile
2. Industry Profile
3. Introduction Of Wealth Management
4. Environmental Scanning
5. Porters five forces model of competition –Michael Porter
RESEARCH METHODOLOGY…………………………………………………..
CONCLUSION………………………………………………………………………
BIBLIOGRAPHY…………………………………………………………………..
ANNEXURE – QUESTIONNAIRE……………………………………………….
PREFACE
Summer training is a major part of the management programs because it provides lots of
practical knowledge as well as organizational experience. This pre-exposure of the
market becomes very necessary in order to form a position as well as to sustain in the
corporate world.
The project report has been designed to meet the requirement of the investors as well as
Spectators; who wish only to obtained better return with the current situation.
An attempt therefore has been made to find golden mean between today’s dreams
and Tomorrow’s reality. Since the project report is related to INVESTMENT IN
INITIAL PUBLIC OFFERING AND ITS ANALYSIS, for enhancing the market
potential of “ALANKIT ASSIGNMENTS LIMITED” hence project report consists
purpose and scope of Investment as well as various precise negative aspects, that
harms to Investors. It will give a broad view of investment plan as well as investors
Perception and related issues. The project will help the organization dealing in Initial
Public Offering as well as investors and me by different ways. Through this project
investors will be able to know about Investment strategy of investment and organization
related to investment will be able to know that, what are the precise aspects that will
increase the investor’s faith and decrease the risk of investors. Being Management
student I will be able to know about various aspects while undergoing my
professional life.
EXECUTIVE SUMMARY
"Wealth Management is an inclusive set of strategies that aims to grow, manage, protect
and distribute assets in a much planned systematic and integrated manner”. Wealth
management is a service provided by financial institutions to help high net worth
individuals protect and grow their wealth. This advanced investment advisory discipline
involves providing a diverse range of services, such as financial planning, investment
management, tax and cash flow and debt management, based on client requirements.
For the purpose of project, I made survey of consumer as well as wealth manager. From
the survey I able to understand about wealth management process, role of wealth
manager, expectation of clients and wealth manager from each other.
There are plenty of opportunities available in the industry. The size of market is growing
due to increase income of upper middle class and middleclass people. The key challenges
areas are unawareness about the wealth management services, creating trust with client,
back door entry by banks and turf competition from individual service provider.
CHAPTER 1: INTRODUCTION
The Group has it headquarter in Delhi with 22 Regional Offices in Mumbai, Kolkata,
Chennai, Ahmadabad, Bengaluru, Hyderabad, Jaipur, Lucknow, Chandigarh, Indore,
Bareilly, Kochi, Amritsar, Ludhiana, Patna, Bhubaneswar, Guwahati, Pune, Ranchi and
Visakhapatnam. The Group has also expanded its wings in the global arena with its 4
overseas offices at London, Singapore and Dubai.
With a consistent expansion of Alankit’s business, the Group has evolved from a largely
Financial & Share Broking Company into a diversified Business House. Alankit is a
professionally managed Group, led by a team of level-headed personnel with outstanding
managerial acumen. We are determined to provide the best and state-of-the-art
investment products & services to our esteemed clients, appreciating their increasing
needs & demands.
It is listed on both the premier exchanges of the country; National Stock Exchange
of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).
Over the last 25 years, Alankit has grown to become a global federation of ten
companies with a diversified portfolio in health and wealth services.
Alankit has successfully evolved from a SEBI registered broker to a Provider. One can
easily attribute the company’s success to its focused approach towards meeting the
changing needs & demands of its clients and to help fulfill their objectives to the best
possible extent. The work and achievements of the group as a whole and Alankit
Assignments Limited, one of Alankit’s leading affiliated companies, has been duly
recognized, with the group being acclaimed by some esteemed organizations of national
stature for its superlative performance at different points of time.
KEY PEOPLE
A notable name in the industry today, Alankit is a prominent market leader and
conglomerate having over two decades of experience. It has diversified operations across
vital segments viz. Financial Services, e-Governance, Healthcare and Insurance Broking.
Alankit Limited, the flagship company of the group, is recognized as a leading e-
Governance service provider of the country. It is the premier exchanges of the country;
National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited
(BSE).
Alankit Assignments Limited is a Public incorporated on 01 January 1991. It is classified
as Non-govt company and is registered at Registrar of Companies, Delhi. Its authorized
share capital is Rs. 500,000,000 and its paid up capital is Rs. 318,000,000. It is inolved in
Architectural, engineering and other technical activities.
Alankit Assignments Limited's Annual General Meeting (AGM) was last held on 30
September 2019 and as per records from Ministry of Corporate Affairs (MCA), its
balance sheet was last filed on 31 March 2019.
COMPANIES STRENGTHS
26+ Years of services
31+ Services
12 Group Companies
20 Regional Offices
673+ Cities
25 Million Customers
E-Governance Services: -
Financial Services: -
▪ Equity Broking
▪ Commodity Broking
▪ Depository Participant - NSDL & CDSL (DP)
▪ Registrar & Share Transfer Agent (RTA)
▪ Investment Advisory
—Mutual Fund / Bonds / IPOs / Fixed
▪ Portfolio Management Services (PMS)
▪ Trading on Dubai Gold & Commodities
Exchange (DGCX)
▪ Energy Trading – IEX
▪ Forex services
Accessories
System (NPS)
Repository (NIR)
Insurance Broking: -
E-Governance Services
“e-Governance is a vital means to pave way for good governance that is swift, easy,
transparent, efficient and pro people in every sense.”
World has gone digital and electronic means for all services is the inevitable future. e-
Governance services becoming the new acceptable norm have led to an immediate
demand for a uniform structure in the segment. Alankit, the fastest growing player in e-
Governance sector, works dedicatedly towards constantly simplifying procedures and
providing quality services to corporates and individuals alike.
With an unparalleled platform for consolidated information, high standard of delivery and
advanced technological features, Alankit’s name stands tall and strong in the market. It is
successfully moving forward on the path of enabling a smarter, efficient, transparent and
highly accountable system in place for the Indian citizen in the present and also in future.
Alankit acts as the last mile between the Government and the citizens of the country.
Alankit works in a focused manner towards swift provision of all e-Governance services
to the citizens through its vast network of centres nationwide and thus, strengthens the
Government-Citizen association.
AADHAAR SERVICES
As a leading GST Suvidha Provider (GSP), Alankit is playing a pivotal role in extending
services to the tax payer populace for complying with the new Goods and Services Tax
(GST) regime, thus making the GST rollout easy & convenient for all the stakeholders.
Alankit provides the much-needed support through the web or mobile based interfaces
and acts as a single stop shop for all GST compliance related services. The company
offers exclusive quality services for ASPs (Application Service Provider) such as high
availability of the API gateway, fault tolerance, GSTN failure handling, enriched APIs
and call-backs with Platinum gateway etc. For the taxpayers, Alankit offers registration,
automated upload and download of invoices data, automated return filings, automated
reconciliation of inward/ outward supplies, ledger maintenance and challan generation.
Alankit’s GST Products:
Staffing Business: -
With the rapid boom in the country’s industrial development, the demand for manpower
has tremendously increased. Catering to the same, Alankit is also engaged in providing
customized solutions for all types of manpower services through its staffing business
facility. The company offers a wide range of qualified human resources across the
industries for all types of projects. Alankit has distinguished itself as a quality manpower
solution provider at cost effective prices through a well-run management set up. We keep
the specific requisites of the clients in mind and then, provide the relevant services
accordingly.
Alankit Limited, one of the group companies of Alankit, is the national distributor and
preferred partner for Entrust Data card Printers. The company offers instant printing
solutions for plastic ID cards including the distribution of millions of multiple card types
like voter ID cards, Aadhaar cards, and health cards and also has accomplished a
tremendous sale of printers over the number of financial years in the past. As smart
Identity has gained momentum in the country, in keeping with the PM’s thrust on ‘Digital
India’ drive, there has been a major demand in the system for plastic cards. Thus, the
company strives to work efficiently towards increasing its sale numbers each year while
being focused on assisting the public with faster services.
In order to ensure a smooth implementation process, Alankit has also introduced another
exclusive GST solution known as Alankit GST Saarthia PoS device introduced for
smaller and unorganized businesses for the purpose of payment and business accounting
which is GST compliant. It is an electronic device that receives payment of a customer
through Aadhaar enabled payment (Iris), does inventory management, records the
transaction and prints receipt of payment and invoice and provides the facility of barcode
scanning. It also offers some important benefits including on cloud data storage for 8
years, linking with the GST Muneemji for easy return filing, facility to send bill through
Email/WhatsApp and generating of reports for easy understanding etc. Alankit strives to
constantly innovate and excel, providing the best in-class solutions to make life easier for
its customers.
e-Return Intermediary
World has gone digital and accomplishing tasks online is a great deal faster, simpler and
transparent today. Alankit harnesses the skills of its experts to cater to the online/ e-filing
of income tax returns of taxpayers. It makes it much easier and hassle free for the citizens
of the country, along with rendering the best professional advisory services as maybe
required.
IN domain is the country’s top-notch internet domain that is easy to buy and use, swift
and credible. It can easily be employed for websites, e-mail and many other applications
on the web. Alankit provides direct registration services for .in domain names, presenting
a great opportunity for the local and international companies wanting to represent their
business in India.
FINANCIAL SERVICES
Alankit assists its customers with an array of expert financial services and facilitates a
unified platform for efficient and prompt depository services that are both risk free and
productive. The company assures every individual of an unparalleled financial
experience, replace with components for a sustainable future growth, with services
renging from stock broking to Depository Participants Services.
Having acquired the membership of all major Stock Exchange of India, Commodity
Exchange of India & abroad, connectivity with the depositories and even membership of
Dubai Gold 7 Commodities Exchange (DGCX) coupled with its customer centric
operations, makes Alankit a financial wizard in the industry.
Alankit enables its clients to trade swiftly and safely in various financial markets of India
such as BSE, NSE, MCX, etc. across various segments, namely, Cash, F&O & Currency
among others. Even though online trading has completely revolutionized the face of stock
trading, the risks and erratic patterns of the market still exist. Alankit’s team of well-
experienced professionals assists the investors/ traders/ corporates to execute trade orders
timely, both on the trading terminal and online in equities, commodities, mutual funds
and currency derivatives in a convenient manner.
Alankit provides risk free and prompt trading and depository services to a variety of
individuals and other entities. Catering a safe, convenient and cost-effective way to hold
securities in the electronic form is what makes Alankit stand apart. Primary advantages
with Alankit include 24X7 access to view information and demate statements online,
competitive transaction charges and free of cost monthly detailed statements, instant
credit of non-cash benefits like bonus and rights, etc.
Alankit stands in the primary league as the preferred RTA service provider in the
country. Alankit has made its mark in the space with notable achievements including
servicing over 6 million investors, handling more than 2 million payment transactions
each year, having more than 2 million demate requests processed, around 2.5 million
annual reports (email and physical) with a share registry of 800+ companies. Also, in the
recent past, Alankit has successfully managed some of the large IPOs like HUDCO,
Bharat Dynamics etc.
Investment Advisory on Mutual Funds, Bonds, IPOs, FDs, Loans: - Alankit assists
investors in making sound investment decisions and its team of domain experts
understands the goals and inspirations of investors and also advises for or against any of
their financial recommendation, after due scrutiny, comprehensive analysis and a detailed
study of the market patterns. Offering flexible investment plans like SIP. It also offers
advisory on multiple options of investments such as tax saving ELSS schemes, RBI
Bonds, Capital Gain Bond investments U/s 54EC, corporate fixed deposits and primary
market investments.
Alankit Global Resources DMCC, one of the group companies of Alankit, provides
trading facilities on all of the market segments operated by DGCX either as principal or
on behalf of clients and also to clear their own transactions as well as transactions of the
trading members of DGCX. The company benefits its clients from clearing services
available with over 65 global exchanges and electronic trading access to over 35 global
exchanges. Alankit also provides its clients with the rich opportunities in the commodity
derivatives market.
Indian Energy Exchange (IEX) provides a platform to bridge the growing gap between
demand and supply of power. Being a trading member of IEX, Alankit is well equipped
with the necessary technology, manpower, infrastructure and all other relevant resources
to facilitate power trading on IEX platform.
Vision
Mission
“To become a customer centric organization with focus on building trust by its
unmatched standards.”
Implementation of E-governance
projects and realization of funds
within the time lines
The threats in the SWOT Analysis of Alankit Assignments Ltd. are as mentioned:
PESTEL ANALYSIS:
POLITICAL FACTORS: Political and legal factors that can affect the broking industry
are the government policies, deregulation of the market, tax policies, laws and
regulations, trade restrictions and tariffs.
ECONOMICAL ENVIRONMENT:
Economic environment is the most important factor for any company or industry. The
equity markets are directly impacted from the economic condition of the country like we
saw in the financial crisis of USA in 2008. With them major other economies also faced
the brunt.
Today in India, the cost of living, high inflation, greater spending power and low saving
power are all factors of the economic environment.
The government is trying to fight the inflation and thereby have brought about many
policy changes which has affected the markets directly and indirectly.
In Greece the economic conditions are not well sound and hence their capital markets have
been thrashed. And people are hesitating in investing in such markets.
TECHNOLOGICAL FACTORS:
At Alankit Assignment Ltd., GST Muneemji Software (for GST), E- Raahi (For GST
Billing), Saarthi (For PoS Device) etc. softwares are used at office as well as its provided
to its customers.
Growing technology integration is bringing the markets closure, its making trading
transparent and really fast. But the dependence on technology and internet can be
disadvantageous when the systems don’t work and prove to fail.
Environmental Factors
Weather Conditions
Temperature
Climate Change
Pollution
Natural disasters (tsunami, tornadoes, etc.)
Additionally, there is increasing importance for businesses to be environmentally friendly
with their operations, as evidenced by the rise of Corporate Sustainability Responsibility
(CSR) initiatives. Examples of CSR initiatives include carbon footprint reduction efforts
and transitions into renewable material and energy sources.
LEGAL
As we know SEBI is the regulator for equity markets, the markets have to be within the
legal framework set by SEBI. Brokers and companies have to comply with the policies
framed by them. As changes in the policies by SEBI, has an impact on the companies,
brokers and slightly to the investors.
The broking houses have to be fair and transparent to their customers or the customers
have the power to drag the broking company to consumer courts.
Bargaining
Power of
Customers
Competitive
Bargaining Rivalry Threat of
Power of New
Suppliers within an Entrants
Industry
Threat of
Substitute
Products
1) What is an IPO?
Every company needs money to grow and expand. They do this by borrowing or by
issuing shares. If the company decides to opt for the second route of issuing shares, it
must invite public investors to buy its shares. This is its first public invitation in the stock
market, and is called the Initial Public Offering (IPO).
When you buy such shares, you get ownership in the company, proportionate to the value
of your shares. These shares then get listed on the stock exchange. The stock exchange is
where you can sell your existing shares in the company or buy more.
The Securities and Exchange Board of India (SEBI) regulates the entire initial public
offering process. A company intending to issue shares through IPOs first registers with
SEBI.
SEBI scrutinizes the documents submitted, and only then approves it. While awaiting the
approval, the company prepares its prospectus, in which it mentions that SEBI’s approval
is pending.
Once approved, the company decides two things; it fixes the price of the share and the
number of shares it plans to issue. There are two types of IPO issues: fixed price and
book building or a mixture of both.
The method of book building has been introduced in the country in 1999 and it helps the
company to find out the demand and price of its shares. A merchant banker is nominated
as a book runner by the Issuer of the IPO. The company that is issuing the Initial Public
Offering (IPO) decides the number of shares that it will issue and also fixes the price
band of the shares. All these information are mentioned in the company’s red herring
prospectus. During the company's Initial Public Offering (IPO) in India, an electronic
book is opened for at least five days. During this period of time, bidding takes place
which means that people who are interested in buying the shares of the Company makes
an offer within the fixed price band. Once the book building is closed then the issuer as
well as the book runner of the Initial Public Offering (IPO) evaluate the offers and then
determine a fixed price. The offers for shares that fall below the fixed price are rejected.
The successful bidders are then allotted the shares in IPO’s.
In the former, the company decides the price of the share in advance. In the latter, the
company gives you a range of prices. You then need to bid for shares within this range.
After deciding on the type of issue, the company makes the shares available to the public.
Investors then submit applications showcasing their interest in buying the shares. Once
the company gets subscriptions from the public, it proceeds to allot the shares.
The last step in this process involves listing it on the stock market. After the shares are
issued to investors in the primary market, they get listed in the secondary market. Trade
in these shares, happens daily.
PARTICIPANTS IN AN IPO
Merchant Bankers
Syndicate Bankers
Underwriters
Lead Writers
Registrar of IPO
A. MERCHANT BANKERS
The merchant banker will ensure that when Rights issues are taken up by a company, the
merchant banker who is responsible for the Rights issue, shall see that an advertisement
regarding the same is published in an English national daily, in an Hindi national daily
and in a regional daily.
It is the duty of the merchant banker to ensure that the application forms for Rights issue
should be made available to the shareholders and if they are not available, a duplicate
composite application form is made available to them within a reasonable time.
If the shareholders are not able to obtain neither the original nor the duplicate application
for Rights shares, they can apply on a plain paper through the merchant banker.
The details that should be furnished in the plain paper, while applying for Rights shares
should be provided by the merchant banker.
B. SYNDICATE BANKERS
Syndicate members are the broking houses responsible for distributing IPO applications,
receiving filled applications from investors and timely update the data on the stock
exchange IPO shares bidding platform (NSE / BSE).
C. UNDERWRITER
The underwriter is usually an investment bank that employs IPO specialists. These
bankers ensure that the firm satisfies all regulatory requirements, such as filing with the
appropriate bodies and depositing all fees, and makes all mandatory financial data
available to the public. Next, and perhaps most importantly, the underwriter contacts
large prospective buyers of stock, such as mutual funds and insurance companies who
have large sums of money to invest. The underwriter takes the pulse of prospective
buyers and then recommends an IPO price to the firm. This is the price at which the
shares will be sold. An excessive price may leave the firm with unsold stock, while a
price that is too low will mean forgone revenue from the stock sale.
The underwriter offers to take on some of the risk of the offering in exchange for a
premium. In essence, the underwriter buys the securities from the issuer and then turns
around to sell the securities on the market. This means that the issuer gets cash up front.
The issuer knows that it is probably not getting the full market value of the securities, but
that’s okay because it no longer has the risk of having to find enough buyers to purchase
the securities at a desirable price. The underwriting investment bank likes the deal
because if it can sell the securities on the market at a higher price than it purchased them,
it can make a profit.
D. LEAD MANAGERS
Lead managers are independent financial institution appointed by the company going
public. Companies appoint more then one lead manager to manage big IPO's. They are
known as Book Running Lead Manager and Co Book Running Lead Managers.
Their main responsibilities are to initiate the IPO processing, help company in road
shows, creating draft offer document and get it approve by SEBI and stock exchanges
and helping company to list shares at stock market.
E. REGISTRAR OF IPO
Registrar of a public issue is a prime body in processing IPO's. They are independent
financial institution registered with SEBI and stock exchanges. They are appointed by the
company going public.
1. Investor has to fill the application; he has two ways of getting the application.
Either he can contact a broker and ask him for an application or he can download
the application from the NSE or BSE website himself. He can either submit the
hardcopy himself r go to the bank and do it online.
2. He fills out the application carefully, mentioning his PAN number, DP ID, client
ID, ASBA bank account number, lot and price clearly. If there is any problem
with the PAN number, the application is rejected. There should be no overwriting,
cutting or using of whitener.
3. The investor then submits this application to the broker who takes it forward. The
broker puts his stamp on it after verifying, and then he gives the receiving to the
customer.
4. At the same time, the broker enters the data on his excel sheet and uploads the
excel sheet on the NSE/BSE website or one by one enters the data online, and
finally the bid number is generated.
Then the broker segregates the applications he receives into the different banks they are
supposed to go to. He manually drops them off to the banks who take the application
forward from there.
The main purpose of the study is to analyze the IPO market. It also involves in analyzing
the risk in investing in the particular firm. This needs to understand the perception of the
investors and the due course of market and its prominent conditions. This study will help
to understand the market and its behavioral approach towards the needs of the investors.
It will capture the systematic investing pattern based on the investor’s mode. The need of
this study is to analyze what investors are expecting from IPO, how they make decision
according to the situation, how they react for the changes that takes place in the Market.
This study will helps to understand what the investor should watch out for investing in
primary market.
To analyze the returns of IPO’s which were issued in the year 2020.
To know the return of those IPO’s.
To know the market rate of return for the same period.
To find out the companies which like to adopt this technique and Spread
awareness about this process.
To find out the factors which influence the IPO Listing Process.
What the companies are looking from Open New IPO’s in India?
Analysis between Share Holder and IPO Companies post/present/future
Prospects.
PRIMARY OBJECTIVE
RESEARCH:
Research means;
According to Emory defines research as, any organized inquiry designed and carried out
to provide information for solving a problem.
RESEARCH DESIGN:
Research design is specification of methods and procedures for acquiring the information
needed to structure or to solve problem.
Research design is defined as, “the arrangement of condition for collection and analysis
of the data in a manner that aims to combined relevant to the research purpose with
economy in procedure”. During the research, descriptive and analytical research has been
used.
The success of formal research project depends on the sound research design. As the
main aim of the project is to identify the perception level of investors in an organization,
the project is purely descriptive in nature. Descriptive research studies are those studies,
which are concerned with describing the characteristic of particular individuals, or of a
group.
DESCRIPTIVE RESEARCH:
Analytical Research is primarily concerned with testing hypothesis and specifying and
interpreting relationships, by analyzing the facts or information already available. This
type of research design focuses on theoretical lines, to solve the problem. An analytical
research answers questions why, how, when and by whom the incident happened. It
provides suitable reason. It is an in depth study. A mode of inquiry in which events,
ideas, concepts, or artifacts are investigated by analyzing documents, records, recordings,
and other media.
Data collection method is an important task in every research process. There are two
types of data is being used.
The decision to take a company public in the form of an initial public offering (IPO)
should not be considered lightly. There are several advantages and disadvantages to being
a public company, which should thoroughly be considered. This memorandum will
discuss the advantages and disadvantages of conducting an IPO and will briefly discuss
the steps to be taken to register an offering to the public. The purpose of the
memorandum is to provide a thumbnail sketch of the process. The reader should
understand that the process is very time consuming and complicated and companies
should undertake this process only after serious consideration of the advantages and
disadvantages and discussion with qualified advisors.
Liquidity
Once shares of a company are traded on a public exchange, those shares have a market
value and can be resold. This allows a company to attract and retain employees by
offering stock incentive packages to those employees. Moreover, it also provides
investors in the company option to trade their shares thus enhancing investor confidence.
Increased Prestige
Public companies often are better known and more visible than private companies, this
enables them to obtain a larger market for their goods or services. Public companies are
able to have access to larger pools of capital as well as different types of capital.
Valuation
Public trading of a company’s shares sets a value for the company that is set by the public
market and not through more subjective standards set by a private valuator. This is
helpful for a company that is looking for a merger or acquisition. It also allows the
shareholders to know the value of shares.
Increased wealth
The founders of the company often have the sense of increased wealth as a result of the
IPO. Prior to the IPO these shares were illiquid and had a more subjective price. These
shares now have an ascertainable price and after any lockup period these shares may be
sold to the public, subject to limitations of federal and state securities laws.
Disadvantages of initial public offering:
Disclosure
The disclosure tools are very extensive once a company issue IPO it must provide
information regarding compensation of senior management, transactions with parties
related to the company, conflicts of interest, competitive positions, how the company
intends to develop future products, material contacts, and lawsuits. In addition, once the
offering statement is effective, a company will be required to make financial disclosures
required by securities and exchange act of 1934. The 1934 act requires public companies
to file quarterly statements containing unaudited financial and audited financial
statements annually. These statements must also contain update information regarding
non-financial matters similar to information provided in the initial registration statements.
This usually retaining lawyers and auditors to prepare these quarterly an annual
statements. In addition, a company must report certain material events as they arise.
Regulator review
The company will be open to review by the SEC to ensure that the company is making
the appropriate filling with all relevant disclosures.
Vulnerability
If a large portion of the company’s shares are sold to the public, the company may
become a target for a takeover, causing insiders to lose control. A takeover bid may be
the result of shareholders be upset with management or corporate Riders looking for
opportunity. Defending a hostel bed can be both expensive and time consuming. Once a
company has weighted the advantages and disadvantages of being a public company. If it
decides that it would like to conduct an IPO it will have to retain lead.
Investing in IPOs is much different than investing in seasoned stocks. This is because
there is limited information and research on IPOs, prior to the offering. And immediately
following the offering, research opinions emanating from the underwriters are invariably
positive.
There are some of the strategies that can be considered before investing in the IPO:
The first and foremost step is to understand the working of an IPO and the basics
of an investment process. Other investment options could also be considered
depending upon the objective of the investor.
• GATHER KNOWLEDGE:
It would be beneficial to gather as much knowledge as possible about the IPO
market, the company offering it, the demand for it and any offer being planned by
a competitor.
This is a crucial step as the broker would be the one who would majorly handle
your money. IPO allocations are controlled by underwriters. The first step to
getting IPO allocations is getting a broker who underwrites a lot of deals.
Finally, after the homework is done, and the big step needs to be taken. All that
can be suggested is to ‘invest at your own risk’. Do not take a risk greater than
your capacity.
PRICING OF AN IPO
The pricing of an IPO is a very critical aspect and has a direct impact on the success or
failure of the IPO issue. There are many factors that need to be considered while pricing
an IPO and an attempt should be made to reach an IPO price that is low enough to
generate interest in the market and at the same time, it should be high enough to raise
sufficient capital for the company.
The process for determining an optimal price for the IPO involves the underwriters
arranging share purchase commitments from leading institutional investors.
PROCESS:
Once the final prospectus is printed and distributed to investors, company management
meets with their investment bank to choose the final offering price and size. The
investment bank tries to fix an appropriate price for the IPO depending upon the demand
expected and the capital requirements of the company.
The pricing of an IPO is a delicate balancing act as the investment firms try to strike a
balance between the company and the investors. The lead underwriter has the
responsibility to ensure smooth trading of the company’s stock. The underwriter is
legally allowed to support the price of a newly issued stock by either buying them in the
market or by selling them short.
It is generally noted, that there is a large difference between the price at the time of issue
of an Initial Public Offering (IPO) and the price when they start trading in the secondary
market.
These pricing disparities occur mostly when an IPO is considered “hot”, or in other
words, when it appeals to a large number of investors. An IPO is “hot” when the demand
for it far exceeds the supply.
This imbalance between demand and supply causes a dramatic rise in the price of each
share in the first day itself, during the early hours of trading.
The pricing of an IPO at less than its market value is referred to as ‘Underpricing’. In
other words, it is the difference between the offer price and the price of the first trade.
Historically, IPO’s have always been ‘underpriced’. Underpriced IPO helps to generate
additional interest in the stock when it first becomes publicly traded. This might result in
significant gains for investors who have been allocated shares at the offering price.
However, underpricing also results in loss of significant amount of capital that could have
been raised had the shares been offered at the higher price.
OVERPRICING:
The pricing of an IPO at more than its market value is referred to as ‘Overpricing’. Even
“overpricing” of shares is not as healthy option. If the stock is offered at a higher price
than what the market is willing to pay, then it is likely to become difficult for the
underwriters to fulfill their commitment to sell shares. Furthermore, even if the
underwriters are successful in selling all the issued shares and the stock falls in value on
the first day itself of trading, then it is likely to lose its marketability and hence, even
more of its value.
Approval of BOD: Approval of BOD is required for raising capital from the public.
Appointment of lead managers: the lead manager is the merchant banker who
orchestrates the issue in consultation of the company.
● Filing the prospectus with SEBI : The prospectus or the offer document communicates
information about the company and the proposed security issue to the investing public.
All the companies seeking to make a public issue have to file their offer document with
SEBI. If SEBI or public does not communicate its observations within 21 days from the
filing of the offer document, the company can proceed with its public issue.
● Filing of the prospectus with the registrar of the companies : once the prospectus have
been approved by the concerned stock exchanges and the consent obtained from the
bankers, auditors, registrar, underwriters and others, the prospectus signed by the
directors, must be filed with the registrar of companies, with the required documents as
per the companies act 1956.
● Printing and dispatch of prospectus : After the prospectus is filed with the registrar of
companies, the company should print the prospectus. The quantity in which prospectus is
printed should be sufficient to meet requirements. They should be send to the stock
exchanges and brokers so they receive them at least 21 days before the first
announcement is made in the newspapers.
● Filing of initial listing application: Within 10 days of filing the prospectus, the initial
listing application must be made to the concerned stock exchanges with the listing fees.
● Promotion of the issue: The promotional campaign typically commences with the filing
of the prospectus with the registrar of the companies and ends with the release of the
statutory announcement of the issue.
● Statutory announcement: The issue must be made after seeking approval of the stock
exchange. This must be published at least 10 days before the opening of the subscription
list.
● Collections of applications: The Statutory announcement specifies when the
subscription would open, when it would close, and the banks where the applications can
be made. During the period the subscription is kept open, the bankers will collect the
applications on behalf of the company.
● The company does not come out with a fixed price for its shares; instead, it indicates a
price band that mentions the lowest (referred to as the floor) and the highest (the cap)
prices at which a share can be sold.
● Bids are then invited for the shares. Each investor states how many shares s/he wants
and what s/he is willing to pay for those shares (depending on the price band). The actual
price is then discovered based on these bids. As we continue with the series, we will
explain the process in detail.
● According to the book building process, three classes of investors can bid for the shares:
2. Retail investors: Anyone who bids for shares under Rs. 2,00,000 is a retail investor.
● Offer Price: A 20 % price band is offered by the issuer within which investors are
allowed to bid and the final price is determined by the issuer only after closure of the
bidding.
● Demand: Demand for the securities offered , and at various prices, is available on a real
time basis on the BSE website during the bidding period
● Payment: 10 % advance payment is required to be made by the QIBs along with the
application, while other categories of investors have to pay 100 % advance along with the
application.
● Reservations: 50 % of shares offered are reserved for QIBS, 35 % for small investors
and the balance for all other investors.
Example 1:
Assuming you are a retail investor and have applied for 200 shares in the issue,
and the issue is over-subscribed five times in the retail category, you qualify to get 40
shares (200 shares/5). Sometimes, the over-subscription is huge or the issue is priced so
high that you can't really bid for too many shares before the Rs. 2,00,000 limit is reached.
In such cases, allotments are made on the basis of a lottery.
Example 2:
Say, a retail investor has applied for five shares in an issue, and the retail category has
been over-subscribed 10 times. The investor is entitled to half a share. Since that isn't
possible, it may then be decided that every 1 in 2 retail investors will get allotment. The
investors are then selected by lottery and the issue allotted on a proportional basis. That is
why there is no way you can be sure of getting an allotment.
Example 3:
In actual companies offer shares in Lot size which contain a fixed no. of shares, retail
investors need to apply for shares in multiple of that lot. A lot can contain any no. of
shares decided by the company. Like A Lot can contain 10 shares or 30 shares or 47
shares or 60 shares. When it comes to an allotment SEBI has guidelines to allot minimum
1 lot to 1 applicant on lottery bases. Just like recently in December 2020 Burger King
IPO came with a lot size of 250 share at Book built Issue , IPO price was Rs. 59 to Rs. 60
per equity share. Similarly, Mrs. Bectors Food Specialities Limited IPO came with a
Market Lot 50 shares (1 Lot = 50 Shares) IPO Price was Rs. 286 to Rs. 288 per equity
share (On Book Building).
But there was a Limit of Minimum 1 Lot and Maximum 13 Lots for a retail investor.
Book Building is basically a capital issuance process used in Initial Public Offer (IPO)
which aids price and demand discovery. It is a process used for marketing a public offer
of equity shares of a company. It is a mechanism where, during the period for which the
book for the IPO is open, bids are collected from investors at various prices, which are
above or equal to the floor price. The process aims at tapping both wholesale and retail
investors. The offer/issue price is then determined after the bid closing date based on
certain evaluation criteria.
The Process:
● The Issuer who is planning an IPO nominates a lead merchant banker as a 'book
runner'.
● The Issuer specifies the number of securities to be issued and the price band for
orders.
● The Issuer also appoints syndicate members with whom orders can be placed by
the investors.
● Investors place their order with a syndicate member who inputs the orders into the
'electronic book'. This process is called 'bidding' and is similar to open auction.
● A Book should remain open for a minimum of 5 days.
● Bids cannot be entered less than the floor price.
Book-building is all about letting the company know the price at which you are willing to
buy the stock and getting an allotment at a price that a majority of the investors are
willing to pay. The price discovery is made depending on the demand for the stock.
The price that you can suggest is subject to a certain minimum price level, called the
floor price. For instance, the floor price fixed for the Maruti's initial public offering was
Rs. 115, which means that the price you are willing to pay should be at or above Rs. 115.
In some cases, as in Antony Waste Handling Cell Limited the price band (minimum
and maximum price) at which you can apply is specified. A price band of Rs 313 to Rs
315 means that you can apply at a floor price of Rs. 313 and a ceiling of Rs. 315.
If you are not still very comfortable fixing a price, do not worry. You, as a retail investor,
have the option of applying at the cut-off price. That is, you can just agree to pick up the
shares at the final price fixed. This way, you do not run the risk of not getting an
allotment because you have bid at a lower price. If you bid at the cut-off price and the
price is revised upwards, then the managers to the offer may reduce the number of shares
allotted to keep it within the payment already made. You can get the application forms
from the nearest offices of the lead managers to the offer or from the corporate or the
registered office of the company.
How is the price fixed?
All the applications received till the last date are analysed and a final offer price, known
as the cut-off price is arrived at. The final price is the equilibrium price or the highest
price at which all the shares on offer can be sold smoothly.
If your price is less than the final price, you will not get allotment. If your price is higher
than the final price, the amount in excess of the final price is refunded if you get
allotment. If you do not get allotment, you should get your full refund of your money in
15 days after the final allotment is made. If you do not get your money or allotment in a
month's time, you can demand interest at 15 per cent per annum on the money due.
● As per regulations, at least 25 per cent of the shares on offer should be set aside for
retail investors. Fifty per cent of the offer is for qualified institutional investors.
Qualified Institutional Bidders (QIB) are specified under the regulation and allotment
to this class is made at the discretion of the company based on certain criteria.
● Shares allotted to each applicant in category A should be 33 shares (100*1/3). That is,
shares applied by each applicant in the category multiplied by the oversubscription
ratio. As, the minimum allotment lot is 100 shares, it is rounded off to the nearest
minimum lot. Therefore, 500 applicants will get 100 shares each in category A —
total shares allotted to the category (50,000) divided by the minimum lot size (100).
● In category B, each applicant should be allotted 167 shares (500/3). But it is rounded
off to 200 shares each. Therefore, 167 applicants out of 200 (33300/200) would get an
allotment of 200 shares each in category B.
● The final allotment is made by drawing a lot from each category. If you are lucky you
may get allotment in the final draw.
● The shares are listed and trading commences within seven working days of
finalization of the basis of allotment. You can check the daily status of the bids
received, the price bid for and the response form various categories in the Web sites
of stock exchanges. This will give you an idea of the demand for the stock and a
chance to change your mind. After seeing the response, if you feel you have bid at a
higher or a lower price, you can always change the bid price and submit a revision
form.
● The traditional method of doing IPOs is the fixed price offering. Here, the issuer and
the merchant banker agree on an "issue price" - e.g. Rs.100. Then one has the choice
of filling in an application form at this price and subscribing to the issue. Extensive
research has revealed that the fixed price offering is a poor way of doing IPOs. Fixed
price offerings, all over the world, suffer from `IPO underpricing'. In India, on
average, the fixed-price seems to be around 50% below the price at first listing; i.e.
the issuer obtains 50% lower issue proceeds as compared to what might have been the
case. This average masks a steady stream of dubious IPOs who get an issue price
which is much higher than the price at first listing. Hence fixed price offerings are
weak in two directions: dubious issues get overpriced and good issues get
underpriced, with a prevalence of underpricing on average.
What is needed is a way to engage in serious price discovery in setting the price at the
IPO. No issuer knows the true price of his shares; no merchant banker knows the true
price of the shares; it is only the market that knows this price. In that case, can we just
ask the market to pick the price at the IPO?
Imagine a process where an issuer only releases a prospectus, announces the number of
shares that are up for sale, with no price indicated. People from all over India would bid
to buy shares in prices and quantities that they think fit. This would yield a price. Such a
procedure should innately obtain an issue price which is very close to the price at first
listing -- the hallmark of a healthy IPO market.
Recently, in India, there had been issue from Hughes Software Solutions which was a
milestone in our growth from fixed price offerings to true price discovery IPOs. While
the HSS issue has many positive and fascinating features, the design adopted was still
riddled with flaws, and we can do much better.
Documents Required:
● A company coming out with a public issue has to come out with an Offer Document/
Prospectus.
● An offer document is the document that contains all the information you need about
the company. It will tell you why the company is coming is out with a public issue, its
financials and how the issue will be priced.
● The Draft Offer Document is the offer document in the draft stage. Any company
making a public issue is required to file the draft offer document with the Securities
and Exchange Board of India, the market regulator.
● If SEBI demands any changes, they have to be made. Once the changes are made, it is
filed with the Registrar of Companies or the Stock Exchange. It must be filed with
SEBI at least 21 days before the company files it with the RoC/ Stock Exchange.
During this period, you can check it out on the SEBI Web site.
● Red Herring Prospectus is just like the above, except that it will have all the
information as a draft offer document; it will, however, not have the details of the
price or the number of shares being offered or the amount of issue. That is because
the Red Herring Prospectus is used in book building issues only, where the details of
the final price are known only after bidding is concluded.
Players:
The study is limited to Delhi city only. Hence, the analysis and findings are
relevant to that area only.
The respondents are reluctant to express their views freely and openly.
The results are of values for only a specific period of time since the market is
always dynamic.
Since the analysis has been made from the information given by the respondents,
the accuracy of the findings depends on the quality of the respondents.
The period of study was only for 2 month, which is very short period for detailed
study.
The information recorded is based on the opinion and reaction of the respondents
as on the date of research.
CHAPTER 3: CONCEPTUAL DISCUSSION
REVIEW OF LITERATURE
The published work relating to the topic is reviewed by the Researcher. The relevant
literature is reviewed on the basis of Books, Periodicals, News Papers and Websites. The
detailed review is given below:-
Learning: IPO expert Tom Taulli explains all facets of IPO investing and trading, with a
particular emphasis on the industries that are fueling the next generation of IPOs, from
social networking and cloud computing to mobile technology.
This new edition reflects the new IPO environment and presents you with the insights
needed to excel in such a dynamic arena.
Discusses more sophisticated IPO trading strategies, explores the intricacies of the
IPO process, and examines the importance of focused financial statement analysis
Contains new chapters on secondary IPO markets, reverse mergers, and master
limited partnerships
Provides in-depth analysis of other major industries generating worthwhile IPOs
Covers IPO investing from basic terms to advanced investing techniques
Atul Mehra (2010) “IPO Boom”, Business Today, point out that promoters are in
hurry to IPO because they do not want to be left out.
Jagannadham Thunuguntla (2011) in his article “IPOs: More Misses Than Hits”,
published in the Dalal Street Investment pointed out that, the age old philosophy of
understanding the company and sticking to the basics should be given due respect. Let
the buyer be made aware that the investor has to put a price tag to his hard earned money.
There is a need for investor education and awareness and the connections should be on a
stable income than a becoming rich overnight.
Jignesh B. Shah and Smita Varodkar in their article “Capital Market: Trends in
India and abroad – impact of IPO Scam an Indian Capital Market”, published in
the Souvenir, All India Accounting Conference, November, S. D. School of
Commerce, Gujarat University, Ahmadabad, concluded that the recent IPO Scam
indicates that even a highly automated system will not prevent malpractices. But steps
should be taken by SEBI to restrict such IPO Scam by applying know your customer
(KYC) and unique identification number to market players and investors.
Alankit's journey of excellence began with a clear-eyed vision to attain its goals steadily
and make an innate presence in the market at every step. Having completed its extensive
tenure of 26 years, Alankit takes great pride in strengthening its capabilities, nurturing
lasting trust and relationships across its business ecosystem with an unyielding integrity
to its strategic direction and the vision to make a real difference. Notable milestones and
a variety of achievements to ornate its journey of 'a well-defined vision steered skillfully
into practice make us the global player we are today. As we continue to ramp our service
offerings through a steady flow of innovations and expand into new markets, our vision
remains the same to strengthen the very fabric of society with a primary concern of our
clientele satisfaction.
Chapter 4: Data Analysis
Sampling Method
(i) Libraries at
(ii) Tabulation- bring similar data together and totalling them in meaningful
categories.
(iii) Questionnaires are edited both in the field and later in home. Field editing
took place just often the interview.
(iv) The collected data are placed into an order. Percentages of respondents
answered similarly are calculated and placed in a table. Then this is
interpreted. This involved drawing conclusion from the gathered data.
Interpretation changes the new information immerging from the analysis into
information that is pertinent or relevant to the study.
(v) In an initial public offering (IPO), a company offers shares to ‘the public’ for
the first time via a listing on a stock exchange. This is an also referred to as
‘going public’.
(vi) Merchant Banking manages such IPO processes. We start by advising
companies on the rationale for going public, and discussing the strategy with
management. As lead manager we take care of all official documentation
(including the prospectus), the valuation of the company and the marketing of
the shares to prospective investors.
(vii) During the marketing process, Merchant Banking introduces the company to
institutional and retail investor, especially top-tier investors with Fortis Bank
has a strong relationship. This part of the process is called a ‘road show’
moreover, Merchant Banking will continue to support your company long
after the IPO with its extensive research, which consistently wins outstanding
ratings from investors, not least because of our excellent knowledge and
understanding of the countries in which we operate.
Chapter 4: Data Analysis
PRIMARY DATA:
In addition to the full support offered by our specialists for IPOs, we will also support
your company in the event of a secondary offering. With access to wide network of
investors and institutional, Merchant Banking has the contact to ensure the successful
placing of every share.
The airline had received as many as 15 bids from which six- SBI caps, HSBC securities,
DSP Merrill Lynch, J M Morgan Stanley, Kodak Mahindra capital and Enam consultants
jointly with Citibank- were short listed for appointment as an advisor to lay the roadmap
for the IPO, which is expected to hit the market by December. A four member high-
powered committee was set up to go through the bids and give its recommendations on
the appointment of the advisor, which would be placed before the board, they said.
After exhausting all options of disinvestment and equity infusion by the Union
government, Air-India had set the ball rolling for its IPO, when the board gave its nod
more than two months ago.
3-5 years 9%
TOTAL 100%
RESPONSES
80%
70%
69%
60%
50%
40%
30%
20%
17%
10% 5%
9%
0%
Less than 1 year 1-3 years 3-5 years More than 5 years
RESPONSES
Figure 1: How long have been investors active in the market of IPO.
Interpretation
Figure1, indicates that 69% investors are new in IPO, which means people are willing
to work in the platform. It means there is significant hike in the number of investors.
While only 9% of the investors have been working for more than 5 years and, 5% of
the investors have been working in between 3-5 years and 17% of the investors have
been working in between 1-3 years.
Total 100%
RESPONSE
Price of IPO
15%
Image of the
Company
14%
Performance of
Premium the company
Amount of IPO 61%
10%
Interpretation
Figure2, indicates that 61% investors feel confident to invest on the basis of
performance of the company during past years, While only 15% investors feel
confident to invest on the basis of price of IPO, 14% investors feel confident to invest
on the basis of image of the company and only 10% investors feel confident to invest
on the basis of premium amount of IPO.
60%
52%
50%
40%
30% 26%
22%
20%
10%
0%
IPO Secondary Securites Other
Interpretation
Figure 3, indicates that 52% of the investors are prefer to invest in IPOs, 26% of the
investors are prefer to invest in secondary securities and 22% of the investors are
prefer to invest in other securities.
73%
Interpretation
Figure 4, indicates that most of the most of the investors want to invest for the long
term loans which is 72.73% and only 27.73% investors invest in IPO for the listing
gains.
YES NO
34.36%; 34%
65.64%; 66%
Interpretation
Figure 5, indicates that 65.64% of the investors do not have the professional
knowledge in stock market and 34.36% of the investors have professional knowledge
in the stock market.
Interpretation
Figure 6, indicates that 67.35% of the investor’s income is less than 15,000 in a year,
22.45% of the investor’s income is in between the 15,001-50,000 in a year, only
4.08% of the investor’s income is in between the 50,001-1,00,000 which is least
among all and 6.12% of the investor’s income is more than 1,00,000 in a year.
34.00%
35.00%
30.00%
23.23% 23.23%
25.00%
20.00%
14.14%
15.00%
10.00%
5.40%
5.00%
0.00%
Interpretation
Figure 7, indicates that maximum number of investors do not face any problem when
they invest in IPOs which is 39.40%. 23.23% of the investors face the problem
related to the delay in crediting the allotted shares to their De-mat account and no
clarity in allotment. And minimum number of the investors face the problem related
to refund which is 14.14%.
5 Strongly Agree
4 Agree
3 Neutral
2 Disagree
1 Strongly
Disagree
5 4 3 2 1 TOTAL
I look at the 35.35% 38.39% 17.17% 5.04% 4.05% 100%
Financial statements
of the company.
I look at the past 38.38% 35.36% 21.21% 1.01% 3.04% 100%
growth of the
company.
I look at the future 42.44% 33.33% 19.20% 3.01% 2.02% 100%
prospects of the
company.
The price band is the 26.26% 44.42% 23.24% 2.03% 4.05% 100%
important
consideration for me.
The image of the 37.37% 33.33% 20.20% 4.04% 5.06% 100%
company can affect
my decision.
Premium is more 30.32% 35.34% 27.27% 5.05% 2.02% 100%
important for me.
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
I look at the I look at the I look at the The price band The image of Premium is
Financial past growth of future is the the company more important
statements of the company. prospects of important can affect my for me.
the company. the company. consideration decision.
for me.
5 4 3 2 1
● Figure8, indicates that most of the investors look at the past growth of the
company which is 38.38%.
● Most of the investors agree on the point that they look at the financial
statement of the company which is 38.39%.
● Investors strongly that they look at the future prospects of the company which
is 42.44%.
● Only 26.26% investors strongly agree that price band is an important
consideration for them.
● Most of the investors strongly agree on the point that they look the image of
the company.
30.32% of the investors strongly agree that they think premium is more important for
them. And only 2.02% of the investors strongly disagree on this point.
80.00%
70.00%
60.00%
50.00%
40.00%
30.00% 19.59%
20.00%
10.00%
0.00%
Yes No
RESPONCES
Interpretation
Figure 9, indicates that 80.41% of the investors will suggest to the new investors that
they should invest in IPOs and 19.59% of the investors will not suggest to the new
investors that they should invest in the IPOs.
73.74%
80.00%
70.00%
60.00%
50.00%
40.00% 26.26%
30.00%
20.00%
10.00%
0.00%
Yes No
RESPONCES
Interpretation
Figure 10, indicates that 73.74% of the investors income is increased because of
investing in IPOs and only 26.26% of the investors income is not increased because
of investing in IPOs.
● The overall percentage indicates that 69% investors are new in IPO, which
means people are willing to invest money if they get a right platform. It means
there is significant hike in the number of investors. While only 9% of the
investors have been working for more than 5 years and, 5% of the investors
have been working in between 3-5 years and 17% of the investors have been
working in between 1-3 years.
● There are many factors in the IPO because of them investors wants to invest
the money in the IPOs but the major percentage of people says that they invest
in IPO only because of the company which is approx. 69%.
● The percentage distribution on the basis of the interest of the investors, it
shows that there are maximum number of investors who wants to invest in
Initial Public Offerings which is approximately 54%.
● This survey shows that most of the investors want to invest for the long term
loans which is 72.73%.
● Many of the investors do not have any professional knowledge of stock
market but they invest in market to increase the income.
● Out of 100% respondents 81.90% of the investors have below 1 year of
experience in IPO investment.
● This research shows that most of the investors look at the past growth of the
company which is 38.38%.
● Most of the investors agree on the point that they look at the financial
statement o the company which is 39.39%.
● Investors strongly that they look at the future prospects of the company wich
is 44.44%.
● Only 26.26% investors strongly agree that price band is an important
consideration for them.
● Most of the investors strongly agree on the ponit that they look the image of
the company.
● 32.32% of the investors strongly agree that they think premium is more
important for them. And only 2.02% of the investors strongly disagree on this
post.
● More investors invest in IPOs on the basis of company’s performance.
● Most of the investors invest in IPOs for the long term gains.
● The investors strongly agree that IPO is a risky investment.
● Most of the investors prefer online mode of investment when they invest in
IPOs because online mode is the easiest way to invest in IPOs.
● From this study the statistics shows that most of the investors gained high
return of profit by investing in IPO while compared to other investment.
● Among the investors, various problems that are encountered while using
Initial Public Offerings. Maximum number of investors do not face any
problem when they invest in IPOs but 23.23% of the investors face the
problem related to the delay in crediting the allotted shares to their De-mat
account and no clarity in allotment.
Conclusion
CHAPTER 6: SUGGESTIONS
Questionnaire
BINARY QUESTIONS
Less than 1 year 1-3 years 3-5 years More than 5 years
Yes No
Q6: What is your average yearly investment in IPOs?
No Problem
5 Strongly Agree
4 Agree
3 Neutral
2 Disagree I look at the financial statements of the company.
1 Strongly Disagree
5 4 3 2 1
5 4 3 2 1
5 4 3 2 1
The price band is the important consideration for me.
5 4 3 2 1
5 4 3 2 1
5 4 3 2 1
Yes No
Yes No
References
www.alankit.com
www.grow.com
www.investopedia.com
www.chittorgarh.com
High-Profit IPO Strategies, Author: Tom Taulli
Atul Mehra (2010) “IPO Boom”, Business Today,
Jignesh B. Shah and Smita Varodkar in their article “Capital Market: Trends in India and
abroad – impact of IPO Scam an Indian Capital Market”