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Mukt Shabd Journal ISSN NO : 2347-3150
“A STUDY ON THE PERFORMANCE OF IPO’s
LISTED IN NSE, INDIAN INDEX”
Ms.Ashwini G K, PG Student, PGDMS &RC, Ms. Jyothi G H, Assistant Professor & Research
PESITM, Shivamogga. 577204. Scholar, PGDMS&RC, PESITM, Shivamogga.
577204.
Abstract
The present study has been undertaken to gauge the performance of IPO’s of companies listed in
NSE, Indian index. Initial public offerings are ahead importance worldwide as an important
source of funds for the companies to step up their growth by using the mobilized funds to
implement innovative strategies as well as considered as an important tool for investment since it
offers huge profits. In this paper the performance of IPO’s are analyzed based on the comparison
of issue price with closing price on the day of issue. From the year 2015 to 2019 which are listed
in National Stock Exchange (NSE) India, most of the investors always prefer to purchase
securities at a lower issue price and the comparison will be made with the closing price. The
analysis of data using correlation shows whether there is a relationship exists between issue
prices and issue size. And also it analyzes the relationship between the subscription ratio and
listed day gain ratio. The findings of the research help to analyze the performance of the listed
companies and also to make proposed investment decision. Through this it can be concluded that
IPO’s can be a long term investment tool or a speculative opportunity to earn booming profits.
Key words: Initial Public offering, Last trading price, National Stock Exchange, Issue Price.
I. INTRODUCTION
A capital market is a financial market in which long-term debt or equity backed securities are
bought and sold. Capital markets channel the wealth of savers to those who can put it to long-
term productive use, such as companies or governments making long-term investments.
Financial regulators like Securities and Exchange Board of India (SEBI), Bank of England (BoE)
and the U.S. Securities and Exchange Commission (SEC) oversee capital markets to protect
investors against fraud, among other duties. Modern capital markets are almost invariably hosted
on computer-based electronic trading platforms most can be accessed only by entities within the
financial sector or the treasury departments of governments and corporations, but some can be
accessed directly by the public. A capital market can be either a primary market or a secondary
market. In primary market, new stock or bond issues are sold to investors, often via a mechanism
known as underwriting.
II. LITERATURE REVIEW
1. Ajay Yadav, Sweta Goel (2019) there are several ways of raising funds from primary market
but, IPOs are the widely adopted tool by the companies to raise funds from open market for
the initial sale of stock by private company. India being a developing nation and flourishing
corporate network is focused on IPO. The motivation behind this examination is to understand
the case of under pricing exists to think about whether or not an Indian IPO and the impact of
the administrative system on IPO under pricing. In this examination enterprise information is
Volume IX, Issue IX, SEPTEMBER/2020 Page No : 347
Mukt Shabd Journal ISSN NO : 2347-3150
broken down by descriptive and comparative method. Indian market has more under pricing
than overpricing.
2. Aloysius Edward J (2019): In this article the researcher analyzed that the capital market
promotes economic growth through promoting savings and increases productivity. One of the
major reforms is the primary market including IPOs started emerging as one of the foremost
source of funds for Indian companies and also an important opportunity for retail investors to
apportion their funds for higher return. To address one of issue in this paper SEBI has
changed the basis of allotment of IPO to retail investors from pro-rata basis to lottery method
since 2012. Two methods are widely used for an IPO, book building and fixed price issue.
Out of 132 companies raised funds through IPO 14 companies are taken for study based on its
issue size. It is found that the companies which had listing gain also had current market price
gain. The companies which had substantial oversubscription had both listing and current
market price gain.
3. Ashish Kumar Suri and Bhupendra Hada (2018) in their paper stated they considered 107
IPO’s launched during the period 2011 to June 2017 on the basis of two performance
indicators i.e. over-subscription and listing day gains. This study aims at comparing the
performance of the IPO’s for two periods January 2011-May 2014 and June 2014-June 2017.
The results of the study shows that the performance of the IPO’s launched during the period
2011-May 2014 significantly differs from the performance of the IPO’s which were launched
between June 2014-June 2017. It was also examined that the number of IPO’s and the
fundraised through them also differ considerably for the two periods.
4. Garima Baluja, Balwinder Singh (2016): In their research paper stated IPO market has
witnessed vast fluctuations in the post SEBI era. Still several new issues have entered the
market during this period, and only a few managed to survive well. A lot of researchers have
verified the aftermarket performance of such IPOs; however the phenomenon of IPO's
survival has remained a neglected issue in India. Therefore, the need arises to probe the
factors behind and the success and fiasco of new issues in the market. The purpose of this
paper is to critically analysis the voyage of IPOs in terms of their survival in the aftermarket
5. S.Poornima,AalaaJ.Haji,Deepa(2016)Initial public offerings are gaining importance
worldwide as an important source of funds for the companies to accelerate their growth by
using the mobilized funds to implement innovative strategies as well as considered as an
important tool for investment since it offers huge profits on the listing day. In this study the
short run performance of the companies is analyzed to understand the anomaly of abnormal
returns as well long term performance to analyze the performance of the IPO’s in the long
run. The period of study is from Jan 2013 – Dec 2014. The sample for the study includes 9
companies listed in National Stock Exchange of India pertaining to the study period. The
results of this study will throw light on the performance of the IPO’s which are majorly
Volume IX, Issue IX, SEPTEMBER/2020 Page No : 348
Mukt Shabd Journal ISSN NO : 2347-3150
considered as a speculative tool and hence aid in better decision making for the investors. The
findings will also help conclude if IPO can be a long term investment tool or a speculative
opportunity to earn booming profits.
6. Gowtham Ramkumar (2017): In their article “Influences of stock market factors on
investors perception” concluded that whether factors influencing investor perceptions has a
important impact on their investment choices and which can advantage people dealing in
stock exchanges.
III. Research Design
3.1 Statement of the problem
The study was undertaken to analyze the financial performance of IPO in selected companies.
Performance of IPO is important and necessity to the companies to raise the capital quickly by
reaching a large number of investors. A company can then use that cash to further the
business, be it in the form of research, infrastructure, or expansion. Evaluating the
performance and trends of IPO helps to see whether IPOs offer better investment
opportunities or not.
3.2 Objectives of the study
1. To conceptualized the concept of capital market in IPO
2. To know the status of subscription of IPOs of companies listed in Indian Index.
3. To evaluate the performance of different companies from different sector, which are listed
in Indian index
4. To give the suggestions on the basis of analyzing data.
5. To statistically examine relationship oversubscription ratio and listing day gain.
3.3 Scope of the study
1. This analysis can increase the knowledge of investors.
2. The study of IPO’s companies as a sample where the companies are issued based on20
3. The companies are ranked in descending order are selected.
4. The Price of the particular sectors from the day of issues and the taken the data from the
BSE and calculates the daily returns and annual returns.
5. The study can be forecasting the fluctuate of the stock price
6. Understanding the IPO can be a long term investment tool or a speculative opportunity to
earn booming profits.
3.4 Research methodology
The data for the study is mainly collected from NSE and BSE website. The analysis is based on
the companies listed under NSE and BSE during the years 2015-2019. The secondary data was
collected from the various sources available like website wherever necessary. The study was
mainly analytical and partly descriptive in nature.
Volume IX, Issue IX, SEPTEMBER/2020 Page No : 349
Mukt Shabd Journal ISSN NO : 2347-3150
Primary Data
Primary data refers to the data that is fresh and collected for the first time. It refers to the data
collected by the researcher and original in character.
Personal discussion was adopted for collection of primary data from Share khan Ltd. Such as
information of Capital market in India, details of Trading, Initial Public Offerings (IPO) and
Stock Market (i.e. BSE & NSE) related information.
Secondary Data
Secondary data is the information that already exists. The source of secondary data were
collected from various published sources like text books, journals, articles, annual reports and
company websites etc.
3.5 Limitations
1. The study is restricted only to the companies which are listed in NSE.
2. The only 4 years (2015-2019) data will be considered to analyze the performance of IPOs.
3. Non-availability of data of certain companies.
4. Due to De-listing of companies their analysis is not being made.
IV Analysis and Analysis and Interpretation
Table No: 01 List of IPOs in NSE and fund raised over 5 years
Year Number of IPOs Fundraised (Rs. crore)
2015 21 13513.17
2016 26 26500.82
2017 38 75278.57
2018 25 31731.28
2019 16 12687.32
(Source: Website)
Fig No: 01Graphical Representation of List of IPOs in NSE and fundraised over 5 years
100000
50000 Number of IPOs
Fund raised(₹ crores)
0
1 2 3 4 5
(Source: Table No: 01)
Volume IX, Issue IX, SEPTEMBER/2020 Page No : 350
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