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INITIAL PUBLIC OFFERING (IPO)
In this project I study main objective of an IPO’S .It include to know about people who prefer IPO, basis of their preference. I study detail industrial profile of stock market and also study detail company profile. In it I include detail study of religare company with their strength and weaknesses. I Include detail study of IPO’ Its advantage and draw backs Initial public offering (IPO), also referred to simply as a "public offering", is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. In an IPO, the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.Initial Public Offering (IPO) in India means the selling of the shares of a company, for the first time, to the public in the country's capital markets. This is done by giving to the public, shares that are either owned by the promoters of the company or by issuing new shares. During an Initial Public Offer (IPO) the shares are given to the public at a discount on the intrinsic value of the shares and this shares during the Initial Public Offering (IPO) in order to make profits for themselves. IPO in India is done through various methods like book building method, fixed price method, 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.IPO’s can be a risky investment. For the individual investor, it is tough The term initial public offering (IPO) slipped into everyday 1

speech during the tech bull market of the late 1990s. Back then, it seemed you couldn't go a day without hearing about a dozen new dotcom millionaires in Silicon Valley who were cashing in on their latest IPO. The phenomenon spawned the term siliconaire, which described the dotcom entrepreneurs in their early 20s and 30s who suddenly found themselves living large on the proceeds from their internet companies' IPOs. INVESTORS are still wary of equities in the 1990s, to blame are the excesses in the primary market in the 1990s. Of the thousands of IPOs (initial public offerings) and offers for sale made between 1994 and 1996, less than a hundred were from companies with track record. Even in this shortlist, only a few managed to complete planned projects and deliver value to investors. The rest just frittered the money away. The primary market of the mid-1990s was merely used as a channel to move public funds into private hands. The Securities and Exchange Board of India (SEBI) was late to wake up to the excesses, but when it did, it improved the disclosure framework, tightened the prerequisites for an IPO, and towards the end of the decade, introduced book-building. ( This route brought to market quality, wealth-creating IPOs such as Hughes Software, I-flex solutions, Maruti, Bharti Tele-Ventures, TV Today and Divi's Labs, to name a few. I also include data analysis and interpretation of my whole project. In it I study all of people preference about knowledge and used of IPO and after that I listed all findings related to interpretation. In the end I conclude all of my project in very simple language. In making this report I faced many problem that I define in limitations.it include lack of time, lack of resources, personal biasness etc. After that I give some suggestion related to project. Then I underline all of bibliography according to given performa. In the end I make annexure in which I include questionnaire and glossary.

REASON FOR GOING IPO
Before deciding whether one should complete an IPO, it is important to consider the positive and negative effects that going public may have on their mind. Typically, companies go 2

public to raise and to provide liquidity for their shareholders. But there can be other benefits. Going public raises cash and usually a lot of it. Being publicly traded also opens many financial doors: 1. Because of the increased scrutiny, public companies can usually get better rates when theBy issue debt.

2. As long as there is market demand, a public company can always issue more stock. Thus, mergers and acquisitions are easier to do because stock can be issued as part of the deal.

3. Trading in the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent.

4. Going public can also boost a company’s reputation which in turn, can help the company to expand in the marketplace.

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OBJECTIVES OF THE STUDY

1. To know how many investors invest in IPO’s. 2. To know about the basis of investing in IPO’s. 3. To understand what prompt them to invest in IPO’s. 4. To understand their trading mechanism in IPO’s. 5. To understand the benefits to investor by investing in IPO. 6. To do detail study of IPO ratings,documents, performance tracker, and basis of allotment.

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HISTORY OF THE INDIAN STOCK MARKET THE ORIGIN Stock Market of India
Introduction Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock). Let us take an example for a better understanding of how market forces determine stock prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price. More and more people would want to buy this stock (i.e. high demand) and very few people will want to sell this stock at current market price (i.e. less supply). Therefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in the market, its price will fall down. In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of IT, most of the operations are done electronically and the stock markets have become almost paperless. Now investors dont have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet. One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old history. 18th Century 1830's 1840's 1850's 1860's 1860-61 East India Company was the dominant institution and by end of the century, busuness in its loan securities gained full momentum Business on corporate stocks and shares in Bank and Cotton presses started in Bombay. Trading list by the end of 1839 got broader Recognition from banks and merchants to about half a dozen brokers Rapid development of commercial enterprise saw brokerage business attracting more people into the business The number of brokers increased to 60 The American Civil War broke out which caused a stoppage of cotton supply 5

from United States of America; marking the beginning of the "Share Mania" in 1862-63 1865 India The number of brokers increased to about 200 to 250 A disastrous slump began at the end of the American Civil War (as an example, Bank of Bombay Share which had touched Rs. 2850 could only be sold at Rs. 87)

Pre-Independance Scenario - Establishment of Different Stock Exchanges 1874 1875 1880's 1894 1880 - 90's 1908 1920 1923 1934 1936 1937 With the rapidly developing share trading business, brokers used to gather at a street (now well known as "Dalal Street") for the purpose of transacting business. "The Native Share and Stock Brokers' Association" (also known as "The Bombay Stock Exchange") was established in Bombay Development of cotton mills industry and set up of many others Establishment of "The Ahmedabad Share and Stock Brokers' Association" Sharp increase in share prices of jute industries in 1870's was followed by a boom in tea stocks and coal "The Calcutta Stock Exchange Association" was formed Madras witnessed boom and business at "The Madras Stock Exchange" was transacted with 100 brokers. When recession followed, number of brokers came down to 3 and the Exchange was closed down Establishment of the Lahore Stock Exchange Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.) Limited led by improvement in stock market activities in South India with establishment of 1940 1944 1947 new textile mills and plantation companies Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited was established Establishment of "The Hyderabad Stock Exchange Limited" "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and Shares Exchange Limited" were established and later on merged into "The Delhi Stock Exchange Association Limited"

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Post Independance Scenario The depression witnessed after the Independance led to closure of a lot of exchanges in the country. Lahore Estock Exchange was closed down after the partition of India, and later on merged with the Delhi Stock Exchange. Bnagalore Stock Exchange Limited was registered in 1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges that were recognized under the Act were:

1. Bombay 2. Calcutta 3. Madras 4. Ahmedabad 5. Delhi 6. Hyderabad 7. Bangalore 8. Indore Many more stock exchanges were established during 1980's, namely:
• • • • • • • • • • • •

Cochin Stock Exchange (1980) Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982) Pune Stock Exchange Limited (1982) Ludhiana Stock Exchange Association Limited (1983) Gauhati Stock Exchange Limited (1984) Kanara Stock Exchange Limited (at Mangalore, 1985) Magadh Stock Exchange Association (at Patna, 1986) Jaipur Stock Exchange Limited (1989) Bhubaneswar Stock Exchange Association Limited (1989) Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989) Vadodara Stock Exchange Limited (at Baroda, 1990) Coimbatore Stock Exchange

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Meerut Stock Exchange At present, there are twenty one recognized stock exchanges in India which does not include the


Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL). Government policies during 1980's also played a vital role in the development of the Indian Stock Markets. There was a sharp increase in number of Exchanges, listed companies as well as their capital, which is visible from the following table: S. No.

As on 31st December

1946 7 1125 1506 270 971 24 86 358

1961 1971 1975 1980 1985 7 8 8 9 14

1991 20 6229

1995 22 8593

1 No. of Stock Exchanges 2 No. of Listed Cos. 3 No. of Stock Issues of Listed Cos. 4 Capital of Listed Cos. (Cr. Rs.) 5 6 7 8 Market value of Capital of Listed Cos. (Cr. Rs.) Capital per Listed Cos. (4/2) (Lakh Rs.) Market Value of Capital per Listed Cos. (Lakh Rs.) (5/2) Appreciated value of Capital per Listed Cos. (Lak Rs.)

1203 1599 1552 2265 4344 2111 2838 3230 3697 6174 2530 2 224 582 260

8967 11784

753 1812 2614 3973 9723 32041 59583 1292 2675 3273 6750 63 107 170 113 168 175 167 211 298 148 126 170 110279 478121 514 1770 344 693 5564 803

Trading Pattern of the Indian Stock Market Indian Stock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange(s). They are divided into two categories:

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Types of Transactions The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:

Indian stock exchange allows a member broker to perform following activities:


Act as an agent, 9

• • •

Buy and sell securities for his clients and charge commission for the same, Act as a trader or dealer as a principal, Buy and sell securities on his own account and risk

Over The Counter Exchange of India (OTCEI) Traditionally, trading in Stock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry. This age-old trading mechanism in the Indian stock markets used to create many functional inefficiencies. Lack of liquidity and transparency, long settlement periods and benami transactions are a few examples that adversely affected investors. In order to overcome these inefficiencies, OTCEI was incorporated in 1990 under the Companies Act 1956. OTCEI is the first screen based nationwide stock exchange in India created by Unit Trust of India, Industrial Credit and Investment Corporation of India, Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation of India, General Insurance Corporation and its subsidiaries and CanBank Financial Services.

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National Stock Exchange In order to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. NSE provides exposure to investors in two types of markets, namely: 1. Wholesale debt market 2. Capital market Wholesale Debt Market - Similar to money market operations, debt market operations involve institutional investors and corporate bodies entering into transactions of high value in financial instrumets like treasury bills, government securities, commercial papers etc.

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Trading at NSE
• • • • • • •

Fully automated screen-based trading mechanism Strictly follows the principle of an order-driven market Trading members are linked through a communication network This network allows them to execute trade from their offices The prices at which the buyer and seller are willing to transact will appear on the screen When the prices match the transaction will be completed A confirmation slip will be printed at the office of the trading member

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COMPANY PROFILE
RELIGARE Securities Ltd. (RSL) is a wholly owned subsidiary of RELIGARE Financial Services Ltd. (RFSL), a Company promoted by the late Dr. Parvinder Singh, Ex-CMD of Ranbaxy Laboratories Ltd . The primary focus of Religare Securities Ltd. is to cater to services in Capital Market Operations to Institutional Investors. The Company is a member of the National Stock Exchange (NSE) and OTCEI. The growing list of financial institutions with whom RSL is empanelled as approved Broker is a reflection of the high levels of services maintained by the Company. RELIGARE was founded with the vision of providing integrated financial care driven by the relationship of trust. The bouquet of services offered by RELIGARE includes Broking (Stocks and Commodities), Depository Participant Service, Advisory on Mutual Fund Investments and Portfolio Management Services. RELIGARE is a pioneer in the concept of partnership to reach multiple locations in order to effectively service its large base of individual clients. Besides the reach of RELIGARE, the clients of the company greatly benefit by its strong research capability, which encompasses fundamentals as well as technical knowledge.

DIRECTORS OF RELIGARE SECURITIES LIMITED :
Chairman : Mr. Harpal Singh Managing Director : Mr. Sunil Godhwani Director : Mr. Vinay Kumar Director : Mr. Malvinder Mohan Singh

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Director : Mr. Shivinder Mohan Singh

SERVICES :
 Arts Initiative  Investment  Banking  Wealth  Advisory  Personal  Credit  Insurance  Mutual Fund  Commodity  Equity

MISSION :
To be India's first Multinational providing complete financial services solution across the globe.

VISION :
Providing integrated financial care driven by the relationship of trust and confidence.

BRAND ESSENCE:
Religare is driven by ethical and dynamic processes for wealth creation.

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 Religare Enterprises Limited  Religare Securities Limited
· · · · Equity Broking Online Investment Portal Portfolio Management Services Depository Services

 Religare Commodities Limited
· Commodity Broking

 Religare Capital Markets Limited
· · Investment Banking Proposed Institutional Broking

 Religare Finvest Limited
· · Lending and Distribution business Proposed Custodial business

 Religare Insurance Broking Limited
· · · Life Insurance General Insurance Reinsurance

 Religare Arts Initiative Limited
· · Business of Art Gallery launched - arts-i

 Religare Realty Limited

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·

In house Real Estate Management Company

 Religare Hichens Harrison** · Corporate Broking · Institutional Broking

 Religare Venture Capital Limited
· Private Equity and Investment Manager  Religare Asset Management* · Derivatives Sales · Corporate finance

COMPETETORS OF RELIGARE
There are several financial security companies playing their roles in Indian equity market. But faces competitions from these few companies.       ICICI Direct.com Share Khan (SSKI) Kotak Securities.com India Bulls HDFC Securities 5paisa.com

 Motital Oswal  Karvy

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SWOT ANALYSIS

STRENGTHS
      Very Strong Brand Image. Low Charges with respect of its Services. Very low annual maintenance of Demat account. Facility to trade in office. Very Good Customer Care Unit. Trading in equity, currency as well as commodity.

WEAKNESSES
 Only one branch is running in Karnal City.  Weak Advertisement Policies.

OPPORTUNITIES
    Large Untapped Market. Opportunity to educate investors about their products & inspire them to invest more & Encourage others. Good Opportunity to Cash its Brand Image and People Trust.

THREATS
 Presence of very strong competitors Like, Karvy, Angel Broking, Share khan,  India bulls etc.  Aggressive marketing by competitors.

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PERFORMANCE EVOLUTION OF IPO
Initial public offering is the first sale of stock by a company to the public. A company can raise money by issuing debt or equity. If the company have never issued equity to the public, its known as an IPO. IPO’S following fixed price as opposed to book building method. In this paper by empirically studying the differences between the IPO’S following different process, we extend empirical work on Indian IPO markets as other empirical works in Indian context, cited later, are all from period when book building process for IPO’S was not allowed and used.

MEANING OF BOOK BUILDINGBook building is basically a process used in initial public offer for efficient price discovery. it is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices. The offer price is determined after the bid closing date. As per SEBI guidelines, an issuer company can issue securities to the public though prospectus in the following manner: 1. 100% of the net offer the public through book building process . 2. 75% of the net offer to the public through book building process and 25% at the price determined through book building. The fixed price portion is conducted like a normal public issue after the book built portion, during which the issue price is determined. The concept of book building is relatively new in India. However it is a comman practice in most developed countries.

PROCEDURES OF BOOK BUILDING: 1.ISSUERS:
Issuers desirous of using of NSE ’s online IPO system are required to complete with the following procedures:-

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1. submit a written request as per prescribed format for usage of electronic facilities and software of NSE. 2. Give details regarding book running lead manager, co book running lead managers and syndicate members. 3. pay the requisite charges to NSE.

2.TRADING MEMBERS:The book running lead manager will give the list of tradings members who are eligible to participate in the book building process to the exchange. Members have to submit a one time undertaking to the exchange. Eligible trading members have to give in the prescribed format details of the user IDs that they would like to use.

3.SUBSCRIBERS:Subscriber can approach any of the approved trading members for submitting bids in the NEAT IPO system. On line transaction registration slip are generated automatically after entering the bids in to the system which acts as proof of the registration of each bid option.

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IPO MARKET IN INDIA

The IPO Market in India has been developing since the liberalization of the Indian economy. It has become one of the foremost methods of raising funds for various developmental projects of different companies. The IPO Market in India is on the boom as more and more companies are issuing equity shares in the capital market. With the introduction of the open market economy, in the 1990s, the IPO Market went through its share of policy changes, reforms and restructurings. One of the most important developments was the disassembling of the Controller of Capital Issues (CCI) and the introduction of the free pricing mechanism. This step helped in developing the IPO Market in India, as the companies were permitted to price the issues. The Free pricing mechanism permitted the companies to raise funds from the primary market at competitive price. The Central Government felt the need for a governed environment pertaining to the Capital market, as few corporate houses were using the abolition of the Controller of Capital Issues (CCI) in a negative manner. The Securities Exchange Board of India (SEBI) was established in the year 1992 to regulate the capital market. SEBI was given the authority of monitoring and regulating the activities of the bankers to an issue, portfolio managers, stockbrokers, and other intermediaries related to the stock markets. The effects of the changes are evident from the trend of the resources of the primary capital market which includes rights issues, public issues, private placements and overseas issues.

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IPO ALLOTMENT STATUS
Initial public offering is also popularly known as IPO, is the first time sale of stocks, of a private company. A new company can launch IPO to raise capital to initiate its business. Moreover, Initial Public Offering can also be launched to raise money for expansion or other important operations of an existing company. The sale of stock through such Initial Public Offering (IPO) is meant for the individual and corporate investors. The aim of such issuance of Initial Public Offering is to invest the accumulated corpus for, either opening -up of a company or expansion of an existing company. Thus, effectively, an Initial Public Offering pools investments and utilizes it in building or expansion of the said company. The shares held by such investors give them the rights of the company and to its future profits. The process which involves determination of the issue size and type, offer price and best time of introduction into the market is called "underwriting". The underwriting is generally done by the investment bankers. These underwriting firms or investment bankers are allotted some specified numbers of shares to sell, which is called as IPO Allotment Status. is the Securities and Exchange Board of India (SEBI).1990s.) to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPO’s are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value.

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COMPANIES FALL INTO TWO BROAD CATEGORIES: PRIVATE AND PUBLIC.

A privately held company has fewer shareholders and its owners don't have to disclose much information about the company. When a privately held corporation needs additional capital, it can borrow cash or sell stock to raise needed funds. Often "going public" is the best choice for a growing business. Compared to the costs of borrowing large sums of money for ten years or more, the costs of an initial public offering are small. The capital raised never has to be repaid. When a company sells its stock publicly, there is also the possibility for appreciation of the share price due to market factors not directly related to the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents and follow the reporting rules of jurisdiction such as Indian Companies Act 1956. It usually isn't possible to buy shares in a private company. One can approach the owners about investing, but they're not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange. This is why doing an IPO is also referred to as "going public."-+

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SIGNIFICANCE OF IPO
Investing in IPO has its own set of advantages and disadvantages. Where on one hand, high element of risk is involved, if successful, it can even result in a higher rate of return. The rule is: Higher the risk, higher the returns. The company issues an IPO with its own set of management objectives and the investor looks for investment keeping in mind his own objectives. Both have a lot of risk involved. But then investment also comes with an advantage for both the company and the investors. The significance of investing in IPO can be studied from 2 viewpoints – for the company and for the investors. This is discussed in detail as follows: TO THE COMPANY: When a privately held corporation needs additional capital, it can borrow cash or sell stock to raise needed funds. Or else, it may decide to “go public”. "Going Public" is the best choice for a growing business for the following reasons: 1. The costs of an initial public offering are small as compared to the costs of borrowing large sums of money for ten years or more,

2. The capital raised never has to be repaid.

3. When a company sells its stock publicly, there is also the possibility for appreciation of the share price due to market factors not directly related to the company.

4. It allows a company to tap a wide pool of investors to provide it with large volumes of capital for future growth.

TO THE SHAREHOLDERS:

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The investors often see IPO as an easy way to make money. One of the most attractive features of an IPO is that the shares offered are usually priced very low and the company’s stock prices can increase significantly during the day the shares are offered. This is seen as a good opportunity by ‘speculative investors’ looking to notch out some short-term profit. The ‘speculative investors’ are interested only in the short-term potential rather than long-term gains.

REASONS FOR LISTING

When a company lists its shares on a public exchange, it will almost invariably look to issue additional new shares in order to raise extra capital at the same time. The money paid by investors for the newly-issued shares goes directly to the company (in contrast to a later trade of shares on the exchange, where the money passes between investors). An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth. The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company and the right to a capital distribution in case of a dissolution.

The existing shareholders will see their shareholdings diluted as a proportion of the company's shares. However, they hope that the capital investment will make their shareholdings more valuable in absolute terms. In addition, once a company is listed, it will be able to issue further shares via a rights issue, thereby again providing itself with capital for expansion without incurring any debt. This regular 24

ability to raise large amounts of capital from the general market, rather than having to seek and negotiate with individual investors, is a key incentive for many companies seeking to lis

MAJOR REASON FOR LISTING IPO

1. The increase in the capital: An IPO allows a company to raise funds for utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing. 2. Liquidity: The shares once traded have an assigned market value and can be resold. This is extremely helpful as the company provides the employees with stock incentive packages and the investors are provided with the option of trading their shares for a price.

3. Valuation: The public trading of the shares determines a value for the company and sets a standard. This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the share holders of the company with the present value of the shares. 4. Increased wealth: The founders of the companies have an affinity towards IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership.

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IPO - PROCEDURE

IPO’s generally involve one or more investment banks as "underwriters." The company offering its shares, called the "issuer," enters a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares. The sale (that is, the allocation and pricing) of shares in an IPO may take several forms. Common methods include: • • • • • • Best efforts contract Firm commitment contract All-or-none contract Bought deal Dutch auction Self distribution of stock

A large IPO is usually underwritten by a "syndicate" of investment banks led by one or more major investment banks (lead underwriter). Upon selling the shares, the underwriters keep a commission based on a percentage of the value of the shares sold. Usually, the lead underwriters, i.e. the underwriters selling the largest proportions of the IPO, take the highest commissions—up to 8% in some cases. Multinational IPOs may have as many as three syndicates to deal with differing legal requirements in both the issuer's domestic market and other regions. For example, an issuer based in the E.U. may be represented by the main selling syndicate in its domestic market, Europe, in addition to separate syndicates or selling groups for US/Canada and for Asia. Usually, the lead underwriter in the main selling group is also the lead bank in the other selling groups. Because of the wide array of legal requirements, IPOs typically involve one or more law firms with major practices in securities law, such as the Magic Circle firms of London and the white shoe firms of New York City. Usually, the offering will include the issuance of new shares, intended to raise new capital, as well the secondary sale of existing shares. However, certain regulatory restrictions and restrictions imposed by the lead underwriter are often placed on the sale of existing shares.

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Public offerings are primarily sold to institutional investors, but some shares are also allocated to the underwriters' retail investors. A broker selling shares of a public offering to his clients is paid through a sales credit instead of a commission. The client pays no commission to purchase the shares of a public offering; the purchase price simply includes the built-in sales credit. The issuer usually allows the underwriters an option to increase the size of the offering by up to 15% under certain circumstance known as the green shoe or over allotment option. The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering

MAJOR PROCESS OF AN IPO

 Eligibility Criteria:
• • • • Net Tangible assets of Rs. 3.00 Crore in each of the preceding 3 years. Track record of Distributable profits at least 3 out of 5 preceding years. The Company has a Networth of Rs. 1.00 Crore in preceding 3 years. The proposed issue should not exceed 5 times of its Pre-issue

 The process of an IPO - Eligibility criteria: (Alternate route) • • • • • • Book building process and 50% of the offer to QIBs or 15% participation in project by F/Is or Schedule Banks; 10% of the Project cost from appraiser; 10% of the Issue to QIBs. Minimum post issue face capital of Rs.10 Crores or Market making for 2 years and Minimum number of allottees atleast 1000

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• • •

Official Process of IPO
Appointment of Brokers, Advertisers and Bankers Conducting Road shows and Press Conference Opening and closing of Subscription list • • Preparation of Basis of Allotment Allotment of shares

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OBJECTS OF THE OFFERING NEW IPO
           Funds Requirement Funding Plan (Means of Finance) Appraisal Schedule of Implementation Funds Deployed Sources of Financing of Funds already deployed Details of Balance Fund Requirement Interim Use of Funds Basic Terms of Issue Basis for issue price Tax Benefits

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ADVANTAGES & DRAWBACKS OF IPO

The Advantages of IPO are numerous. The companies are launching more and more IPO’s to raise funds which are utilized for undertakings various projects including expansion plans. The Advantages of IPO is the primary factor for the immense growth of the same in the last few years. The IPO or the initial public offering is a term used to describe the first sale of the shares to the public by any company. All types of companies with the idea of enhancing growth launch IPOs to generate funds to cater the requirements of capital for expansion, acquiring of capital instruments, undertaking new projects.

MAJOR ADVANTAGES OF IPO
IPO has a number of advantages. IPO helps the company to create a public awareness about the company as these public offerings generate publicity by inducing their products to various investors. 1. The increase in the capital: An IPO allows a company to raise funds for utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing. 2. Liquidity: The shares once traded have an assigned market value and can be resold. This is extremely helpful as the company provides the employees with stock incentive packages and the investors are provided with the option of trading their shares for a price. 3. Valuation: The public trading of the shares determines a value for the company and sets a standard. This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the share holders of the company with the present value of the shares. 4. Increased wealth: The founders of the companies have an affinity towards IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership.

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DRAWBACKS OF IPO’S
1. Heavy expenditure: It is true that IPO raises huge capital for the issuing company. But, in order to launch an Initial Public Offering (IPO), it is also necessary to make certain investments. Setting up an IPO does not always lead to an improvement in the economic performance of the company. A continuing expenditure has to be incurred after the setting up of an IPO by the parent company. A lot of expenses have to be incurred in the form of legal fees, printing costs and accounting fees, which are connected to the registering of an IPO. Such expenses might cost hundreds of US dollars. Apart from such enormous costs, there are other factors as well that should be taken into consideration by the company while introducing an IPO. 2. It’s a complex process: Such factors include the rules and regulations involved to set up public offerings and this entire process on the other hand involve a number of complexities which sometime require the services of experts in relevant fields. Some companies hire experts to do the needful to ensure a hassle-free execution of the task. After the IPO is introduced, the expenses become a routine in every activity involved. Besides, the CEO of the company would have to spend a lot of time in handling the SEC regulations or sometimes he hires experts to do the same. All these aspects, if not handled with efficiency, prove to be some major drawbacks related to the launch of IPOs. 3. Depend on shareholders: The launch of IPO also brings about shareholders of the company. Shareholders have ownership in the company. The primary owners of the company or the people holding maximum authority in the company cannot take decisions all by themselves once an IPO has been launched and shareholders have been formed. The shareholders have an active participation in every decision that is being taken even if they do not hold 50 percent share of the company. They have their individual demands to be met as they own a certain percentage of stakes in the company. A major risk with shareholders is that, they can sell off their stocks any time they want, in case they see the price band of the stakes of that company is going down. This will lead to a further drop of the value of shares in the market which in turn will decrease the overall value of the company.

31

THE RISK FACTOR
Investing in IPO is often seen as an easy way of investing, but it is highly risky and many investment advisers advise against it unless you are particularly experienced and knowledgeable. The risk factor can be attributed to the following reasons: 1. UNPREDICTABLE: The Unpredictable nature of the IPO’s is one of the major reasons that investors advise against investing in IPO’s. Shares are initially offered at a low price, but they see significant changes in their prices during the day. It might rise significantly during the day, but then it may fall steeply the next day.

2. NO PAST TRACK RECORD OF THE COMPANY: No past track record of the company adds further to the dilemma of the shareholders as to whether to invest in the IPO or not. With no past track record, it becomes a difficult choice for the investors to decide whether to invest in a particular IPO or not, as there is basis to decide whether the investment will be profitable or not. 3. POTENTIAL OF STOCK MARKET: Returns from investing in IPO are not guaranteed. The Stock Market is highly volatile. Stock Market fluctuations widely affect not only the individuals and household, but the economy as a whole. The volatility of the stock market makes it difficult to predict how the shares will perform over a period of time as the profit and risk potential of the IPO depends upon the state of the stock market at that particular time.

32

4. RISK ASSESSMENTThe possibility of buying stock in a promising start-up company and finding the next success story has intrigued many investors. But before taking the big step, it is essential to understand some of the challenges, basic risks and potential rewards associated with investing in an IPO. This has made Risk Assessment an important part of Investment Analysis. Higher the desired returns, higher would be the risk involved. Therefore, a thorough analysis of risk associated with the investment should be done before any consideration. For investing in an IPO, it is essential not only to know about the working of an IPO, but we also need to know about the company in which we are planning to invest. Hence, it is imperative to know:  The fundamentals of the business  The policies and the objectives of the business  Their products and services  Their competitors  Their share in the current market  The scope of their issue being successful It would be highly risky to invest without having this basic knowledge about the company.

33

There are 3 kinds of risks involved in investing in IPO: 1. BUSINESS RISK: It is important to note whether the company has sound business and the business model of the company. 2. FINANCIAL RISK: Is this company solvent with sufficient capital to suffer short-term business setbacks? The liquidity position of the company also needs to be considered. Researching financial risk involves examining the corporation's financial statements, capital structure, and other financial data. 3. MARKET RISK: It would beneficial to check out the demand for the IPO in the market, i.e., the appeal of the IPO to other investors in the market. Hence, researching market risk involves examining the appeal of the corporation to current and future market conditions management ,

which are consistent with the standard norms. Researching business risk involves examining

34

IPO Track Record and Performance in Financial year 2009-10
During the financial year 2009-2010 a total of 35 IPO’s listed. Their performance is enumerated in the table below. Of the 35 issues as many as 24 or 68.57% ended in positive territory. Closing in the negative were 11 or 31.4% of the issues. The top gainer was Jubilant Food works Limited which gained 116.31%. The issue was priced at Rs 145 and closed at Rs313.65, an absolute gain of Rs 168.65. The second top performer was yet another century maker ARSS Infrastructure Limited which issued shares at Rs 450, and gained Rs 478.50 or 106.33% to close at Rs 928.50. The biggest loser was Euro Multivision which lost 67.81% of its issue price of Rs 75. The stock closed at Rs 24.14 down Rs 50.86. The second biggest loser was Rishabdev Techno cables which lost 66.76%. The issue was priced at Rs 33, lost Rs 22.03 and is currently quoting at Rs 10.97.

EQUITY

ISSUE PRICE

CURRENT PRICE

%GAIN/LOSS

July-2010
Hindustan Media Technofab Engg Parabolic Drugs
166.00 240.00 75.00 185.95 272.95 58.85 12.02 13.73 -21.53

May-2010
Jaypee Infra SJVN Mandhana Ind Tarapur Trans
102.00 26.00 130.00 75.00 84.85 24.05 160.20 37.05 -16.81 -7.50 23.23 -50.60

35

Nitesh Estates Talwalkars Fitn

54.00 128.00

39.00 166.10

-27.78 29.77

April-2010
Goenka Diamond Intrasoft Tech Shree Gan Jewel Persistent Pradip Oversea
135.00 145.00 260.00 310.00 110.00 82.00 116.15 154.40 450.80 85.90 -39.26 -19.90 -40.62 45.42 -21.91

March-2010
ILandFS Trans DQ Entertain United Bank Man Infra Texmo Pipes ARSS Infra
258.00 80.00 66.00 252.00 90.00 450.00 300.15 112.70 87.70 284.65 46.10 1208.30 16.34 40.88 32.88 12.96 -48.78 168.51

February-2010
Hathway Cable DB Realty Emmbi Polyarns Aqua Logistics Thangamayil VasconEngg Syncom Health
240.00 468.00 45.00 220.00 75.00 165.00 75.00 180.40 403.30 18.45 550.95 118.00 143.15 42.90 -24.83 -13.82 -59.00 150.43 57.33 -13.24 -42.80

36

Jubilant Food Infinite Comp

145.00 165.00

333.70 170.40

130.14 3.27

January-2010
MBL Infra DB Corp Godrej Proper JSW Energy
180.00 239.35 32.97

212.00 490.00 100.00

232.70 649.95 126.35

9.76 32.64 26.35

December-2009
Cox and Kings
330.00 474.05 43.65

November-2009
Astec Life Den Networks
82.00 195.00 71.15 208.80 -13.23 7.08

October-2009
IndiaBPower Thinksoft EuroMult Pipavav
45.00 125.00 75.00 58.00 30.05 147.15 34.80 98.80 -33.22 17.72 -53.60 70.34

September-2009
Oil India Globus Spirits Jindal Cotex NHPC
1050.00 100.00 75.00 36.00 1343.25 187.85 112.85 32.00 27.93 87.85 50.47 -11.11

August-2009
Adani Power 100.00 128.65 28.65

37

Raj Oil Mills Excel Infoways

120.00 85.00

48.85 45.40

-59.29 -46.59

July-2009
Mahindra Holida 300.00 512.90 70.97

June-2009
Rishabhdev Tech
33.00 8.35 -74.70

March-2009
Edserv Softsyst
60.00 196.80 228.00

November-2008
Alkali Metals
103.00 112.30 9.03

October-2008
Chemcel Biotech 20 Microns
16.00 55.00 10.58 51.35 -33.88 -6.64

September-2008
Austral Coke * Resurgere Mines
196.00 270.00 6.40 139.60 -96.73 -48.30

August-2008
Nu Tek India Coral Hub
192.00 150.00 33.75 8.52 -82.42 -94.32

July-2008
Birla Cotsyn * Somi Conveyor KSK Energy Vent
14.00 35.00 240.00 0.86 17.65 162.25 -93.86 -49.57 -32.40

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The performance of the 35 IPO’s is as follows.
2 stocks gained 100% or more 1 stock gained 80% or more but less than 100% 2 stocks gained more than 50% but less than 60% 3 stocks gained more than 40% but less than 50% 2 stocks gained more than 25% but less than 40% 6 stocks gained more than 10% but less than 25% 4 stocks gained more than 5% but less than 10% 4 stocks gained less than 5% On the negative side 4 stocks lost less than 25% 2 stocks lost more than 25% but less than 50% 5 stocks lost more than 50% but less than 67%

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ANALYSING AN IPO INVESTMENT POTENTIAL INVESTORS
Initial Public Offering is a cheap way of raising capital, but all the same it is not considered as the best way of investing for the investor. Before investing, the investor must do a proper analysis of the risks to be taken and the returns expected. He must be clear about the benefits he hope to derive from the investment. The investor must be clear about the objective he has for investing, whether it is long-term capital growth or short-term capital gains. The potential investors and their objectives could be categorized as:  INCOME INVESTOR An ‘income investor’ is the one who is looking for steadily rising profits that will be distributed to shareholders regularly. For this, he needs to examine the company's potential for profits and its dividend policy.  GROWTH INVESTOR: A ‘growth investor’ is the one who is looking for potential steady increase in profits that are reinvested for further expansion. For this he needs to evaluate the company's growth plan, earnings and potential for retained earnings.  SPECULATOR: A ‘speculator’ looks for short-term capital gains. For this he needs to look for potential of an early market breakthrough or discovery that will send the price up quickly with little care about a rapid decline. INVESTOR RESEARCH: It is imperative to properly analyze the IPO the investor is planning to invest into. He needs to do a thorough research at his end and try to figure out if the objective of the company match his own personal objectives or not. The unpredictable nature of IPO’s and volatility of the stock

40

market adds greatly to the risk factor. So, it is advisable that the investor does his homework, before investing. The investor should know about the following: 1 BUSINESS OPERATIONS: What are the objectives of the business? What are its management policies What is the scope for growth? What is the turnover of the labour force? Would the company have long-term stability?

2 FINANCIAL OPERATIONS : What is the company’s credit history? What is the company’s liquidity position? Are there any defaults on debts? Company’s expenditure in comparison to competitors. Company’s ability to pay-off its debts. What are the projected earnings of the company 3 MARKETING OPERATIONS : • Who are the potential investors? • What is the scope for success of the IPO? • What is the appeal of the IPO for the other investors? • What are the products and services offered by the company? • Who are the strongest competitors of the company?

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IPO INVESTMENT STRATEGIE
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: 1 UNDERSTAND THE WORKING OF 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. 2 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. 3 INVESTIGATE BEFORE INVESTING :

The prospectus of the company can serve as a good option for finding all the details of the company. It gives out the objectives and principles of the management and will also cover the risks. 4 KNOW YOUR BROKER: 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. 5 MEASURE THE RISK INVOLVED: IPO investments have a high degree of risk involved. It is therefore, essential to measure the risks and take the decision accordingly. 42

6 INVEST AT YOUR OWN RISK: 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

43

THE STAGES OF AN IPO
There are many steps to an IPO. Here I will focus on the financial transactions happening in the brief period just before and after the first trading days. 1. Announcement of Intent Generally, the intent to make a public offering will be announced prior to making an SEC filing. 2. Selecting an Underwriter It is desirable to have a well-respected firm as the underwriter. An underwriter's reputation depends on their track record of prior IPOs in the particular industry sector. 3. Prospectus A formal prospectus must be written and filed with the SEC (Form 1). This will outline all the material facts about the company, and if the facts change, a revision must be filed (Form 1/A - A for Amended). 4. Road Show With the prospectus in hand, a representative of the underwriter travels with company management to give presentations to people in the brokerage industry to persuade them that this new stock is a good investment opportunity, and to persuade them to take an allocation of the new stock. 5. Allocations The newly created stock is sold by the company to the underwriter at an agreed-upon fixed price. The underwriter usually allocates a significant fraction of the stock to other brokerages, who can either sell it for the house account, or - more commonly - offer it to their best clients at the fixed price. This opportunity to take IPO stock at the issue price and sell it on the same day is one of the few guaranteed ways to make money legally. The underwriter's own employees are not allowed to take allocations, but they can give them to their friends at other brokerages, who will then return the favor next time they manage an IPO. After the road show and allocation negotiations, it will be fairly clear if the brokerage houses in general agree with the proposed price range. 6. Pricing The evening before the offering, the company management and the underwriter's group

44

will meet to finalize the price ... or kill (postpone) the deal "due to unfavorable market conditions". They have to set the price below their assessment of a realistic long-term price, in order to make sure that the underwriter won't lose money as they unload their allocation during the quiet period. 7. First Day Before the open, the new stock symbol will have been loaded on the NASDAQ computers, and brokerages will have posted bids on behalf of investors who do not have allocations, but have faith in the new stock. Around 11 AM, the first offers to sell will be posted, and for the next hour, trading will be frantic as the stock struggles to find its price. At this time, the underwriters and the partners with allocations will typically offer a trickle of shares at twice the issue price. If there is a lot of demand, they will then keep raising the price, if not, they will drift downwards until the demand appears. Usually, the volume during this hour adds up to between a third and half of the offered stock. A stock with a lot of hype and great public interest may continue to float up during the day; it may close at three times the issue price and keep rising for the next week or two. Note, that this represents a situation where the underwriter is taking a huge profit that rightfully should have gone to the company via a higher issue price. More commonly, if the price was set right, the stock will close the first day 40%-60% above the issue price. 8. Unloading by Underwriter Over the next week or two, the underwriter will slowly release the stock offering into the market at a controlled rate. During this period, the stock will often drift lower until the underwriter finishes unloading and the market stabilizes. For most investors, this is the best time to buy into the new stock. 9. Quiet Period In order to ensure a level playing field, the SEC insists that the prospectus (as filed with the SEC) is the only information from the brokerage houses to potential investors. This restriction is relaxed after about 3 weeks. This period is known as "the quiet period".

45

10. Regular Coverage After the quiet period ends, analysts at the brokerage houses can start recommending the stock in their newsletters etc. This generally will lead to upward movement.

IMPORTANTS ISSUE ON IPO
An important issue in IPO literature is the efficiency of IPO selling methods, and it has been the subject of considerable theoretical and empirical research. price offerings, in Taiwan. 1. Theoretical models on the choice of IPO methods Recent IPO literature that has modeled the choice of IPO selling methods includes Benveniste and Busaba (1997), Chemmanur and Liu (2002), and Sherman (2003). These theoretical models, assuming asymmetric information exists either between investors and issuers or among investors, have yielded empirical predictions that relate firm characteristics On the other hand, some IPO literature has examined the relation of market conditions and firms’ going public decisions. For instance, Subrahmanyam and Titman (1999) and Benveniste, Busaba, and Wilhelm (2002) theoretically show that when a firm goes public, it produces information spillovers, and the information produced is valuable to firms planning to go public In addition, more recent literature on IPOs have empirically investigated the role public information plays in IPOs; some authors show that a huge degree of variations in IPO under-pricing can be predicted using market information available prior to the IPO date; for example, Bradley and Jordan (2002), Derrien and Womack (2003), Loughran and Ritter mpirically document IPO under-pricing is an ipo 2. Empirical studies on the choice of IPO methods The second objective of this thesis is to conduct an empirical study on the hypotheses developed above on Taiwanese issuing firms. little attention. While most of the empirical research has focused on the underpricing difference between IPO methods, the issuer ’s choice of IPO methods has received Our study tries to fill this gap. Since the predictions of the Chemmanur and Liu This thesis develops and tests a theoretical rationale on the choice of IPO selling methods, discriminatory auctions versus fixed-

46 1

(2002) model are related to firm

characteristics, and ours to market conditions and IPO

characteristics, we also incorporate firm characteristics into the study to examine which set of variables can better explain the issuer’s decision on the choice of IPO methods. 3. Underpricing difference between IPO methods The third objective of this thesis is to examine the underpricing difference between IPO methods. Of previous studies on the underpricing difference, most suggest that IPO auctions tend to be less under-pric Derrien and Womack (2003), who, using French data, document that IPO auctions are less ed compared to other selling methods. Notable is the study of Derrien and Womack (2003), who, using French data, document that IPO auctions are less under-priced than fixed-price offerings. In addition, although not a direct comparison between auctions and fixedprice offerings, studies of the Kandel, Sarig, and Wohl’s (1999 4. Objectives and contributions Several studies have theoretically compared advantages and disadvantage between different IPO selling methods. For example, Benveniste and Busaba (1997) consider whether book building or fixed-price offering is more profitable from the issuer’s point of views; Chemmanur and Liu (2002) consider how issuers will choose an IPO selling method between uniform-price auctions and fixed-price offerings; Sherman (2003) consider whether book building or a discriminatory auctions is more profitable also from the issuer’s point of view. This thesis will develop a model that also considers whether discriminatory auctions or fixed-price offerings are more profitable from the issuer’s point of view. We incorporate market conditions and Miller’s (1977) divergent opinions into the model. Therefore, our model might contribute insights from the market’s perspectives to the understandings of the issue of how issuers choose an IPO selling method

47

MEANING OF RESEARCH
Research is defined as “a scientific & systematic search for pertinent information on a specific topic”. Research is an art of scientific investigation. Research is a systemized effort to gain new knowledge. It is a careful inquiry especially through search for new facts in any branch of knowledge. The search for knowledge through objective and systematic method of finding solution to a problem is a research.

RESEARCH METHODOLOGY
Research is a systematic and continues method of defining a problem, collecting the facts and analyzing them, reaching conclusion forming generalizations. Research methodology is a way to systematically solve the problem. It may be understood has a science of studying how research is done scientifically. In it we study the various steps that all generally adopted by a researcher in studying her research problem along with the logic behind them.

RESEARCH DESIGN
A research is the arrangement of the conditions for the collections and analysis of the data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blue print of the collection, measurement and analysis of the data. As search the design includes an outline of what the researcher will do from writing the hypothesis and its operational implication to the final analysis of data. I used descriptive and diagnostic research design in my study

48

RESEARCH DESIGN CAN BE CATEGORIZED AS:
TYPES OF RESEARCH DESIGN

EXPLORATORY RESEARCH DESIGN

DESCRIPTIVE &DIAGNOSTIC RESEARCH DESIGN

EXPERIMENTAL RESEARCH DESIGN

DATA COLLECTION
After the research problem has been identified and selected the next step is to gather the requisite data. While deciding about the method of data collection to be used for the researcher should keep in mind two types of data VIZ. primary and secondary. PRIMARY DATA: The primary data are those, which are collected afresh and for the first time, and thus happened to be original in character. We can obtain primary data either through observation or through direct communication with respondent in one form or another or through personal Interview. SECONDARY DATA: The secondary data on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical processes. When the researcher utilizes secondary data then he has to look into various sources from where he can obtain them.

49

For e.g. Books, magazine, newspaper, Internet, publications and reports. In the present study I have made use of secondary data collected from their website and from their records.

SAMPLING DESIGN:
A sample design is a definite plan for obtaining a sample from the sampling frame. It refers to the technique or the procedure that is adopted in selecting the sampling units from which inferences about the population is drawn. Sampling design is determined before the collection of the data. Several decisions have to be taken in context to the decision about the appropriate sample selection so that accurate data is obtained and efficient results are drawn.

SAMPLE SIZEI took a sample of 100 people. I asked many question from them and get different response that I included in data analyses and interpretation.

50

51

1. Awareness About IPO. Response
Yes No

No. of Respondents
70 30

No, 30 Yes No Yes, 70

INTERPRETATIONThis chart shows that out of 100 respondents that I have studied, 70 are know about IPO while the rest 30 are not aware about it. This is show the awareness of people about IPO.

52

2.Source of Awareness about IPO. Response
Advertisement Internet Newspaper Word Of Mouth

No. of respondents 10 6 50 4

INTERPRETATIONThe Chart show that the main source of IPO for people are newspaper. They get mostly knowledge about it.the second consideration is advertisement. In third number they consider internet which include very few percentage of giving knowledge. In last from word of mouth they get just 4% knowledge of IPO.

53

3. People ready to invest in IPO.
RESPONSE
YES

NO

NO. OF RESPONDENTS 55 15

INERPRETATIONIn this chart the 55% people are ready to invest in IPO. But 15% of people are not ready to invest. Its because of lack of knowledge about IPO’s.

54

4.Basis of preference for IPO.

BASE
Fundamental Background Past performance

NO. OF RESPONDENTS
25 10 35

INTERPRETATION:
This chart Show that 35% people give preference to past performance while choosing an IPO .25% people focus on fundamental and the rest 10% giving preference to backgrounds of the company.

55

5.Timing for investment in IPO.

Response
1 year 2 year More than 2 year

Respondents 05 10 55

INTERPRETATIONThis chart show that mostly people are give preference to more than two year. Just 10% people ready to invest for 2 year. Rest 5% people prefer to invest in just 1 year.

56

6. Affect of Reputation of the promoters on Decision of Purchasing IPO’s

Response Yes No

No of Respondents
50 20

INTERPRETATIONChart show that 50% people say that their decision will be affected by promoters, just 20% say there are no any affect of promoters reputation on their decision of IPO.

57

7. Consideration

of people on trend of the market before investing in

an IPO’s.

Response
Yes no

No. of respondents 55 15

INTERPRETATIONChart represents that 55% people considering the trend of market before investing in an IPO. Rest 15% are not taking into account the trends of market .

58

8.Affect of media advertisement on purchasing.

Response
Yes No

No. of respondents 54 16

INTERPRETAIONThis chart represent that 54% people was agree that their purchasing are greatly affected by media advertisement. But just 16% are not agreed by this statement.

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9.PEOPLE READY FOR TRADE AFTER INVESTING IN AN IPO.

RESPONSE
YES NO

NO. OF RESPONDENTS 61 09

INTERPRETATIONchart shows that 61% people are ready for trade after purchasing an IPO. But there are very few means just 9% people are not ready for trade afterpurchasing.

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10.TYPE OF TRADING THAT PEOPLE PREFER WHILE TAKING IPO’S DECISION.

TRADING
Intra day

NO.OF RESPONDENTS 12 58

Inter day

70 No. of respondents 60 50 40 30 20 10 0 12 intra day inter day Response 58

INTERPRETATIONThis chart represent that mostly people giving preference to inter day trading because its give them high return.just few people are giving preference to inter day according to their knowledge.

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FINDINGS
1. This is found that very few people are not aware about IPO, means mostly are aware about it. 2. Mostly people are interesting in investing for long time. 3. People decision are greatly affected by promoters reputation. 4. More people are strongly agree with the affect of media advertisement ipo’s decision. 5. More people preferring inter day trading because its give more return to investment. 6. Mostly people considered prevailing uptrend while taking investment decision. 7. Mostly people prefer past performance while taking decision 8. Mostly people give preference to trend of the market while taking decision. 9. This is also found that mostly people are ready for trade after purchasing an IPO. 10. Background of company has no more important than past performance while taking investment decision.

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CONCLUSION

An initial public offering (IPO) is the first sale of stock by a company to the public. Broadly speaking, companies are either private or public. Going public means a company is switching from private ownership to public ownership.Going public raises cash and provides many benefits for a company The process of underwriting involves raising money from investors by issuing new securities. Lock- up periods prevent insisders from selling their shares for a certain period of time. The end of the lock up period can put strong downward pressure on a stock.Flipping may get you blacklisted from future offerings. Immediate performance of IPO can be relied upon for the equity in the long run was rejected. It was proved from the fact that over last five years, the existed statistically insignificant positive correlation between percentage change in the issue price & list price of the IPO and percentage change in the issue price & current market price of the same. Therefore, We can conclude that immediate performance of a particular IPO can not be relied upon for the equity in the long run. More the subscription (times of issue size) of the IPO, more is the immediate performance, was accepted. As there existed statistically significant positive correlation between subscription (times of issue size) of the immediate performance at the time of listing. Thus, we can judge that the IPO will give high immediate returns, by the times of its oversubscription. Investors evaluate an IPO maximum from Promoters of the company, prevailing Market Trend & Recent IPO performance & Issue Size of the IPO and minimum from Suppliers of the company, Listing in Well Known Stock exchanges & Media Advertisements.. IPO is used by a company to raise its funds. The extra amount obtained from public may be invested in the development o f the company, although it costs a little to a company but it gives a way to get more money for long term investments .

63

LIMITATIONS

1. The first and main limitation of my project is related to time. It means I have little time to do study of this project. 2. I have also limited resources in which I completed my study. 3. Personal biasness from part of respondents can take place. 4. I had selected sample of people not the whole population to investigation. 5. Some of the respondents of the survey were unwilling to give information.

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SUGGESTIONS
1. 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.

2. 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.

3. The prospectus of the company can serve as a good option for finding all the details of the company. It gives out the objectives and principles of the management and will also cover the risks. 4. . 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.

5. 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.

65

REFERENCES
1. BOOKS :

• • • •

Pandey, I.M., “Financial Management”, Ed. 2007, Vikas Publishing House Private Ltd., New Delhi. Gupta, Shashi K., “Management Accounting”, Ed. 2007, Kalyani Publishers, New Delhi. Khan ,M .Y., “Financial Management” Ed. 2000,McGraw Hill, New Delhi Bhalla ,V.k , “ Working Capital”, Ed.2001 , Anmol , New Delhi

2. MAGAZINES:

Arak, M. and Goodman, Treasury Bond Futures: Valuing the delivery options, The Journal of Futures Market’Vol. 7, pp 269-286, June, 1987.
• • • • Business India The economics time Times of India Business line

WEB SITES  www.ipohome.com  www.essortment.com  www.investopedia.com

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 www.ipoavenue.comwww.moneycontrol.com  www.wikipedia.com
 www.moneycentral.hoovers.com  www.bullishindian.com

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