Beruflich Dokumente
Kultur Dokumente
Submitted
By Pradeep kumar t
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EXECUTIVE SUMMARY
dependent on the kind of work and how much importance to which sector is
given. And when we say or talk about industries growth which leads the
reach the levels to fulfill the needs of the society. And industries which have
massive outflow of work and a big portfolio then its very difficult for any
company to work with limited finance and this is where IPO plays an
important role.
This report trying to help to find out IPO performance during 2010,
what are the companies which issued during this year. How and what are
the steps taken by the companies before going for any IPO and also the role
of (SEBI) Securities and Exchange Board of India the BSE and NSE , what
are primary and secondary markets and also the important terms related to
IPO. It gives us idea of how IPO is driven in the market and what are
various factors taken into consideration before going for an IPO. And it also
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tells us how we can more or less judge a good IPO. Then we all know that
scams have always been a part of any sector you go in for which are
covered in it and also few recommendations are given for the same. It also
gives us some idea about what are the expenses that a company undertakes
during an IPO.
funds for the small companies making them big and given a new vision in
past and it is still continuing its work and also for many coming years.
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Chapter
INTRODUCTION
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INTRODUCTION TO IPO
IPO stands for Initial Public Offering and means the new offer of
offering those shares to the public, which were held by the promoters or the
private investors prior to the IPO. In the case when other investors or
Promoter held the shares the stake holding comes down to the extent their
shares are offered to the public. In other cases new shares are issued to the
public and the shares, which are with the promoters stay with them. In both
cases the share of the promoters in the total capital comes down.
For example say there are 100 shares in a company and 50 of these
are offered to the public in an IPO then in such a case the promoter’s stake
in the company comes down from 100% to 50%. In another case the
company issues 50 additional shares to the public and the stake of the
is considered their intrinsic value and that’s why investors keenly await
IPOs and make money on most of them. IPO are generally priced at a
Rs.100 the shares will be offered at a price, which is lesser than Rs.100 say
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Rs.80 during the IPO. When the stock actually lists in the market it will list
closer to Rs.100. The difference between the two prices is known as Listing
Gains, which an investor makes when investing in IPO and making money
at the listing of the IPO. A Bullish Market gives IPO investors a clear
What is an IPO
company can raise money by issuing either debt or equity. If the company
A privately held company has fewer shareholders and its owners don't have
to disclose much information about 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 your jurisdiction. Most small
businesses are privately held. But large companies can be private too. Did
you know that IKEA, Domino's Pizza and Hallmark Cards are all privately
held?
can approach the owners about investing, but they're not obligated to sell
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you anything. Public companies, on the other hand, have sold at least a
strict rules and regulations. They must have a board of directors and they
must report financial information every quarter. In the United States, public
to the SEC. From an investor's standpoint, the most exciting thing about a
public company is that the stock is traded in the open market, like any other
commodity. If you have the cash, you can invest. The CEO could hate your
guts, but there's nothing he or she could do to stop you from buying stock.
predict what the stock 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
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company. Also, most IPO’s are of companies going through a transitory
In the primary market securities are issued to the public and the
stock exchanges, where stocks are bought and sold after they are issued to
the public.
PRIMARY MARKET
The first time that a company’s shares are issued to the public, it is by
a process called the initial public offering (IPO). In an IPO the company
price.
Most IPO’S these days do not have a fixed offer price. Instead they
follow a method called BOOK BUILDIN PROCESS, where the offer price
is placed in a band or a range with the highest and the lowest value (refer to
the newspaper clipping on the page). The public can bid for the shares at
any price in the band specified. Once the bids come in, the company
evaluates all the bids and decides on an offer price in that range. After the
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offer price is fixed, the company allots its shares to the people who had
SECONDRY MARKET
Once the offer price is fixed and the shares are issued to the people,
stock exchanges facilitate the trading of shares for the general public. Once
stock exchange the existing shareholders sell their shares to anyone who is
buy or sell shares in a stock exchange directly; they have to execute their
transaction through authorized members of the stock exchange who are also
Why Go Public?
offering of part ownership of the company to the public through the sale of
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Going public raises cash and usually a lot of it. Being publicly
always issue more stock. Thus, mergers and acquisitions are easier to do
prestige. In the past, only private companies with strong fundamentals could
strong financials and a solid history to go public. Instead, IPOs were done
wrong with wanting to expand, but most of these firms had never made a
profit and didn't plan on being profitable any time soon. Founded on venture
excitement to make it to the market before burning through all their cash. In
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cases like this, companies might be suspected of doing an IPO just to make
the founders rich. This is known as an exit strategy, implying that there's no
desire to stick around and create value for shareholders. The IPO then
How can this happen? Remember: an IPO is just selling stock. It's all
about the sales job. If you can convince people to buy stock in your
Getting In On an IPO
underwriting.
investment bank. A company could theoretically sell its shares on its own,
but realistically, an investment bank is required - it's just the way Wall
equity (in this case we are referring to equity). You can think of
The biggest underwriters are Goldman Sachs, Merrill Lynch, Credit Suisse
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The company and the investment bank will first meet to negotiate the
deal. Items usually discussed include the amount of money a company will
raise, the type of securities to be issued and all the details in the
certain amount will be raised by buying the entire offer and then reselling to
securities for the company but doesn't guarantee the amount raised. Also,
investment banks are hesitant to shoulder all the risk of an offering. Instead,
Once all sides agree to a deal, the investment bank puts together a
is to be used and insider holdings. The SEC then requires a cooling off
period, in which they investigate and make sure all material information has
been disclosed. Once the SEC approves the offering, a date (the effective
During the cooling off period the underwriter puts together what is
known as the red herring. This is an initial prospectus containing all the
information about the company except for the offer price and the effective
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date, which aren't known at that time. With the red herring in hand, the
underwriter and company attempt to hype and build up interest for the issue.
They go on a road show - also known as the "dog and pony show" - where
down and decide on the price. This isn't an easy decision: it depends on the
company, the success of the road show and, most importantly, current
possible.
Finally, the securities are sold on the stock market and the money is
As you can see, the road to an IPO is a long and complicated one.
You may have noticed that individual investors aren't involved until the
very end. This is because small investors aren't the target market. They don't
have the cash and, therefore, hold little interest for the underwriters. If
underwriters think an IPO will be successful, they'll usually pad the pockets
of their favorite institutional client with shares at the IPO price. The only
account with one of the investment banks that is part of the underwriting
syndicate. But don't expect to open an account with $1,000 and be showered
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IPO – ADVANTAGES AND DISADVANTAGES
public offering (IPO) should not be considered lightly. There are several
and disadvantages of conducting an IPO and will briefly discuss the steps to
be taken to register an offering for sale to the public. The purpose of this
should understand that the process is very time consuming and complicated
qualified advisors.
➢ Increased Capital
➢ Liquidity
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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
➢ 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
➢ Valuation
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
the shares.
➢ Increased wealth
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
IPO can take up to a year or more to complete and a company can expect to
and printers. In addition, the underwriter's fees can range from 3% to 10%
of the value of the offering. Due to the time and expense of preparation of
the IPO, many companies simply cannot afford the time or spare the
➢ Disclosure
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prepare these quarterly and annual statements. In addition, a company must
shares and the feeling that they must get market recognition for the
company's stock.
➢ Regulatory Review
The Company will be open to review by the SEC to ensure that the
If the shares of the company's stock fall, the company may lose
➢ Vulnerability
If a large portion of the company's shares are sold to the public, the
control. A takeover bid may be the result of shareholders being upset with
hostile bid can be both expensive and time consuming. Once a company has
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weighed 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 a lead
details prior to investing in an IPO. Here are some parameters you should
evaluate:-
➢ Promoters
Even with a family run business what are the credibility and professional
have enough experience (of at least 5 years) in the specific type of business?
➢ Industry Outlook
➢ Business Plans
higher initial investment from the promoters will lead to a higher faith in the
organization.
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➢ Financials
Why does the company require the money? Is the company floating
more equity than required? What is the debt component? Keep a track on
the profits, growth and margins of the previous years. A steady growth rate
sound feasible.
➢ Risk Factors
The offer documents will list our specific risk factors such as the
➢ Key Names
Every IPO will have lead managers and merchant bankers. You can
figure out the track record of the merchant banker through the SEBI
website.
➢ Pricing
this you can find out the P/E Growth ratio and examine whether its earning
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➢ Listing
You should have access to the brokers of the stock exchanges where
Auditors of the company, Underwriters to the issue, Solicitors, etc. are the
issuer also discloses the details of the compliance officer appointed by the
In the pre-issue process, the Lead Manager (LM) takes up the due
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Prospectus, statutory advertisements and memorandum containing salient
Advertising Agency and Bankers to the Offer is also included in the pre-
issue processes. The LM also draws up the various marketing strategies for
the issue.
dispatch of refunds to bidders etc are performed by the LM. The post Offer
activities for the Offer will involve essential follow-up steps, which include
connected with the work such as the Registrar(s) to the Offer and Bankers
to the Offer and the bank handling refund business. The merchant banker
shall be responsible for ensuring that these agencies fulfill their functions
The Registrar finalizes the list of eligible allottees after deleting the
invalid applications and ensures that the corporate action for crediting of
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shares to the demat accounts of the applicants is done and the dispatch of
refund orders to those applicable are sent. The Lead manager co-ordinates
with the Registrar to ensure follow up so that that the flow of applications
Bankers to the issue, as the name suggests, carries out all the
activities of ensuring that the funds are collected and transferred to the
Escrow accounts. The Lead Merchant Banker shall ensure that Bankers to
the Issue are appointed in all the mandatory collection centers as specified
in DIP Guidelines. The LM also ensures follow-up with bankers to the issue
to get quick estimates of collection and advising the issuer about closure of
disputes, patent disputes, disputes with collaborators etc. and other materials
said issue; and on the basis of such examination and the discussions with
the Company, its Directors and other officers, other agencies, independent
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verification of the statements concerning the objects of the issue, projected
profitability, price justification, etc., they state that they have ensured that
they are in compliance with SEBI, the Government and any other competent
Current issues
changes to the the stock market rules and proceedings for quite some time now and
simplified IPO applying procedures and reduced hassles of money refunds. Now, the
Sebi has decided to reduce the time between public issue closure and listing to 12 days
from existing period of up to 22 days. And, this comes to effect on May 1, 2010.
This will greatly help to reduce the reduce instances of manipulation in the pre-
listing period. Several IPOs had created havoc before and after listing due to big grey
market plays. Market operators manipulate the IPO process using the long gap in the
listing process.
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Benefits:
1. When IPO Applied thru ASBA process, your whole IPO bid money stays in your bank
account and continues to earn the interests till the IPO allotment status is out. After then,
only the money for allotted shares will be debited. So, we don’t have to worry about the
refunds from the IPO registrars for you have paid only the exact amount to the registrar.
2. With shorter IPO listing time, duration for which money locked-in your bank account
is shorter. You would see the result of IPO allotments and listings in 12 days and the IPO
money locked-in would be released sooner enabling us to apply for more IPOs than
before. Also, SEBI believes this shorter duration can bring down the grey market
manipulations of IPO listing prices.
IPO
FPO(For
QualifiedISSUES
(For
Unlisted
Listed
Preferential
Private Companies)
Companies)
Private
Institutions
Placement
Issue
Placement
Righ
Publ
Offer
Fresh
(For
(For for
Listed
(ListedCompanies
unlisted
Fresh Cos.)
companies)
)
Placement
ic
t
Issue
Sale
Issue
Issu
es
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Classification
Issues can be broadly classified into Public Issue, Rights Issue and
Private Placement. Public issues can be further classified into Initial Public
offerings and further public offerings. In a public offering, the issuer makes
an offer for new market investors to join their shareholders family. The
securities or an offer for sale of its existing securities or both for the first
time to the public. This provides a listing and trading of the issuer’s
securities.
Rights Issue
its existing shareholders as on a record date. The rights are normally offered
in a particular ratio to the number of securities held prior to the issue. This
route is best suited for companies who would like to raise capital without
public issue. This is a faster way for a company to raise equity capital.
Private Placement
securities to the public or an offer for sale to the public, through an offer
Pricing of an IPO
The pricing of an ipo is a very critical aspect and has a direst impact
on the success or failure of the ipo issue. There area many factors that need
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to be considered while pricing an ipo and on attempt should be made to
reach an ipo price that is low enough to generate interest in the market and
at the sometimes, it should be high enough to raise sufficient capital for the
company.
The process for determining an optimal price for the ipo involves the
institutional investors.
Process
company arrangements 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
firms try to strike a balance between the company and the investors. The
them short.
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It is generally noted, that there is alarge difference between the price
at the time of issue of an ipo, and the price when they start trading in the
secondary market.
An ipo is “hot” when the demand for it far exceeds the supply.
the price of each share in the first day itself, during the early hours of
trading.
Under pricing:
the stock when it first becomes publically traded. This might result in
significant gains for investors who have been allocated share at the offering
capital that could have been raised had the shares been offered at the higher
price.
Overpricing:
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The pricing of an ipo at more than its market value is reffered to as
stock is offered at the higher price than what the market is willing to pay,
successful in selling all the issued shares and the stocks falls in value of on
the first day itself of trading, then it is likely to lose its marketability and
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Filing the prospectus with SEBI
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
observations within 21 days from the filing of the offer document, the
exchanges and the consent obtained from the banker, auditors, registrar,
filed with the registrars of companies, with the required documents as per
is filed with the registrar of companies, the company should print the
brokers so they receive them atleast 21 days before the first announcement
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• Filing of initial listing application: Within 10 days of filing
the prospectus, the initial listing application must be made to the concerned
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.
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.
is done.
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• Establishing the liability of the underwriters: If the issue
be followed.
submitted to the concerned stock exchange along with the listing agreement
and the listing fee. The allotment formalities should be completed within 30
days.
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
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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:
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
possibility for appreciation of the share price due to market factors not
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SIGNIFICANCE TO THE SHAREHOLDERS:
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
SEBI has laid down eligibility norms for entities accessing thee
The main entry norms for companies making a public issue (IPO or
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d) If change in name, atleast 50% revenue for proceding 1 year should be form
the new activity.
e) The issue size does not exceed 5 times the pre-issue networth.
To provide sufficient flexibility and also to ensure that genuine companies
two other alternative routes to company not satisfying any of the above
b) The minimum post-issue face value capital shall be Rs. 10 crore or there
OR
appraiser(s).
b) The minimum post-issue face value capital shall be Rs. 10 crores or there
also satisfy the criteria of having at least 1000 prospective allotters in its.
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SEBI GUIDELINES
IPO of Small Companies: Public issue of less than five crores has to
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Public Offer of Small Unlisted Companies (Post-Issue Paid-Up
Capital upto Rs.5 crores) Public issues of small ventures which are in
operation for not more than two years and whose paid up capital after the
issue is greater than 3 crores but less than 5 crores the following guidelines
apply.
2. If the paid up capital is less than 3 crores then they can be listed on the Over
Issue of shares to general public cannot be less than 25%of the total issue.
1. Offer to the public is not less than 10% of the securities issued.
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2. A minimum number of 20 lakh securities is offered to the public
3. Size of the net offer to the public is not less than Rs.30 crores.
Promoters Contribution
the issue.
include invariably the places where stock exchanges have been established.
2. For issues not exceeding Rs.10 crores the collection centers shall be situated
at:-
• All such centres where stock exchanges are located in the region in which
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1. Net Offer the general public has to be atleast 25% of the total issue size for
2. It is mandatory for a company to get its shares listed at the regional stock
3. In an issue of more than 25 crores the issuer is allowed to place the whole
issue by book-building.
4. Minimum of 50% of the Net Offer to the public has to be reserved for the
8. A venture capital fund shall not be entitled to get its securities listed on any
stock exchange till the expiry of 3 years from the date of issuance of
securities.
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1. The minimum period for which the public issue is to be kept open is 3
working days and the maximum for which it can be kept open is 10 working
days. The minimum period for right issue is 15 working days and the
2. A public issue is effected if the issue is able to procure 90% of the total
issue size within 60 days from the date of the earliest closure of the public
issue.
excess application money and allot shares more than the proposed issue,
4. Allotment has to be made within 30 days of the closure of the Public issue
issue.
Other Regulations
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1. Underwriting is not mandatory but 90% subscription is mandatory for each
back
3. If the issue size is more than Rs500 crores, voluntary disclosures should be
5. In the event of the initial public offer being at a premium and if the rights
prior to such offer, the resultant shares will be not taken into account for
reckoning the minimum promoters contribution further, the same will also
be subject to lock-in.
Restrictions on Allotments
1. Firm allotments to mutual funds, FII and employees are not subject to any
lock-in period.
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2. Within 12 months of the public issue no bonus issue should be made.
long term capital funds required by business firms. Capital market is the
market for financial assets that have long or indefinite maturity. In other
words it refers to all the facilities and the institutional arrangements for
are used for raising capital resources in capital market are known as capital
market instruments.
Preference shares:-
Shares that carry preferrencial rights in comparison with ordinary shares are
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and the distributions of the assets of the company in the events of its
Equity shares:
Equity share, also known as ordinary shares are the shares held by the
corporate intity. Since equity shareholders face greater risk and have no
specific preferencial rights. They are given larger shares in profit through
higher dividend then those given to preference share holders that the
there are no profits in subsequent year. Equity shareholders also enjoy the
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distributed to them as bonus shares. Such bonus shares are entitled to a
usually takes the form of certificate that acknowledges in debt ness of the
company.
savings.
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• It provides avenue for investors to invest in financial assets.
• A listed company required to meet the entry norm only if the post issue net
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• Written consent from share holders in regard to lock-in made compulsory
• The SEBI (Registrars to an Issue and share Transfer Agents ) Rules and
relationship between the issuer and the registrars to the issue. It has now
been stipulated that no Registrar to an Issue can act as such for any issue of
securities made by any body corporate, if the Registrar to the issue and the
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• Multiple categories of merchant bankers to abolished and there shall be only
one entity viz., merchant banker, presentl, the Merchant Banker allowed to
Regulations, 1993.
Chapter 2
Research methodology
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RESEARCH METHODOLOGY AND DESIGN
previous years, the number of companies which going for IPO is increased
during 2010. There are common phenomenons among the investors today
that the return on investing in IPO is not much. Event though investor has
the storm back the IPO and yearly there are huge application received from
the investor to invest in IPO. And we also heared about that the “coal India”
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One IPO that are listed in the last year have been trading at a higher
price when compare to the issue price call it a fundamentals playing out of
after the initial euphoria if you may. But, out 73 IPOs some of them are not
listed, they were withdrawn their IPO. The interesting news, was that, some
of the issues were oversubscribed, and some of the Issues got gain in their
issue price. In short, out of 73 IPOs, 16 offers listed at higher price compare
to the issue price. The re-rating of stocks by the investors reported after the
Somehow, the IPO 2010 is better than previous year, and some of the
IPOs are doing well in the market even after the global crisis. There are
some IPOs whose trade price and the issue price differs significantly. Some
investors are getting more money and some are loosing. The most of IPOs
issued during the year 2010 are traded at the lower prices than their issue
price. So there is a need to know the performance of the IPO. This is the
study to know the performance of the IPO that are issued during the year
2010. The problem here is to know which IPO is doing well and which are
not.
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JUSTIFICATION OF THE STUDY:-
The study highlights the performance of the IPO dusing the year
2010. It also deals the future prospects of IPO. It also reviews the
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instead of asking for the brand of wrist watch used by the respondent, may
himself look at the watch the main advantage of this method is subjective
in studies which particularly deal with subjects who are not capble of giving
Participants are normally paid a small sum for attending. The meeting is
3. Survey research.
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gather information it needs, or it might add questions to an omnibus survey
4. Experimental research.
extent that the design and execution of the experiment eliminate alternative
hypothesis that might explain the results, research and HR managers can
treatments.
on identifying the problems and is finding out the alternative solution to the
campaign.
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The reason being it is also an experimental study is that is is the
Collection of Data:-
1. Primary data
2. Secondary data.
The primary data are those data which are collected for the first time.
The primary data was collected through discussions and interviewing wit
corporations like…
• Websites
• RBI Guidelines
• SEBI Guidelines
• Text books
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Tools of Analysis:-
financia experts, and share brokers to know the performance of the IPO
secondary data from various sources like RBI bulletin, Websites, Business
journals, etc. about the FDIand interpreting the same with reference to the
year 2010.
Sampling Plan :-
procedure the researcher would adopt in selecting the items for the sample.
issued during the year, 2010, I have taken the sample as the total of
population. I have taken all the 73 IPOs that are issued during the year
2010.
ANALYSIS OF DATA
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Analysis of data has been done,
• By taking all the IPO that are issued during the year 2010.
• By taking the issue price of the data that are issued during the year 2010.
• By taking the trade price pertaining to a particular day.
• By comparing the gain or loss during the year 2010.
• By relating the data to know which sectors IPO are doing well and how the
trade price are changing significantly from the issue price.
• For this study collecting of primary data with regards to the IPOs is very
difficult. Getting the full fledged data on this topic is quite impossible.
• The study contains most of the secondary data and analysis of the same.
• The study has been taken to the performance of the IPO during the year
2010
• It only judge the performance of the IPO based on the issue price and trade
price. But there are so many reasons for the success of IPO.
• It has not dealt with the cause behind on company is getting the huge
success whether other suffers.
• It does not deal with the speculation in the capital market.
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Chapter 3
COMPANY PROFILE
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CDSL, we are a powerful medium for trading and settlement of dematerialized shares.
We have established live DPMs, Internet access to accounts and an easier transaction
process in order to offer more convenience to individual and corporate investors. A team
of professional and the latest technological expertise allocated exclusively to our demat
division including technological enhancements like SPEED-e, make our response time
quick and our delivery impeccable. A wide national network makes our efficiencies
accessible to all.
The paradigm shift from pure selling to knowledge based selling drives the
business today. With our wide portfolio offerings, we occupy all segments in the retail
A 1600 team of highly qualified and dedicated professionals drawn from the best
client service delivery. This has propelled us to a position among the top distributors for
60
equity and debt issues with an estimated market share of 15% in terms of applications
mobilized, besides being established as the leading procurer in all public issues.
To further tap the immense growth potential in the capital markets we enhanced
the scope of our retail brand, Karvy – the Finapolis , thereby providing planning and
advisory services to the mass affluent. Here we understand the customer needs and
lifestyle in the context of present earnings and provide adequate advisory services that
will necessarily help in creating wealth. Judicious planning that is customized to meet
the future needs of the customer deliver a service that is exemplary. The market-savvy
and the ignorant investors, both find this service very satisfactory. The edge that we have
over competition is our portfolio of offerings and our professional expertise. The
investment planning for each customer is done with an unbiased attitude so that the
market trends, investment options, opinions etc. Thus empowering the investor to base
every financial move on rational thought and prudent analysis and embark on the path to
wealth creation.
Advisory service
Under our retail brand ‘Karvy – the Finapolis', we deliver advisory services to a
They are continually engaged in designing the right investment portfolio for each
support system that focuses on trading customers' portfolios and providing valuable
inputs, monitoring and managing the portfolio through varied technological initiatives.
This is made possible by the expertise we have gained in the business over the years.
61
magazine called ‘Karvy - the Finapolis'. Covering the latest of market news, trends,
fields .
This specialized division was set up to cater to the high net worth individuals and
institutional clients keeping in mind that they require a different kind of financial
planning and management that will augment not just existing finances but their life-style
as well. Here we follow a hard-nosed business approach with the soft touch of dedicated
retirement needs and a host of other services, all provided on a one-to-one basis.
Our research reports have been widely appreciated by this segment. The
delivery and support modules have been fine tuned by giving our clients
emerged as a leader in the registry business, the first of the businesses that
62
we ventured into, we have now transferred this business into a joint venture
the advent of depositories in the Indian capital market and the relationships
that we have created in the registry business, we believe that we were best
service over 6 lakhs customer accounts in this business spread across over
250 cities/towns in India and are ranked amongst the largest Depository
have transferred this business to Karvy Stock Broking Limited (KSBL), our
63
Chapter 4
2010
64
List of IPOs issued during the year 2010
quantity price
ltd
2 Birla shloka edutech ltd. 24.78 50
3 jubilant food works ltd 328.72 145
4 Vascon engineering ltd 199.8 165
5 Syncom health works ltd 56.25 75
6 aqua logistics 150 220
7 DB Reality ltd 1500 468
8 EMMBI polyarns ltd 38.96 40
9 NTPC Ltd 8480.1 201
10 ARSS infrastructure 103 450
projects ltd
11 Hathway cables and 666 240
datacom ltd
12 Texmo pipes and pdts ltd 45 90
13 Man infra construction 141.75 252
14 Rural electrification corp. xxxxx Xxxxx
ltd
15 United banak of india 324.98 66
16 DQ entertainment 128.16 80
(international) ltd
17 NMDC ltd 9930.45 375
18 Pradip overseas ltd 116.6 110
65
19 IL and FS transportation 700 258
network ltd
20 Persistent systems 168.01 310
21 Thamngamayil jewelry 28.79 75
22 Shree ganesh jewellary 371.02 260
house
23 Infrasoft technologies ltd 53.65 145
24 Goenka diamond and 126.51 135
jewels
25 Talwalkers better value 77.44 128
fitness ltd
25 Nitesh estates ltd 450 54
26 Tarapur transformers ltd 63.75 75
27 Mandhana industries ltd 107.9 130
28 SJVN ltd 1064.74 26
29 Jaypee infratech ltd 1650 102
30 Tara health food ltd xxxxx Xxxxxx
32 Standard chartered plc 2486.35 104
33 Fatpipe network india ltd xxxxx Xxxxx
34 Parabolic drugs ltd 200 118
35 Aster silicates ltd 53.10 118
36 Technofab engineers ltd 71.66 240
37 Hindustan media venture 270 166
ltd
38 Midfield industries ltd 59.85 133
66
39 Engineers india ltd 959.65 290
40 SKS micro fin ltd 1628.78 985
41 Bajaj corp. ltd 297 660
42 Prakash steelage ltd 68.75 110
43 Gujarath pipavat ltd 500 46
44 Indosolar ltd 357 29
45 Tirupati ink ltd 51.5 43
46 Eros international ltd 350 175
47 Career point infosystem 115 310
48 Microsec financial 1628.78 985
services ltd
49 Ramky infrastructure ltd 530 450
50 Orient green power co. ltd 900 47
51 Electrosteels ltd 248.07 11
52 Cantabile retail 105 135
53 VA TECH WABHAG ltd 125 1310
54 Tecprosystem ltd 267.91 355
55 Ashoka build con. Ltd 225 324
56 Sea TV networks ltd 50.20 100
57 Bedmutha industries ltd 91.8 102
58 Commercial engineers and 153 127
bodybuilders
59 Obroi reality ltd 1028.61 260
60 BS Transcom ltd 190.45 248
61 Prestige estate project ltd 1200 183
62 Gyscoal alloys ltd 54.67 71
63 Coal india ltd 15199.44 245
67
64 Gravita India ltd 45 125
65 Powergrid corp. of India 2984.45 90
66 RPP infra 48.75 75
67 Moil ltd 1237.51 375
68 Claris life sciences 300 228
69 The shipping corp. of india 1164.73 140
ltd
70 A2Z maintenance 675 400
71 Ravikumar distilleries 73.6 64
72 Punchab and sind bank 470.82 120
73 C mahendra export ltd 165 110
Conclusion :
Apart from previous years, Indian IPO market had a good energy, and that
showed us the result of increase in number of IPO issue, ie (in previous year
the number of IPO was 21.). The major part of IPOs were issued on
construction and engineering sector. But while taking the fund as yard stick,
68
Table 4.1
size offer
price
(RS.Cr)
Vascon engineering ltd 199.8 27- 29- 165
jan- jan-
2010 2010
DB reality 1500 29- 3-feb- 468
jan- 2010
2010
ARSS Infrastructure 103 8- 11- 450
2010 2010
Man infra construction 141.75 18- 22- 252
2010 2010
IL & FS transportation 700 11- 15- 258
69
2010 2010
Nitesh estates ltd 450 23- 27- 54
apr- apr-
2010 2010
Jaypee infra tech 1650 29- 4- 102
apr- may-
2010 2010
Technofab engineers ltd 71.66 29- 7- 240
june- july-
2010 2010
Engineers India ltd 956.65 27- 30- 290
july- july-
2010 2010
Gujarath pipav port 500 23- 26- 46
aug- aug-
2010 2010
Ramky infrastructure 530 22- 27- 450
sep- sep-
2010 2010
VA tech wabag ltd 125 22- 27- 1310
sep- sep-
2010 2010
Techpro systems 267.91 23- 28- 355
sep- sep-
70
2010 2010
Asoka buildcon ltd 225. 24- 28- 324
sep- sep-
2010 2010
Commercial engineers 153 30- 5-oct- 127
2010
Oberoi reality ltd 1028.61 6- 8-oct- 260
oct- 2010
2010
Prestige estates project 1200 12- 14- 183
2010 2010
RPP infra projects 48.75 18- 22- 75
nov- nov-
2010 2010
Interpretation:
There are 18 companies who have come out for IPOs issues in this
industry sector. Jay pee infra had come up with highest offer. And
comparing other sectors, here is the place more IPOs issues are made during
71
And some of industrial giants like prestige groups, DB reality, etc. are also
size(RS.Cr) price
United bank of 324.98 23- 25- 66
2010 2010
Standard chartered 2486.35 25- 28- 104
2010 2010
SKS Micro 1628 28- 2- 985
2010 2010
Microsec fin. 147 17- 21- 118
sep- sep-
2010 2010
Punjab and sind 470.82 13- 16- 120
2010 2010
72
Interpretation
In this sectors, the number of companies are which are came for IPO
is comparatively lesser than that previous sector. But the issue size were
little huge. Standard chartered PLC had come up with huge offer.
size(RS.cr) price
NTPC Ltd 8480.1 3-feb- 5- 201
2010 feb-
2010
Tarapur transformers 63.75 26- 28- 75
apr- 4-
2010 2010
SJVN ltd 1062.74 24- 3- 26
apr- may-
2010 2010
Orient green power 900 21- 24- 47
sep- sep-
73
2010 2010
BS transcom 190.45 6-oct- 13- 248
2010 oct-
2010
Power grid 2984.45 9- 12- 90
nov- nov-
2010 2010
A2Z maintenance 675 8- 10- 400
dec- dec-
2010 2010
Interpretation
Power grid corporation, SJVN ltd were come up with huge IPO issues. And
here, the 7 companies were issued for absorbing contributing 14356 crore
rupees.
size(Rs.cr) price
74
Bajaj corp 297 2- 5- 660
aug- sep-
2010 2010
Syncom health 56.25 27- 29- 75
2010 2010
Parabolic drugs 200 14- 14- 118
june- june-
2010 2010
Claris life 300 24- 24- 228
2010 2010
Interpretation:
fund essential. During 2010 around 4 companies were issued their IPOs in
this sector. Bajaj corp. Claris life sciences are the companies who made
75
1.5 Steel industry
company Issue open close Offer
size(Rs.cr) price
Prakash 68.75 5-aug- 10- 110
steelage 2010 aug-
2010
Electrosteels 248.07 21-sep- 24- 11
2010 sep-
2010
Bedmutha 91.8 28-sep- 1-oct- 102
industries 2010 2010
Gyscoal alloys 54.67 13-oct- 15-oct- 71
2010 2010
Interpretation:
needed. The interesting fact here is, all steel sector companies were waiting
till the end of first half of the year. Electro steels and gyscoal alloys are the
companies which came up with comparatively huge IPOs from this sector.
76
4.6 Computer Hardware and Software sector
Interpretation:
Now the IT sector has been recovering from the effect of financial
crisis. Around 6 companies were initially offered, but from this Fatpipe
77
networks India withdrew their offer. Infinite computer solutions and
Interpretation :
While taking the whole IPOs, this is the section where the huge issues
where made. Around 26366.89 crore Rupees was the total size of IPOs
which made in this particular sector. And coal India ltd issues were
oversubscribed.
78
4.8 Shipping and Transport corporation
Interpretation:
logistics and, The Shipping Corp. Of India were the companies which made
the IPOs. The Shipping Corp. of India was the company who made large
79
4.9 Media and entertainment sector
Interpretation:
the year 2010, around 5 companies were come up with new issues.
80
Hatchway cables and data com ltd, Eros international are companies
Interpretation:
81
This is an another major area of ivestment. Around 4 companies
were come up with their new issues during 2010. Shree Ganesh jewelry
Interpretation:
Retail industries are the one of the growing sector in India. During
2010 around 3 companies were come up with IPO offer, among this
82
4.12 Textiles sector
Interpretation:
This is an another sector where the few IPOs issues were made. Only
two companies were made their IPOs over here. Among this mandhana
4.13 miscellaneous
83
Texmo pipes 45 16-feb- 19-feb- 90
2010 2010
and products
Talwalkers 77.44 21-apr- 23-apr- 128
2010 2010
better value
fitness ltd
Aster silicates 53.1 24-june- 28-june- 118
2010 2010
Indo solar ltd 357 13-sep- 15-sep- 29
2010 2010
Tirupati inks 51.50 16-sep- 19-sep- 43
2010 2010
Gravita india 45 1-nov- 3-nov- 125
2010 2010
Ravikumar 73.60 8-dec- 10-dec- 28.9
2010 2010 5
distilleries
Interpretation:
The companies which are not involved in other sectors are grouped
84
CHAPTER 5
85
Total list of IPOs and fund issued
86
n IPOs name Total fund
o issued
ltd
0 projects ltd
1 datacom ltd
4 ltd
1 DQ entertainment 128.16
6 (international) ltd
8
87
88
sector Fund issued
Construction and engineering 9854.13
Banking and finance sector 5058.43
Power sector 14356.59
Pharmaceuticals and life care 853.25
Steel industry 463.29
Computer sector 600.24
Mining and minerals 26366.89
Shipping and transport 1314.73
Media and entertainment 1464.36
Jewelry sector 662.53
Retail and packing sector 203.81
Textiles sector 224.5
miscellaneous 1216.36
While comparing previous years, 2010 was the one which never
forgettable, around 74 companies were came for IPO, and some of them
were withdrew their issue, finaly around 70 companies made their issues.
construction sector. While we taking the fund issued, mining and minerals
where the sector were more funds issued. Around 26366.89 crore were
89
Following table has shows clearly that, how much funds were
the issue size refers to the company has issued that much share to the
company. The above histogram shows the comparison of issue size for
sector to sector. The issue size is the indicator how the companies has get
the fund from the public. From the historical data we can get that the issue
construction, power ,etc. while taking other sectors, these areas has good
investement scope.
90
Name of the issue Issue Current %of
gain or
price price
loss
bodybuilders co ltd
Oberoi reality ltd 260 227.6 -14.2
Prestige estates project ltd 183 125.5 -45.8
RPP infra projects 75 53.9 -39.14
91
ANALYSIS AND INTERPRETAION:
During 2010, construction sector was the place where the most number of
IPOs made. Around 18 companies were came with new issue. From that,
only 3 companies got gain in their issue. Rest of that all are went to below
expectation. In short , that was really a huge loss. The gainers are pointed
below:
or
92
loss
United bank of India 66 93.5 41.6
7
Standard chartered PLC 104 112.55 8.22
SKS Micro financial services 985 638.4 -
35.5
8
Microsec fin. 118 40.1 -33
Punjab and sind bank 120 99.75 -17.2
only two were went to above expectation. All others are traded lower than
their issue price. UBI has achieved 41.64% of gain in their issue price, and
standard chartered PLC made 8.22% gain in their value. In short , this
93
SJVN ltd 26 21 -19.2
Orient green power 47 24.25 -48.4
BS transcom 248 87.8 -64.59
Power grid 90 96.4 7.1
A2Z maintenance 400 234.7 -41.475
This was also an tragedy, during 2010, around 7 companies were come up
with new issues, among that only one get gain in their value. Powergrid
corporation was the company which made gain in their price. All others are
gone in to underpriced.
loss
Bajaj corp 660 407.05 -38.32
Syncom health care 75 31.1 -58.53
Parabolic drugs 118 43.15 -63.45
Claris life sciences 228 169.95 -25.46
94
ANALYSIS AND INTERPRETATION:
Unlike other sector, here all issues were traded lower prices than their issue
price. Around 4 companies were come up with new issues. None of them
could trade their share on a higher price than their issue price.\
95
ANALYSIS AND INTERPRETATION:
Steel industry is the place where we need more initial fund. And its
also an very profitable business too. Even here also only one company
loss
Infinite computer 165 154.4 -6.42
solution
Birla shloka edutech 50 16.1 -67.8
ltd
Persistent systems 310 386.95 27.8
Intrasoft technologies 145 65.1 -55.1
96
Careerpoint 310 321.45 3.69
infosystems
While taking this sector, two companies were got higher price
that their issue price. Others may be the result of Great financial crisis.
loss
NMDC 375 260.6 -30.5
97
Coal India Ltd 245 304.6 24.3
Moil ltd 375 405 8.01
Here out of 3 two were traded at higher price. And some of the
IPOs were oversubscribed. Unlike other sectors, the IPOs made over
loss
Aqua logistics 220 19.9 -90.95
The shipping corp. of 140 109 -22.142
India
98
This was the place where all IPOs were traded lower than their
issue price. In short, the performance of these share was totally so poor.
loss
Hatchway cables and 240 120.8 -49.6
(international) ltd
Hindustan media 166 154.95 -6.65
ventures
Eros international 175 154.9 -11.45
media
Sea TV networks 100 23.25 -76.75
The IPOs which made over this sector also under performed.
99
10 jewelers and diamond
loss
Thangamayill jewelry 75 150.95 101.26
Shree ganesh jwelry 260 162.3 -37.57
house ltd
Goenka diamond and 135 59.85 -55.67
jewelry
C Mahendra exports 110 178.45 62.22
While taking this sectors, the performance of IPOs in this sector was
no so poor, out of 4 around two ipos were traded above than their issue
100
11 Retail and packing
loss
EMMBI polyarns 40 13.75 -65.6
Midfield industries 133 46.4 -65.1
Cantabil retails 135 37 -72.59
13 textiles
or loss
101
Pradip overseas 110 75.6 -31.27
Mandhana industries 130 259 99.80
Here we could see, only two issues made, out of them one goe
12 Others
or loss
Jubilant food works 145 490.4 238.2
Texmo pipes and products 90 34.25 -61.9
Talwalkers better value 128 175.15 36.8
fitness ltd
Aster silicates 118 25.7 -78.2
Indo solar ltd 29 17.25 -40.8
Tirupati inks 43 10.13 -76
Gravita india 125 209.1 67.20
Ravikumar distilleries 64 28.95 54.7
102
ANALYSIS AND INTERPRETATION:
The companies which are not included none of previous sectors are
added with miscellaneous sector. Under this category around 8 issues are
made. And one Issues was withdrew by the company. Here some are got
good gain, some are totally failed. Jubilant food works was one company,
issue
Jubilant food 1 238.2
works
Thangamayil 2 101.26
103
jewlers
Mandhana 3 99.80
industries
Gravita India 4 67.20
C Mahendra 5 62.32
expots
issue price and the current price. Here from above chart Jubilant food works
top the list with 238.2% gain followed by Thangamayyil Jewelers with
62.32% respectively. Here from the following data we can observe that
Top losers
104
engineers and body
builders ltd
Nitesh estates 69th -169.3
DB reality 68th -126.9
technofab 67th 104
Aqua logistics 66th 90.95
These are the list of the company which underperforms in the market.
Technofab and Aqua logistics with 104% and 90.95% respectively. So from
the following data the companies which are under performed have suffered
2010
According to this sector wise analysis made during the year, the
performance of the IPOs was not so bad. The some of the retail
105
investors invested in the primary market during the year have lost
money as most of IPOs are quoting below their issue price. Among 70
IPOs 13 of them able to gain and rest of 57 are trading at a loss. Again
construction sector out of 18 only three were got gain in their value, in
entertainment sector all IPOs were under performed. Some trent was,
the demand for Coal India, Jubilant food works are excellent, still these
So overall we can see that companies going for IPO issues are
improved while comparing previous sectors, and almost all IPOs are
106
CHAPTER 6
107
OBSERVATIONS AND FINDINGS OF THE STUDY
CLEARELY OBSERVED:
➢ There are increase in the number of companies going out for the public. By
comparing different years, the year 2010 shows an increasing trend in going
for public.
➢ 2010 shows that highest number of companies going for IPO.
➢ Some of the IPOs are over subscribed.
➢ And the companies could able to contribute more fund.
➢ The capital appreciation ot the initial return during the year was very bad,
almost 80% of companies issued IPOs during the year was trading less that
its offer price.
➢ The capital depreciation was many. The initial return was very frustrating.
Even the business giants also suffered loss.
➢ This year was blessed with the number of IPOs, but the performance was
not up to expectation.
108
➢ The awareness to invest in IPO was great. SEBI took some tough initiative
to overcome the IPO scam. The enthuse of the investor were in great shape.
The investor kept faith with the primary market.
➢ The sector wise results can be watch closely from the performance of
the IPO. The sector wise performance deals with best sector. The
mining and mineral sectors gives the highest return to its investors. The
capital appreciation in this sector was anonymous.
• The most expected industry where in DB reality, prestige, birla shloka were
failed.
• The IPOs which issued over, shipping and transport, media and
entertainment, medical were totally underperformed.
• The retail sector IPO was really an failure.
Seeing the performance of the IPO. All the big fun in the Industries fail
drastically. The few IPOs like Jubilant, Coal india, Thangamayyil jewelers,
etc, were performed well. The big guns like Prestige etates, Birloa shloka,
are failed drastically.
Economic impact on IPO due to the market condition is too much during
the year. As most IPOs are trading in the price lower than the issue price
because of slow down of our market due to the past effect of global crisis
and political reasons.
109
7
Chapter 7
Recommendation
110
Recommendation
From the various charts , tables and other information regarding the IPO
and its performance I can recommend the following points to judge the
performance of IPO
They are:
• Firstly invest in selected IPO and diversify the investment pattern to avoid
the risk associated with the investing
• Secondly, choose the sector effectively. Go for the financial performance of
the sector and judge with all technical tools to judge the performance of the
company and then only invest in IPO.
• Do not go by speculation. Though you can get short term advantage but for
long term its very risky.
• Before doing for the IPO issue, current market condition also taken in to
consideration
• The overall performance of the IPO gives both positive as well as negative
return to the investor. So decision to invest in IPO must taken carefully.
• From this year performance we can see the the IPO from the MINING and
Minerals are doing well, whereas….
• Never depend the big firms
111
Conclusions
From the study and the research analysis made it can be convincingly concluded that:
1. IPO is one of the cheapest sources of financing.
2. All kinds of investors including small, medium and big go in for IPOs
3. The performance of the IPOs of 2010 has not been very good due to economic
recessions slump in the global market and expected revival in the IT and other sectors
not forthcoming
4. timing of the IPOs plays a very vital role in the success of the IPOs
5. Price band of the IPOs is very important and IPOs with mid cap price band have by
and large faired well during 2010
6. Extensive use of electronic media and very high absorption in IT in IPOs has made
the entire process of IPO marketing quite convenient and smooth.
7. Sector performance as foreseen by the investors also plays and major decisive role in
performance of the IPOs.
8. finally marketing of IPOs has been underlined force behind the success or failure of
the IPOs
9. and while considering the last three year trend, the IPO issue has been increasing.
112