PERFORMANCE OF INITIAL PUBLIC OFFERING AT NATIONAL STOCK EXCHANGE ON THE LISTING DAY

DURING THE YEAR 2015-2017

Abstract:- This paper gives an over view of the performance of INITIAL PUBLIC OFFERING'S (IPO) on the
listing day with issue price in India during 2015 to 2017, listed in National Stock Exchange(NSE) India.
The analysis found that there is, on the average, cheering returns are given. The investors shown their
interest in the IPOs is mainly by the image of the company but not on the basis of the fundamental
analysis.

Most of the Primary Market Investors always prefer to apply for the IPOs if the issue price is less than
the inherent value or the good market analysis. The study is purely based on LISTING PRICE only. The
LISTING PRICE ALSO TAKEN THE CLOSING PRICE ON THE LISTING DAY.

Key words: Initial Public Offering (IPO) , Listing Day Price, Issue Price, Market Price

INTRODUCTION : The Initial public offering is the method by which a private company can go public
by sale of its stocks to common public. It could be a new or an old company which decides to be
listed on an exchange and hence goes Public. Companies can raise equity funds with the help of an
IPO by issuing new shares to the public or the existing shareholders can sell their shares to the
public without raising any fresh capital. Generally, This is done to become public ltd companies.

Investors offer finance to the company for the stake in the company. The investor is liable in the
decision making process and also advice the management in most of the company issues. When the
investors of the company want to liquidate their investment they have options like sell the equity to
different company, sell the whole company to another company as an acquisition, or sell the equity in
the Initial 44 Dr. A. S. Ambily et al Public offering of the company. Also, when a company in needs of
finance for the development of their company then they have options like private market equity, issue
debt in the market or offer equity in the public which means initial public offer in the market. IPOs
performance can be affect by different factors like issue size, delay in listing time etc. Some advantages
for going public are like significant access to investment capital, some stock price support after the
listing etc. While some disadvantages for going public are like for small companies the cost incurred for
IPO is very high etc. SEBI is the regulator of the Indian Capital market including the primary market i.e.
IPOs. IPOs have some fixed process and which every company has to follow when it comes for the IPO in
the market. The most important objective of an IPO is to raise capital for the company. It helps a
company to tap a wide range of investors who would provide large volumes of capital to the company
for future growth and development. A company going for an IPO stands to make a lot of money from
the sale of its shares which it tries to anticipate how to use for further expansion and development. The
company is not required to repay the capital and the new shareholders get a right to future profits
distributed by the company. The IPO trend came in India in the eighties when a large number of
companies, organization came out with public issues, which triggered a growth in the primary market.
An entire industry of Merchant Bankers, Brokers, Agents and Retail Investors grew in the primary issues
market. During eighties and nineties many of the companies just disappeared without a trace after the
listing was done. There were estimated of over hundreds of companies which disappeared from the
market after raising funds in the primary market. People lost all their income as the fundamentals of the
company were not known by them. But in late nineties did not see much activity in the primary market.
The primary issues market resurrected itself after 2003 largely triggered by the divestment program of
public sector companies in the beginning of year in January 2008. Many investors lost their income,
saving which they invested in the company. India saw a dramatic recovery in its IPO markets in 2010.
This revival has been a domestic consumption led–growth story, driven by an influx of capital from
Western economies and a booming local stock market. India saw a growth of 21.5% in the number of
IPOs compared to 2009. In 2010, India saw a string of IPOs and follow-on offerings from many previously
state-owned enterprises in the materials sector such as steel, oil and gas which helped the Indian
Government raise funds to build roads, ports and power plants. The global IPO market is off to a very
good start in 2014. This has been the best performing first quarter since 2011 in terms of both number
of IPOs and capital raised. Three sectors that led globally by capital raised in 2014 Q1 were energy,
technology and real estate. Although technology may not always be the leading sector in any geography,
it is often the new or innovative technology which is the driving force behind the popularity and success
of the leading sectors. As boundaries blur between technology and industries, companies may move
away from traditional sector categorization in an effort to maximize valuation as they come to market.
The present A study on Performance of Ipo’s under NSE from issue price 45 study focuses on the
performance of ipo’s under NSE from issue price to last trading price in the year 2013-2015. REVIEW OF
LITERATURE Gadesurendar and Dr. S. Kamaleshwari Rao (2011) stated that Companies raise in the
primary market by way of initial public offers, rights issue. An initial public offering is one through which
an unlisted company makes either a fresh issue of securities of an offer for sale of its existing securities
or both for the first time to be public. IPS’s deepen the market diversify investors portfolio, reduce
volatility in stock prices bring investors money into the market. Qiming Wang (2010) The price clustering
of initial public offerings in the secondary market trading during the first 240 trading days after their IPO
DATES. The result indicates the huge difference between the integer price frequency of IPS’S in the
primary market and that of matched stocks in the secondary market almost disappears on the first
trading day after IPO. S.S.S.KUMAR (2010) stated that the performance issued through the book building
process in India over the period 1999-2006.the sample comprises 156 firms that upon listening the IPO’s
on an average offered positive returns up till twenty four months but subsequently they underperform
the market. Arwah Arjun Madan(2010) stated that in the long run there is a drastic fall in the returns on
IPO’s return is found to be negative from the second to the fifth year of listing. Anand adthikari(2010)
stated that companies with unique business models got listed in the year 2009-10 and made their
inventors rich. OBJECTIVES OF THE STUDY To study about the performance of IPO’s from issue price to
last trading price in the year 2013-2015. To study the percentage change of IPO’s from issue price to last
trading price in the year 2013-2015. RESEARCH METHODOLOGY The data for the study is mainly
collected from NSE website. The analysis is based on the companies listed under NSE during the years
2013 to 2015. The secondary data was collected from the various sources available like websites
wherever necessary. RESEARCH PROBLEM One major source of business financing is through Initial
Public Offerings (IPOs). Historically, IPOs received high initial first day gains compared to the market
performance. The study was undertaken to analyze the financial performance of IPO companies. The
study is mainly based on the detailed profit & loss account of the IPO 46 Dr. A. S. Ambily et al
companies. Data collected was secondary in nature. The study was mainly analytical and partly
descriptive in nature. ISSUE PRICE Issue Price is the price at which a companies shares are offered to the
market for the first time, which might be at par or at a premium or discount. When they begin to be
traded, the market price may be above or below the issue price. LAST TRADING PRICE The last traded
price is the last closing price, last traded time is the time at which transaction occurred, Volume is the
number of shares traded and also may be the value of the stocks, Open the price opened, High, Low the
price for the day / for 52 weeks, Previous day closing. ANALYSIS AND INTERPRETATION The following
tables contains both primary data and secondary data. The table shows the IPOs' listed under NSE
during the period of 2013 to 2015 and its issue price and last trading price and the percentage change in
issue price to last trading price.

TABLE NO. 1
YEAR ON YEAR NO. OF ISSUES AND ISSUE SIZE IN RUPEES
ISSUE SIZE YOY increas in LISTED AT LISTED AT
YEAR NO. OF IPOs
Rs. in Crores Percentage PREMIUM DISCOUNT
2015 21 11,362.30 100
2016 26 26,372.48 132.10
2017 35 67,505.14 494.11
Source: Primary Data
 TABLE NO: 1
IPO’s DURING 2015: PERFORMANCE FROM ISSUE PRICE TO LISTING DAY PRICE
ISSUE LISTING CHANGE IN
SL.NO. NAME OF THE COMPANY
PRICE PRICE PECENTAGE
1 Ortel Communication Ltd 181.00 162.25 -10.36
2 Adlabs Entertainment Ltd 168.00 191.50 13.99
3 Inox Wind Ltd 310.00 438.40 41.42
4 VRL Logistics Ltd 205.00 294.10 43.46
5 MEP Infrastructure Developers Ltd 63.00 58.40 -7.30
6 UFO Moviez Ltd 625.00 597.30 -4.43
7 PNC Infratech Ltd 378.00 360.50 -4.63
8 Manpasand Bevarages Ltd 320.00 327.75 2.42
9. Syngene International Ltd 250.00 310.55 24.22
10 Power Mech Proejects Ltd 640.00 580.00 -9.38
11 Navkar Corporation Ltd 155.00 166.85 7.65
12 Pennar Engineered Building Systems Ltd 178.00 169.50 -4.78
13. Shree Pushkar Chemicals and Fertilisers Ltd 65.00 63.05 -3.00
14 Prabhar Dairy Ltd 115.00 115.95 0.83
15 Sadbhav Infrastructgure Projet Ltd 103.00 106.20 3.11
16 Coffee Day Enterprises Ltd 328.00 271.00 -17.38
17 Interglobe Aviation Ltd 765.00 877.25 14.67
18 SH Kelkar & Company Ltd 180.00 209.85 16.58
19 Dr.Lal PathLabs Ltd 550.00 825.00 50.00
20 Alkem Laboratories Ltd 1,050.00 1,381.70 31.59
21 Narayana Hrudayala Ltd 250.00 336.95 34.78

Source: Primary Data (chittorgarh.com)

 TABLE NO: 2
IPO’s DURING 2016: PERFORMANCE FROM ISSUE PRICE TO LISTING DAY PRICE

ISSUE LISTING CHANGE IN

SL.NO. NAME OF THE COMPANY
PRICE PRICE PECENTAGE

1 Precision Camshafts Ltd 186.00 177.45 -4.60

2 Team Lease Services Ltd 850.00 1032.00 21.41
3 Quick Heal Technologies Ltd 321.00 253.85 -20.92
4 Healthcare Global Enterprises Ltd 218.00 171.00 -21.56
5 Bharat Wire Ropes Ltd 45.00 45.55 1.22
6 Infibeam Incorporation Ltd 432.00 445.75 3.18
7 Equitas Holding Ltd 110.00 135.20 22.91
8 Thyrocare Technologies Ltd 446.00 618.80 38.74
9. Ujjivan Financial Services Ltd 210.00 231.55 10.26
10 Parag Milk Foods Ltd 215.00 247.00 14.88
11 Mahanagar Gas Ltd 421.00 520.30 23.59
12 Quess Corp Ltd 317.00 503.10 58.71
13. L&T Infotech Ltd 710.00 697.60 -1.75
14 Advanced Enzymes Technologies Ltd 896.00 1178.10 31.48
15 Dilip Buildcon Ltd 219.00 251.75 14.95
16 S.P. Apparels Ltd 268.00 288.75 7.74
17 RBL Bank Ltd 225.00 299.40 33.07
18 L&T Technology Services Ltd 860.00 869.00 1.05
19 GNA Axles Ltd 207.00 245.05 18.38
ICICI Prudential Life Insurance
20 334.00 297.55 -10.91
Company Ltd

21 HPL Electric & Power Ltd 202.00 189.30 -6.29

22 Endurance Technologies Ltd 472.00 646.90 37.06
23 PNB Housing Finance Ltd 775.00 891.15 14.99
24 Varun Beverages Ltd 445.00 459.50 3.26
25 Sheela Foam Ltd 730.00 1032.00 41.37
26 Laurus Labs Ltd 428.00 480.10 12.17
 TABLE NO: 3
IPO’s DURING 2017: PERFORMANCE FROM ISSUE PRICE TO LISTING DAY PRICE

ISSUE LISTING CHANGE IN

SL.NO. NAME OF THE COMPANY
PRICE PRICE PECENTAGE

1 BSE Ltd 806.00 1069.20 32.66

2 Music Broadcast Ltd 333.00 372.90 11.98
3 Avenue Supermarts Ltd 299.00 641.60 114.58
4 CL Educate Ltd 502.00 422.10 -15.92
5 Shankara Building Products Ltd 460.00 632.45 37.49
6 S Chand and Company Ltd 670.00 676.00 0.90
7 IRB InvIT Fund 102.00 101.80 -0.20
8 Housing and Urban Development Corporation 60.00 72.55 20.92
9. PSP Projects Ltd 210.00 199.50 -5.00
10 IndiGrid InvIT Ltd 100.00 98.64 -1.36
11 Tejas Networks Ltd 257.00 263.50 2.53
12 Eris Lifesciences Ltd 603.00 601.50 -0.25
13. Central Depository Services (India) Ltd 149.00 261.60 75.57
14 GTPL Hathway Ltd 170.00 171.65 0.97
15 AU Financiers (India) Ltd 358.00 541.65 51.30
16 Salsaar Techno Engineering Ltd 108.00 262.50 143.06
17 Security and Intelligence Services (India) Ltd 815.00 757.05 -7.11
18 Cochin Shipyard Ltd 432.00 528.15 22.26
19 Apex Frozen Foods Ltd 175.00 212.10 21.20
20 Bharat Road Network Ltd 205.00 208.45 1.68
21 Dixon Technologies (India) Ltd 1,766.00 2891.55 63.73
22 Matrimony.com Ltd 985.00 904.65 -8.16
23 Capacite Infraprojects Ltd 250.00 342.55 37.02
24 ICICI Lombord General Insurance Company Ltd 661.00 681.20 3.06
25 SBI Life Insurance Company ltd 700.00 707.55 1.08
26 Pratap Snack Ltd 938.00 1180.65 25.87
27 Godrej Agrovet Ltd 460.00 595.65 29.49
 28 MAS Financial Services Ltd 459.00 654.40 42.57
29 Indian Energy Exchange Ltd 1,650.00 1,629.15 -1.26
30 General Insurance Corporation of India Ltd 912.00 874.30 -4.13
31 Reliance Nippon Life Asset Management Ltd 252.00 284.40 12.86
32 Mahindra Logistics Ltd 429.00 429.50 0.12
33 The New India Assurance Company Ltd 800.00 727.10 -9.11
34 Khadim India Ltd 750.00 688.85 -8.15
35 HDFC Standard Life Insurance Company Ltd 290.00 344.60 18.83
Source: Primary Data

Change in Percentage is calculated as per the below formula:

Listing Day Closing Trade Price - Issue Price

--------------------------------------------------------- * 100
Issue Price
INTERPRETATION From the above table, it is observed that Dr. Lal pathalabs limited has shown the
highest positive difference of 72.18 percent and coffee day enterprises limited has shown highest
negative difference of-30 percent. The average difference of the year 2015 is 21.42 percent.

FINDINGS The investment done in the securities by the investors is mainly done only by the image of the
company but not on the basis of the fundamental analysis. Most of the investors always prefer to
purchase at a lower rate when issue price and last trade price is compared. The average difference for
the year 2013 regarding IPO’s performance from issue price to last trading price is 114.83 percent. The
average difference for the year 2014 regarding IPO’s performance from issue price to last trading price
53.625 percent. The average difference for the year 2015 regarding IPO’s performance from issue price
to last trading price 21.42 percent. The percentage return shows the return for a particular period of
time. The last trade price will always be higher than the issue price. The last trade price comes after the
issue price in the above study.

SUGGESTIONS 1. The investment in IPO can prove too risky because the investor does not know
anything about the company because it is listed first time in the market so its performance cannot be
measure. 2. On the other hand it can be said that the higher the risk higher the returns earned. So we
can say that the though risky if investment is done then it can give higher returns as well. 3. Primary
market is more volatile than the secondary market because all the companies are listed for the first time
in the market so nothing can be said about its performance. 4. “We can fairly predict the future, but
can’t make it happen as it is.”

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