Objective of The Study

OBJECTIVE OF THE STUDY:
 To identify the level of awareness among investors regarding IPO investment.

 To study the factors affecting while investment in IPO.
 To identify the purpose of IPO investment.
CHAPTER 1
INTRODUCTION OF STOCK MARKET

INTRODUCTION:
With the ever increasing and expanding economy, Indian economy is considered as a growth
engine of the world’s economy. And stock market of such robust economy is the face of the
growing market and companies in it. India has one of the oldest and the fastest stock market
platform i:e Bombay Stock Exchange (BSE). Stock market basically is an electronic platform
where the share of the companies are listed and traded. Because of this advanced platform it
is possible for companies to raise capital from public efficiently and effectively. With the
economic reforms in the country, stock exchanges have grown exponentially in terms of
foreign institutional investment and transaction turnover. This increase is mainly due
liberalized and supportive along with regulative role of government. The share prices of the
listed companies fluctuate on the basis of various factors which affect and build the
sentiments of markets and investor. In India, we have a very low level of economic literacy
and if we quantify it then in a population of more than 125 Crore, less than 2% of population
actually invests in stock market. Such low participation is because of the above-mentioned
low level of economic literacy plus huge fluctuations in the market due to several factors.
India is pioneer in Information Technology industry and IT companies of India are one of the
greatest contributors in total export as well as fame for the country. Being a pioneer industry,
shares of IT companies are always remain in the limelight of stock market. Further return on
this is again fluctuates due to industry and market factors. Since so many fluctuations exist in
the stock market, it creates an urge to study about those factors which are responsible for the
ups and downs in the market.
STOCK EXCHANGE:
“Stock” means the capital or fund that a company raised through the sale of securities, and
“Stock Exchange” is any organization, association or group of persons, incorporated or not,
which constitutes, maintains or provides a market place or facilities for bringing together
purchasers and sellers of securities and includes the market place and facilities maintained by
such an exchange. The stock exchange is the important segment of a capital market. If the
stock exchange is well-regulated and functions smoothly, then it is an indicator of healthy
capital market. If the state of the stock exchange is good, the overall capital market will grow
and otherwise it can suffer a great set back which is not good for the country. The
government at various stages regulates the stock market.
STOCK TRADING AN OVERVIEW:
The marketing of the securities on the stock exchange can be done through members of the
stock exchange. These members can be either individuals or corporate bodies. For the process
of trading in stock exchange there is the basic need for a transaction between an individual
and the broker executes customers’ order to buy or sell on the stock exchange trading ring.
The exchange of scrip between the members of the exchange in the form of buying or selling
is called trading. Broker is the member of recognized stock exchange and helps the customers
in buying or selling the securities for the brokerage that he receives.
TRADING METHOD:
Listed securities are traded on the floor of recognized stock exchange where its members
traded. An investor is not permitted to enter the floor of stock exchange and he trusts the
broker to:
1. Negotiate the best price for the trade.
2. Settle the account, i.e., payment for securities sold on due date.
3. Take delivery of securities purchased.
PROCEDURE OF SECURITIES TRADING:
1. Selection of broker
2. Opening an Account with the Broker
3. Selection of Securities
4. Selection of Time for Trading
5. Placing an Order
6. Preparation of Contract Note
7. Settlement
HISTORY AND ORIGIN OF STOCK EXCHANGE:
PHASE 1:
The first stock exchange was established in London in the year 1773; just after establishment
of London stock exchange, various countries like France, Germany and USA also established
their own stock exchange markets. In India, the first exchange was established in Bombay in
the year 1875; later, in the year 1908, Calcutta Stock Exchange was established which was
recognized as the company in 1923; The Madras Stock Exchange limited was established in
1973. So far, the Government of India has recognized 22 stock exchanges, which are located
at major business centers in different parts of the country.
In 1956, the Central Government passed the Securities Contracts Regulation Act 1956, which
came into force throughout the country on 20th Feb. 1957.
PHASE 2:
Recently, the Government of India has enacted an Act (SEBI Act 1992), which provides for
the establishment of a board to protect the interest of investors in securities. The SEBI has
emerged as a monitoring institution of the country for the development and regulation of
stock market, SEBI has issued from time to time guidelines to insider trading, listing of
securities, registration of intermediaries, mutual funds, etc.
A stock exchange is a form of exchange which provides services for stock brokers and traders
to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue
and redemption of securities and other financial instruments, including the payment of
income and dividends. Securities traded on a stock exchange include stock issued by
companies, unit trusts, derivatives, pooled investment products and bonds.
Stock exchanges often function as "continuous auction" markets, with buyers and sellers
consummating transactions at a central location, such as the floor of the exchange. To be able
to trade a security on a certain stock exchange, it must be listed there. Usually, there is a
central location at least for record keeping, but trade is increasingly less linked to such a
physical place, as modern markets are electronic networks, which gives them advantages of
increased speed and reduced cost of transactions. Trade on an exchange is by the members
only.
The initial offering of stocks and bonds to investors is done in the primary market and
subsequent trading is done in the secondary market. A stock exchange is often the most
important component of a capital market. Supply and demand in stock markets are driven by
various factors that, as in all free markets, affect the price of stocks. There is usually no
compulsion to issue stock via the stock exchange itself, nor must stock be subsequently
traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is
the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of
a global market for securities.
PHASE 3:
In recent years, various other trading venues, such as electronic communications networks,
alternative trading systems and "dark pools" have taken much of the trading activity away
from traditional stock exchanges.
MAJOR STOCK EXCHANGES IN INDIA:

There are two main stock exchanges in India where majority of the trades take place -
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Apart from these
two exchanges, there are some other regional stock exchanges like Bangalore Stock
Exchange, Madras Stock Exchange etc but these exchanges do not play a meaningful role
anymore.
BSE AND NSE:

Most of the trading in the Indian stock market takes place on its two stock exchanges:
the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has
been in existence since 1875. The NSE, on the other hand, was founded in 1992 and started
trading in 1994. However, both exchanges follow the same trading mechanism, trading hours,
and settlement process.
As of February 2020, the BSE had 5,518 listed firms,1 whereas the rival NSE had about 1,799
as of Dec. 31, 2019.Out of all the listed firms on the BSE, only about 500 firms constitute
more than 90% of its market capitalization; the rest of the crowd consists of
highly illiquid shares.
Almost all the significant firms of India are listed on both the exchanges. The BSE is the
older stock market but the NSE is the largest stock market, in terms of volume. As such, the
NSE is a more liquid market. In terms of market cap, they're both comparable at about $2.3
trillion. Both exchanges compete for the order flow that leads to reduced costs, market
efficiency, and innovation. The presence of arbitrageurs keeps the prices on the two stock
exchanges within a very tight range.
DIFFERENT MARKET PARTICIPANTS:

There are a lot of individuals and corporate houses who trade in a stock market. Anyone who
buys/sells shares in a stock market is termed as a market participant. Some of the categories
of market participants are as follows:
 Domestic Retail Participants-These are individuals who transact in the markets.

 NRI’s and Overseas Citizen of India (OCI)-These are people of Indian origin who
reside outside India.
 Domestic Institutions-These are large corporate entities based in India (for example:
LIC of India).
 Domestic Asset Management Companies (AMC)-The market participants in this
category would be mutual fund companies like HDFC AMC, SBI Mutual Fund, DSP
Black Rock and many more similar entities.
 Foreign Institutional Investors-FIIs are Non-Indian corporate entities such as foreign
asset management companies, hedge funds and other investors.
REGULATOR OF THE INDIAN STOCK MARKET:

Securities Exchange Board of India
Securities Exchange Board of India (SEBI) is the regulatory body of the Indian Stock
Markets. The main objective of SEBI is to safeguard the interest of retail investors, promote
the development of stock exchanges, and regulate the activities of financial intermediaries
and investors in the market. SEBI ensures the following:
 The stock exchanges (BSE and NSE), brokers and sub-brokers conduct their business
fairly.
 Corporate houses should not use markets as a mean to unfairly benefit themselves
 Small retail investors’ interest is protected.
 Large investors with huge cash should not manipulate markets.
TYPES OF FINANCIAL INTERMEDIARIES IN THE STOCK
MARKET:
From the time an investor places his order to buy shares till the time it is transferred to his
Demat account, a number of corporate entities are involved to ensure smooth transaction.
These entities are known as financial intermediaries and they work according to the rules and
regulations prescribed by SEBI. Some of the financial intermediaries are discussed below:
Stock Broker:
A stock broker also known as a dealer is a professional individual who buys/sells shares on
behalf of its clients. A stock broker is registered as a trading member with the stock exchange
and holds a stock broking license. They operate under the guidelines prescribed by SEBI. An
individual needs to open trading/DEMAT account to transact in the financial market.
Depository and Depository Participants:

A Depository is a financial intermediary that offers the service of DEMAT account. A
DEMAT account will have all the shares that an investor owns in electronic format. In India,
there are only two depositaries which offers DEMAT account services - National Securities
Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). An
investor cannot directly go to the depositary to open the DEMAT account. He needs to
appoint a Depository Participant (DP). According to SEBI guidelines, banks, financial
institutions and members of stock exchanges registered with SEBI can become DPs.
Banks:
Banks help to transfer funds from a bank account to a trading account. The client needs to
categorically mention which bank account has to be linked to the trading account to the stock
broker at the time of opening the trading account.
National Security Clearing Corporation Ltd (NSCCL) and Indian Clearing

Corporation Ltd (ICCL):
NSCCL and ICCL are 100% subsidiaries of National Stock Exchange and Bombay Stock
Exchange respectively. They ensure guaranteed settlement of transactions carried in stock
exchanges. The clearing corporation ensures there are no defaults either from buyers or
sellers side.
Trading Account:
A trading account is used to place buy/sell orders in the stock market. One can open their
trading account with a stock broker who is registered with SEBI. An order can be placed
either through an online or offline mode. In the online mode, one can buy/sell stocks through
the trading terminal provided by the broker whereas; in the offline mode, an individual can
ask its broker to place an order on his/her behalf.
WHO CAN INVEST IN INDIA?

India started permitting outside investments only in the 1990s. Foreign investments are
classified into two categories: foreign direct investment (FDI) and foreign portfolio
investment (FPI). All investments in which an investor takes part in the day-to-day
management and operations of the company are treated as FDI, whereas investments in
shares without any control over management and operations are treated as FPI.
For making portfolio investments in India, one should be registered either as a foreign
institutional investor (FII) or as one of the sub-accounts of one of the registered FIIs. Both
registrations are granted by the market regulator, SEBI.
Foreign institutional investors mainly consist of mutual funds, pension funds,

endowments, sovereign wealth funds, insurance companies, banks, and asset management
companies. At present, India does not allow foreign individuals to invest directly in its stock
market. However, high-net-worth individuals (those with a net worth of at least $50 million)
can be registered as sub-accounts of an FII.
Foreign institutional investors and their sub-accounts can invest directly into any of the
stocks listed on any of the stock exchanges. Most portfolio investments consist of investment
in securities in the primary and secondary markets, including shares, debentures,
and warrants of companies listed or to be listed on a recognized stock exchange in India. FIIs
can also invest in unlisted securities outside stock exchanges, subject to the approval of the
price by the Reserve Bank of India. Finally, they can invest in units of mutual funds and
derivatives traded on any stock exchange.
An FII registered as a debt-only FII can invest 100% of its investment into debt instruments.
Other FIIs must invest a minimum of 70% of their investments in equity. The balance of 30%
can be invested in debt. FIIs must use special non-resident rupee bank accounts in order to
move money in and out of India. The balances held in such an account can be fully
repatriated.
CHAPTER 2
INTRODUCTION OF IPO INVESTMENT

INITIAL PUBLIC OFFERING (IPO):
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 is the reason that the investors buy 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 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.
HISTORY OF INITIAL PUBLIC OFFERINGS (IPOS):

The term initial public offering (IPO) has been a buzzword on Wall Street and among
investors for decades. The Dutch are credited with conducting the first modern IPO by
offering shares of the Dutch East India Company to the general public. Since then, IPOs have
been used as a way for companies to raise capital from public investors through the issuance
of public share ownership.
Through the years, IPOs have been known for uptrends and downtrends in issuance.
Individual sectors also experience uptrends and downtrends in issuance due to innovation and
various other economic factors. Tech IPOs multiplied at the height of the dot-com boom as
startups without revenues rushed to list themselves on the stock market.
The 2008 financial crisis resulted in a year with the least number of IPOs. After the recession
following the 2008 financial crisis, IPOs ground to a halt, and for some years after, new
listings were rare. More recently, much of the IPO buzz has moved to a focus on so-
called unicorns; startup companies that have reached private valuations of more than $1
billion. Investors and the media heavily speculate on these companies and their decision to go
public via an IPO or stay private.
REASON FOR LISTING IPO:
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.
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.
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.
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.
OBJECTS OF THE OFFERING NEW IPO:
 Funds Requirement
 Funding Plan (Means of Finance)
 Schedule of Implementation
 Funds Deployed
 Sources of Financing of Funds already deployed
 Interim Use of Funds
 Basic Terms of Issue
 Basis for issue price
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.
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.
MERITS:
• Low cost financing
• No commitment of fixed returns
• No restrictions attached to financing
• No issues such as mortgaging, hypothecation etc.
• Entire money received in one stroke without linking to any milestones
• No issues with returning of finance
DEMERITS:
• Success of IPO has an element of risk.
• IPO can only finance part of the project
• IPO performance post listing has also bearing.
• For new promoters and new company it is difficult to market their IPO.
More often than not, the pricing of any IPO is what influences the decision of any investor.
The rating agencies, in this case, will not talk about ‘what price'' and “what time” aspects of
the offer. Given that the decision to invest or avoid investments in any IPO is most often a
function of the pricing, the lack of this aspect in the present IPO grading system could make
the whole process an unfinished task. Also, rating agencies (experienced in debt rating) could
face trouble with rating the equities, which, unlike debt rating, is more dynamic and cannot
be standardized. Further, IPO grading mechanism is a globally-unique initiative; it could
increase the cost of raising capital in India and urge companies to seek capital overseas.
Markets, in the short term, can be price-driven and not purely motivated by company
fundamentals. That is to say that, at times, even good companies at higher price could be a
bad investment choice, while the not-as-good ones could be a steal at lower prices.
Despite having disclaimers, a higher graded IPO may well tempt small investors into falsely
believing that a high premium would come about on listing.
Similarly, investors may get deluded by a low-graded IPO, which could become a `missed
opportunity' in the future. The purpose of introducing grading, thus, might get defeated if it
leads to a false sense of buoyancy or alarm among investors.
FACTORS DECIDING IPO PRICE:
 Promoters and their background.

 Current National and Global economic scenario.
 Sector specific issues in which company will be operating.
 Tie up with financial institutions.
 Investors outlook for the company.
IPO INVESTMENT STRATEGIES:
Investing in IPOs is much different than investing in seasoned stocks. This is because there is
limited information and research on IPOs, There is 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.
6) INVEST AT YOUR OWN RISK: 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.
FACTORS BY CONSIDERED WHILE INVESTING IN IPO:
Usually, when a company comes out with an initial public offering (IPO), there is a lot of
noise around it. Nobody wants to miss an opportunity of investing in an IPO. However, not
all IPOs provide desired returns. Some IPOs fail miserably and people face losses.
Check company background
Before investing in an IPO, always read as much as possible about the business of the
company and its operations. Evaluate how the company has performed financially over the
past few years. It is very important for a company to be financially sound.
Future prospects of the company
Understand why the company is coming out with an IPO. Talk to the management and
understand the future plans of the company. Evaluate how the money collected from the
public will be utilised in future - whether the company will use it for expansion, to pay off
loans or for anything else.
Look at the Valuation
Valuation is one of the most important factors that one should consider while investing in an
IPO. The best way to evaluate the valuation of any company is to compare its price with that
of its peers in the listed space. If the business of the company is new, and it has no peers in
the listed space, you can simply judge its valuation by using the price to earnings ratio and
return on equity. The price to earnings ratio is calculated by dividing the share price of the
current stock by the earnings per share.
Stay cautious of over-subscription
The number of shares that a company offers during an IPO are limited. Moreover, the
allocation of shares to each category of investors, including the retail investors is pre-decided.
A lot of times, the number of applications made is higher than the number of shares which are
on offer. So, the allotment is done proportionately and there are chances that you may get
fewer shares than you applied for.
Always read the prospectus
The fine print contains all the details related to the company - business of the company,
summary of the financial statements, capital structure, objects of the issue, management
views etc. The prospectus gives an overall information about the IPO and hence it is easy to
decide if the company is worth investing or not.
RECENTLY LISTED IPO:
 Heranba Industries IPO Details:
IPO Opening Date Feb 23, 2021
IPO Closing Date Feb 25, 2021
Issue Type Book Built Issue IPO
Face Value ₹10 per equity share
IPO Price ₹626 to ₹627 per equity share
Market Lot 23 Shares
Min Order Quantity 23 Shares
Listing At BSE, NSE

Issue Size Eq Shares of ₹10
(aggregating up to ₹625.24
Cr)
Fresh Issue Eq Shares of ₹10

(aggregating up to ₹60.00 Cr)
Offer for Sale 9,015,000 Eq Shares of ₹10

(aggregating up to ₹[.] Cr)
 RailTel IPO Details:
IPO Opening Date Feb 16, 2021
IPO Closing Date Feb 18, 2021
Listing At BSE, NSE
Issue Size 87,153,369 Eq Shares of ₹10

Cr)

Cr)
 Indigo Paints IPO Details:
IPO Opening Date Jan 20, 2021
IPO Closing Date Jan 22, 2021
IPO Price ₹1488 to ₹1490 per equity

share
Listing At BSE, NSE
Issue Size [.] Eq Shares of ₹10

(aggregating up to ₹1,176.00
Cr)
Fresh Issue [.] Eq Shares of ₹10

(aggregating up to ₹300.00 Cr)

 IRFC IPO Details:
IPO Opening Date Jan 18, 2021
IPO Closing Date Jan 20, 2021
Listing At BSE, NSE
Issue Size 1,782,069,000 Eq Shares of ₹10

(aggregating up to ₹4,633.38
Cr)
Fresh Issue 1,188,046,000 Eq Shares of ₹10

 Burger King IPO Details:
IPO Opening Date Dec 2, 2020
IPO Closing Date Dec 4, 2020
Listing At BSE, NSE
Issue Size 135,000,000 Eq Shares of ₹10

Cr)
Fresh Issue 75,000,000 Eq Shares of ₹10

Cr)

Cr)
CHAPTTER 3
LITERATURE REVIEW
First, Fried & Hirsch, 1994: Hall & Hofer, 1993; Hisrich & Jankowicz, 1990;
MacMillian, Siegel,& Subbanarasimha, 1985; Tybee & Bruno, 1984 it has been argued
that private equity firms begin to add value to their investee companies even before the initial
investment takes place through considered evaluation and selection procedures. These
procedures identify only the best prospects for investment and together with the imposition of
governance and monitoring controls in investment contracts (Gompers, 1945; Sahlman,
1990) lead to enhanced prospects of survival and prosperity.
Second, (Gompers & Lerner, 1998). Private equity firms have been described as active
investors, monitoring the progress of firms, sitting on boards of directors, and meting out
financing based on the attainment of milestones. This active investor role is demonstrated by
buyout focused firms as well as earlier stage ‘venture capital’ firms (Cao & Lerner, 2009;
Cornelli & peck, 2001). The ways and means through which private equity firms are posited
as potentially adding value to investee companies are myriad. Frequently cited ways include:
“1) assistance in finding and selecting key management team personnel; 2) solicitation of
essential suppliers and customers; 3) strategic planning; 4) assistance in obtaining additional
financing; 5) operational planning; and 6) replacement of management personnel when
appropriate” (MacMillian, Kulow, & Khoylian, 1988, p. 28;. Private equity firm
involvement has also been shown to be associated with efficiency and productivity
improvements, both in respect of buyout specialists and venture capital firms (Chemmanur,
Krishnan, & Nandy, 2009; Cotter & Peck, 2001; Cressy, Munari, & Malipiero, 2007;
Munari, Cressy, & Malipiero, 2006).
One of the key areas of interaction between private equity firms and investees is through
participation on investee company boards. Private equity firms ordinarily require board
representation as part of their funding agreement (Beecroft, 1994; Cotter & Peck,2001;
Kaplan, 1989; Sahlman, 1990). Private equity firm representation on boards has been found
to increase as the investee company moves through its developmental phases and staged
investment increases the ownership level of the private equity firm (Smith, 2005).
Third, private equity firms are believed to add value around the IPO event. Their familiarity
with the process enables them to prepare the investee company beforehand, for example by
influencing marketing and R&D expenditure to portray an appropriate balance of investment
for the future and current profit. They may also impose appropriate governance and
management structures to make the offer attractive to future shareholders (Campbell &
Frye, 2006; Krishnan, Masulis, Ivanov, & Singh, 2009). Through these preparatory
actions, a more attractive proposition is presented to the market, thereby achieving a higher
price and/or hastening the time to IPO (Barry, Muscarella, Peavy, & Vetsuypens, 1990;
Dovin & Pyles, 2006; DuCharme, Malatesta, & Sefcik, 2001; Lin & Smith, 1998;
Sandstrom & Westerholm, 2003; Timmons & Bygrave, 1986; Wang, Wang, & Lu,2002).
Lerner, 1994, private equity firm experience with the IPO process and markets can deliver a
timing benefit. Timing of an IPO to coincide with positive market conditions is a key
consideration in going public and is associated with higher returns (Cumming, 2008;
Lerner, 1994; Ritter & Welch, 2002). Experienced private equity firms have been shown to
be better at timing IPO exits (Lerner, 1994) and less incentivized to take investee companies
public for ulterior motives as can be the case with younger venture capital firms who may
wish to generate reputational benefits (Gompers, 1996).
Finally, private equity firms’ contacts within the industry can not only lead to the selection of
superior service providers of associated functions, e.g. auditors, lawyers and underwriters, but
can also reduce the costs of evaluating, selecting and commissioning these service providers
(Bygrave & Timmons, 1992; Dolvin, 2005; Dolvin & Pyles, 2006; Stein & Bygrave,
1990).
Fourthly private equity firms can continue to add value beyond the IPO. They commonly
retain high degrees of ownership (Barry et al, 1990; Bradley, Jordan, Yi, & Roten, 2001;
Brav & Gompers, 1997; Cao & Lerner, 2009; DeGeorge & Zeckhauser, 1993;
Holthausen & Larcker, 1996; Lin & Smith, 1998; Mian & Rosenfeld, 1993).
Consequently, their board representation and influence continue after the IPO event
(Campball & Frye, 2006; Jain & Kin, 1995; Krishnan et al, 2009), which is not
ordinarily the case under other exit routes (Wright et al, 1990).
Collectively, these value adding activities of private equity firms are considered to have
lasting benefit for investee companies. An extensive study of post IPO performance by Brave
& Gompers (1997) suggests that the knowledge, resource and network benefits private
equity firms bring extends beyond the event of going public. In comparing post IPO share
price performance, their sample of private equity backed firms significantly outperformed
non-private equity backed firms despite being smaller, as measured by market capitalization.
Conversely, buy-side analysts need to be concerned that leaner operations together with
reduced capital expenditures (Fox & Marcus, 1992; Kaplan, 1989) will lead to a lack of
sustainability following the IPO. Window dressing is therefore and important aspect of
private equity firm certification of investee firms, there is – by comparison – relatively little,
directly related work on window dressing.
In the case of reverse LBOs, accounting measures of operating performance have been found
to peak around the time of the IPO (DeGeorge & Zeckhauser, 1993). Existing evidence is
mixed as to whether this extends to manipulating reported performance to window dress
public offerings. On one hand, the presence of private equity firms, other than young,
inexperienced firms, has been found to mitigate the management of accruals (Jain & Kini,
1995; Morsfield & Tan, 2006). In contrast, Chou, Gombola & Liu (2006) found evidence
of significant discretionary accruals around the IPOs of reverse LBOs.
Shah (1995) documents an under pricing of 3.8% weekly excess returns from a study of 2056
IPOs that commenced trading between January 1991 and April 1995 and finds that past
Sensed returns have an impact on the under pricing.
In a comprehensive analysis of 1922 IPOs listed from 1992 to 1995 Madhusoodhanan and
Thiripalraju (1997) shows that the annualized excess returns from IPOs at294.8% was
higher than the experiences of the other countries. They also suggest book building as an
alternative “proposition to avoid mispricing”.
Kakati (1999) examined the performance of a sample of 500 IPOs that tapped the market
during January 1993 to March 1996 and documents that the short run under pricing is to the
tune of 36.6% and in the long-run the overpricing is 40.8%.
Krishnamurti and Kumar (2002) working on the IPOs that listed between July 1992 to
December 1994 conclude a mean excess return of 72.34% and indicate that the time delay
between offer approval and the issue opening as an important factor behind the under pricing.
Majumdar (2003) also documents short run under pricing in India and observes after market
total returns of 22.6% six months after listing. All the above mentioned studies examined IPO
performance during the fixed price regime as book building was not in vogue at those times.
Ranjan and Madhusoodanan (2004) from a study of 92IPOs offered during 1999-2003
document that fixed price offers were underpriced to a larger extent than the book built issues
though the book built issues were only figuring 24 in the sample this was the first study
comparing the fixed price issues performance vis-à-vis book built issues. Chemmanur and
Liu (2003) analyze information acquisition in uniform price auctions and fixed price public
offers. Public offers allow issuers to control price but not allocations, book building allows
issuers to control both, and standard auctions do not allow issuers to control
either.Chemmanur and Liu demonstrate how fixed price offers allow the issuer to induce a
higher level of information acquisition but do not allow the offering price to reflect the
information acquired.
Ausubel (2002) suggests that IPOs should be sold through an ascending clock auction, which
he shows to be efficient in an independent private values model with an exogenous number of
bidders. Klemperer (2002) points out that a multi-unit uniform price auction “is analogous to
an ascending auction (in which every winner pays the runner-up’s willingness-to-pay)”, since
the lowest winning bid “is typically not importantly different from the highest losing bid”.
With IPO auctions, there tend to be hundreds of bids at the market-clearing price.Ausubel
recommend ascending auctions to reduce the winner’s curse, although reducing the winner’s
curse increases the free rider problem if information must be produced.
Cornelli and Goldreich (CG, 2001) and Jenkins on and Jones (JJ, 2003) use unique data
sets to examine the orders and allocations6 for investors in book building IPOs. Both find that
large orders are favored over small orders. JJ find that early bids receive favorable
allocations. This is consistent with underwriters trying to discourage free riders, since those
that place firm, early bids are clearly acting on their own opinions about the issuer.
However,CG do not find that early orders are favored in terms of allocation size.CG find that
rationing varies between bidders, and that about 30% of bidders don’t get shares at all,
showing that underwriters are actively managing allocations (for better or for worse), rather
than passively rationing everyone when demand is high. Both papers also find a core of
frequent investors that tend to be favored in terms of allocations.
Berrien (2004) models IPO under pricing as being driven by suboptimal regulation –
requiring aftermarket price support for all IPOs, in an environment in which price support
would not occur voluntarily. The paper does not give information on which countries, if any,
mandate aftermarket price support.
Several researchers have focused on the particular role of market sentiment in IPO
performance. The evidence shows that initial returns are higher when investors overreact to
initial IPOs news. For example, Gervais and Odean (2001) find that if investors have more
overconfidence after market gains then this is followed by increased trading volumes and
market depth.
Brown and Cliff (2004) use a large group of sentiment indicators to investigate the
relationship between sentiment and near-term market returns, and find that sentiment is
caused by equity returns. These findings are consistent with Solt and Statman (1988) that
greater initial returns cause excessive optimism in investors and following overreaction in
post-IPO market. The issuer can also choose when to go public].
Rock(1986), Beatty and Ritter (1986) document that IPO offer prices should be
undervalued relative to fair value to avoid winner’s curse. However, the valuation processes
of these three IPO methods are different; first, the value of a fixed-price offering is
determined by underwriters, and they gauge the offerings prices by their own pricing
formulas. Second, auction offerings are open to all bidders and therefore the value of offering
is determined by market demand. In contrast with the fixed-price method, an auction allows
potential investors to raise their bid prices which may lead to overpricing, and thus dramatic
reverse trading would likely follow post-IPO. Finally, book building underwriters solicit
private information from regular traders by road show to and then set the IPO price.
Ritter (1998) investigates IPO mechanisms in several countries and finds that the Magnitude
of under pricing is greater for countries with fixed-price offering than those using book
building procedures. However, Ljungqvist and Wilhelm (2002) use worldwide IPO markets
and document that initial returns are positively related with information production.
Controlling for the country factor, Derrien and Womack (2003) use IPO data in French
stock market, which have experienced these three IPO methods, and find that book building
had greater under pricing and pricing variance than other two methods. These findings of a
direct correlation between initial returns and information compensation are consistent with
the theoretical models of Benveniste and Spindt (1989), Benveniste and Wilhelm (1990).
Daniel, Hirshleifer and Subrahmanyam (1998) study the effect of biased self-attribution on
news announcements and find that short-term momentum and long-term reversal are apparent
in equity markets. Moreover, the trading activities of institutional investors play important
roles in IPO markets, and the risk preference and investment sentiment toward an initial great
allocation of shares would dominate the post-IPO performance.
Aggarwal (2003) documents the flipping of institutional investors is more frequently in hot
IPOs. Investors endowed with offering shares are more likely enjoy higher initial abnormal
returns and thus realize their gain.
Ellis (2006) finds a significant relationship between initial IPO returns and trading volume
and document that cold IPOs have early sell trades by insiders. However, the extent of
ownership Changes among the IPO methods remain unknown.
CHAPTER 4
RESEARCH METHODOLOGY
The Research design for this project is formed in the way of descriptive design. The data
collected for this study is Primary in nature and being collected from structured
questionnaire, and secondary data is collected from various websites, journals, articles,
working papers, reports etc. The study is conducted in the Ahmedabad city through a field
survey and google form. Sample size is 250 samples collated form Ahmedabad. A structured
Questioner is open ended and close ended.
Sources of Data:
 For systematic research, information is required from different sources of data.
Primary Data:
Primary data may be described as those data that have been observed and recorded by the
researcher for the first time to their knowledge. Researcher has collected primary data
through close ended questionnaire method, filled by Investors.
Secondary Data:
Secondary data means the data which are readily available from different sources. Researcher
has gathered these data from the websites, books and magazines.
Research Design:
 For gathering primary data, Researcher has used survey approach, which is widely
used method for data collection and best suited for quantitative descriptive type of
research survey.
Research Approach:
 We have collected information through survey of investors.
Research Instrument:
 For present research Researcher has used questionnaire, which is the most, common
instrument used to collect the primary data. A questionnaire consists of the set of
questions presented to the respondents for their answers.
Questionnaire Design:
The questionnaire has been designed using a blend of close ended questions. Close ended
questions are used to facilitate prompt replies where it is perceived that the respondents
would need choices retort over.
Sampling Technique:
Here for research purpose sampling plan is prepared. This plan called for three decisions.
A. Sampling unit
B. Sample size
C. Sampling procedure
A. Sampling Unit:
The sampling units are the Investors. Investors are taken from various region of Ahmedabad
B. Sample size:
For the purpose of research 250 Investors from Ahmedabad city have been surveyed.
C. Sampling procedure:
To obtain representative centre sample of the population should be drawn. Thus, here
nonprobability, convenient sampling method is used for investors.
Analytical Tools:
 Charts & Graphs

 Tabular Presentation
 Chi-square Analysis
CHAPTER 5
QUESTIONNAIRE ANALYSIS AND INTERPRETATION

1) Age:
Age Frequency Percentage

10-20 11 4.4
21-30 176 70.4
31-40 56 22.4
41 and Above 7 2.8
Total 250 100.0
Age
3% 4%
22%
70%
10-20 21-30 31-40 41 and Above

From the above chart we can say that,
 176 respondents out of 250(71%) belongs to age group of 21-30 which is most in
numbers.
 56 respondents out of 250(22%) belongs to age group of 31-40 years.
 11 respondents out of 250(4%) belongs to age group of 10-20 years.
 7 respondents out of 250(3%) belongs to age group of above 40 years which least in
numbers.
2) Gender:
Gender Frequency Percentage
Male 143 57.2
Female 107 42.8
Total 250 100.0
Gender
Female Male
43% 57%
Male Female

 143 out of 250 which is 57% are Male respondents.
 Remaining 107 are Female respondents which is 43%.
3) Marital Status:
Particulars Frequency Percentage
Married 111 44.4
Unmarried 139 55.6
Total M a r i t a250
l Status 100.0
Unmarried 139
Married 111
0 20 40 60 80 100 120 140 160

 139 out of 250 which is 55.6% are Unmarried.
 Remaining 111 are Married which is 44.4%.
4) Occupation:

Salaried 61 24.4
Businessman 53 21.2
Professional 61 24.4
Retired and others 75 30.0
Total 250 100.0
Occupation
Retired and Salaried

others 24%
30%
Busi-
nessman
Pro- 21%
fes-
sional
24%
Salaried Businessman Professional Retired and others

 75 respondents (30%) are Retired and Others.
 61 respondents (24.4%) are Professional.
 61 respondents (24.4%) are Salaried.
 53 respondents (21.2%) are Businessman.
5) Approximately Monthly Income:

Below 20000 65 26.0
20001-30000 110 44.0
30001-40000 65 26.0
40001 and above 10 4.0
Total 250 100.0
Approximately Monthly Income

120 110
100
80
65 65
60
40
20 10
0
Below 20000 20001-30000 30001-40000 40001 and a...

 65 respondents (26%) have Below 20000 monthly income.
 110 respondents (44%) have monthly income between Rs. 20001 to Rs. 30000.
 65 respondents (26%) have monthly income between Rs. 30001 to Rs. 40000.
 10 respondents (4%) have monthly income more than Rs. 40000.
6) What is the purpose of IPO Investment?
What is the purpose of IPO Investment?
41% Listing Gain

Long term Gain
59%
Listing Gain 147 58.8
Long term Gain 103 41.2
Total 250 100.0

 147 respondents (59%) doing investment for listing gain.
 103 respondents (41%) doing investment for long term gain.
What is the source of Information you use before Investing

in IPO?
Friend Advice 34
Expert Opinion 73
7) What Electronic Media 109 is the

source of
Print Media 34
0 20 40 60 80 100 120
Information you use before Investing in IPO?

Print Media 34 13.6
Electronic Media 109 43.6
Expert Opinion 73 29.2
Friend Advice 34 13.6
Total 250 100.0
Categories Frequency Percentage
Promoter’s
64 25.6
background
Sector performance 70 28.0
Performance of
88 35.2
existing companies
Premium Amount 28 11.2
Total 250 100.0

 109 respondents (43.6%) get information through Electronic Media, which is highest
in numbers.
 73 respondents (29.2%) get information through Expert Opinion.
 34 respondents (13.6%) get information through Print Media.
 34 respondents (13.6%) get information through Friend Advice.
8) What do you see before Investing in IPO?

 88
What do you see before Investing in IPO?
11%
26%
35%
28%
Promoters background
Sector performance
Performance of existing companies
Premium Amount
respondents (35.2%) looking for performance of existing company before investing in
IPO.
 70 respondents (28%) looking for sector performance before investing in IPO.
 64 respondents (25.6%) looking for promoter’s background before investing in IPO.
 28 respondents (11.2%) looking for premium amount before investing in IPO, which
is least in numbers.
9) How long are you trading in stock and IPO’s?

Years Frequency Percentage
0year-2years 107 42.8
2years- 5years 110 44.0
5years-10years 29 11.6
10years and above 4 1.6
Total 250 100.0
How long are you trading in stock and IPO’s?
107 110
120
100
80
60
29
40
20 4
0
0year-2years 2years- 5years 5years- 10years and
10years above
 107 respondents (42.8%) are trading in stock in IPO less than 2 years.
 110 respondents (44%) are trading in stock and IPO between 2 years to 5 years, which
is highest in numbers.
 29 respondents (11.6%) are trading in stock in IPO between 5 years to 10 years.
 4 respondents (1.6%) are trading in stock in IPO more than 10 years.
10) How do you come to know about the new IPO listing?
Categories Frequency Percentage
Through Broker 69 27.6
Through Television 76 30.4
Through Newspaper 64 25.6
Through Friend 41 16.4
Total 250 100.0
How do you come to know about the new IPO listing?
16% 28%
26%
30%
From the Through Broker Through Television above

chart we Through Newspaper Through Friend can say
that,
 76 respondents (30.4%) come to know about new IPO listing through television,
which is highest in numbers.
 69 respondents (27.6%) come to know about new IPO listing through broker.
 64 respondents (25.6%) come to know about new IPO listing through news-paper.
 41 respondents (16.4%) come to know about new IPO listing through friend.
11) Factors considered for IPO.

Very Very
High Low
Factors High Neutral Low Total
consider consider
consider consider
Company Goodwill 100 87 39 19 5 250
Market share 42 100 54 51 3 250
Board Member 26 91 17 100 16 250
Future Prediction and Forecast 48 95 10 48 49 250
Size of the IPO Issued 52 70 20 82 26 250
Current Financial Position 43 101 28 63 15 250
Key Share holder 53 99 25 60 13 250
Corporate Governance
40 80 44 70 16 250
Practice
New Project Risk and
56 90 11 82 11 250
Prospects
Legal Matter 43 110 11 60 26 250
Historical Background 46 98 20 62 24 250
Legitimacy 55 99 10 65 21 250
Very Very
High Neutra Low
Factors High Low Total
consider l consider
consider Consider
Company Goodwill 40 34.8 15.6 7.6 2 100
Market share 16.8 40 21.6 20.4 1.2 100
Board Member 10.4 36.4 6.8 40 6.4 100
Future Prediction and Forcast 19.2 38 4 19.2 19.6 100
Size of the IPO Issued 20.8 28 8 32.8 10.4 100
Current Financial Position 17.2 40.4 11.2 25.2 6 100
Key Share holder 21.2 39.6 10 24 5.2 100
Corporate Governance
16 32 17.6 28 6.4 100
Practice
New Project Risk and
22.4 36 4.4 32.8 4.4 100
Prospects
Legal Matter 17.2 44 4.4 24 10.4 100
Historical Background 18.4 39.2 8 24.8 9.6 100
Legitimacy 22 39.6 4 26 8.4 100
Factors considered for IPO.
21
65
Legitimacy 10
99
55
24
62
Historical Background 20
98
46
26
60
Legal Matter 11
110
43
11
82
New Project Risk and Prospects 11
90
56
16
70
Corporate Governance Practice 44
80
40
13
60
Key Share holder 25
99
53
15
63
Current Financial Position 28
101
43
26
82
Size of the IPO Issued 20
70
52
49
48
Future Prediction and Forcast 10
95
48
16
100
Board Member 17
91
26
3
51
Market share 54
100
42
5
19
Company Goodwill 39
87
100
0 20 40 60 80 100 120
Very Low Consider Low consider Neutral

High consider Very High
consider

 100 Respondents which is (40%) are Very High Considering Company Goodwill for
IPO.
 3 Respondents which is (1.2%) are Very Low Considering Market Share for IPO.
 91 Respondents which is (36.4%) are High Considering Board of Members for IPO.
 10 Respondents which is (4%) are Neutral about Future Prediction and Forecast for
IPO.
 82 Respondents which is (32.8%) are Low Considering Size of the IPO Issued for
IPO.
 101 Respondents which is (40.4%) are High Considering Current Financial Position
for IPO.
 13 Respondents which is (5.2%) are Very Low Considering Key Share holder for
IPO.
 44 Respondents which is (17.6%) are Neutral about Corporate Governance Practice
for IPO.
 56 Respondents which is (22.4%) are Very High Considering New Project Risk and
Prospects for IPO.
 26 Respondents which is (10.4%) are Very Low Considering Legal Matter for IPO.
 62 Respondents which is (24.8%) are Low Considering Historical Background for
IPO.
 10 Respondents which is (4%) are Neutral about Legitimacy for IPO.
12) Do you go by the grading before Investing?
Yes 202 80.8
No 48 19.2
Total 250 100.0
Do you go by the grading before Investing?

19%
81%
Yes No
 202 Respondents which is (80.8%) are grading before Investing.
 48 Respondents which is (19.2%) are not grading before Investing.
13) How much percentages have you gained on IPO listing?

Up to 10% 72 28.8
10% - 15% 126 50.4

15% - 20% 47 18.8
20% and above 5 2.0

Total 250 100.0
How much percentages have you gained on IPO listing?
140 126
120
100
72
80
60 47
40
20 5
0
Up to 10% 10% - 15% 15% - 20% 20% and above

 72 Respondents which is (28.8%) gained up to 10% from IPO listing.
 126 Respondents which is (50.4%) gained 10% to 15% from IPO listing, which is
highest in numbers.
 47 Respondents which is (18.8%) gained 15% to 20% from IPO listing.
 5 Respondents which is (2%) gained 20% and more from IPO listing.
14) How do you feel about the procedure for IPO’s?

Easy 85 34.0
Complicated 79 31.6
Difficult 59 23.6
Lengthy 27 10.8
Total 250 100.0
How do you feel about the procedure for IPO’s?

Lengthy
11%
Easy
Difficult 34%
24%
Complicated
32%

 85 Respondents which is (34%) say that the procedure for IPO’s is easy.
 79 Respondents which is (31.6%) say that the procedure for IPO’s is complicated.
 59 Respondents which is (23.6%) say that the procedure for IPO’s is difficult.
 27 Respondents which is (10.8%) say that the procedure for IPO’s is lengthy.
15) What difficulties did you face after applying IPO’s?

Refund Problem 28 11.2
No Clarity in allotment 58 23.2
Delay in crediting allotted

shares to your Demat 54 21.6
Account
None of the above 110 44.0

Total 250 100.0
What difficulties did you face after applying IPO’s?
None of the above 110
Delay in crediting allotted shares to your demat 54

Account
No Clarity in allotment 58
Refund Problem 28
0 20 40 60 80 100 120

 28 Respondents which is (11.2%) say that there is Refund Problem after applying in
IPO’s.
 58 Respondents which is (23.2%) say that there is No Clarity in Allotment after
applying in IPO’s.
 54 Respondents which is (21.6%) say that there is Delay in crediting allotted shares to
your Demat Account after applying in IPO’s.
 110 Respondents which is (44%) say that there is No Any kind of Difficulties after
applying in IPO’s , Which is highest in numbers.
16) You always take the help of a broker while investing in IPO.

Strongly Agree 32 12.8
Agree 72 28.8
Neutral 66 26.4
Disagree 50 20.0
Strongly Disagree 30 12.0
Total 250 100.0
You always take the help of a broker while investing in

IPO.
12% 13%
20%
29%
26%
Strongly Agree Agree Neutral

Disagree Strongly Disagree

 32 Respondents which is (12.8%) are Strongly agree to take help of a broker while
investing in IPO.
 72 Respondents which is (28.8%) are Agree to take help of a broker while investing in
IPO.
 66 Respondents which is (26.4%) are Neutral to take help of a broker while investing
in IPO.
 50 Respondents which is (20%) are Disagree to take help of a broker while investing
in IPO.
 30 Respondents which is (12%) are Strongly Disagree to take help of a broker while
investing in IPO.
17) Is it better to invest in IPO or Pick the same stocks on listing?

Invest in IPOs 74 29.6
Pick the same stock on
48 19.2
listing
Partly invest in IPO and

77 30.8
pick the stock on listing
Wait sometime after

51 20.4
listing
Total 250 100.0
Is it better to invest in IPO or Pick the same stocks on list-

ing?
74 77
80
70
60 48 51
50
40
30
20
10
0

 74 Respondents which is (29.6%) say that Invest in IPO’s is better.
 48 Respondents which is (19.2%) say that Pick the same stock on listing is better.
 77 Respondents which is (30.8%) say that Partly invest in IPO and pick the stock on
listing is better, which is highest in numbers.
 51 Respondents which is (20.4%) say that Wait sometime after listing is better.
CHAPTER 7
HYPOTHESIS TESTING
OCCUPATION AND COMPANY GOODWILL:
H0: There is no significance relation between occupation and company goodwill.
H1: There is significance relation between occupation and company goodwill.
Occupation * Company Goodwill Crosstabulation

Count
Company Goodwill
Very high
Not Consider Low consider High consider consider Total
Occupation Salaried 0 7 23 31 61
Businessman 1 2 25 25 53
Professional 0 4 22 35 61
Retired and others 4 6 17 48 75
Total 5 19 87 139 250
Chi-Square Tests
Asymptotic
Significance
Value df (2-sided)
Pearson Chi-Square 16.533a 9 .057
Likelihood Ratio 17.938 9 .036
Linear-by-Linear .469 1 .494
Association
N of Valid Cases 250
Interpretation:
 The Above Analysis represents that there is significant relation between Occupation and
Company Goodwill.
 From Above Table We can see that significant level is not less than 0.05 so alternative
hypotheses is accepted.
APPROXIMATE MONTHLY INCOME AND CURRENT FINANCIAL POSITION:
H0: There is no significance relation between approximate monthly income and current
financial position.
H1: There is significance relation between approximate monthly income and current financial
position.
Approximately monthly income * Current Financial Position Crosstabulation

Count
Current Financial Position
Very high
Not Consider Low consider High consider consider Total
Approximately monthly Below 20000 3 19 31 12 65
income 20001-30000 5 21 61 23 110
30001-40000 6 17 35 7 65
40001 and above 1 6 2 1 10
Total 15 63 129 43 250
Chi-Square Tests
Asymptotic
Significance
Value df (2-sided)
Pearson Chi-Square 14.182a 9 .116
Likelihood Ratio 13.631 9 .136
Linear-by-Linear 3.422 1 .064
Association
N of Valid Cases 250
Interpretation:
 The Above Analysis Represents that there is significant relation between approximate
monthly income and current financial position.
WHAT IS THE PURPOSE OF IPO INVESTMENT? * COMPANY GOODWILL:
H0: There is no significance relation between What is the purpose of IPO investment and
Company Goodwill.
H1: There is significance relation between What is the purpose of IPO investment and
Company Goodwill.
What is the purpose of IPO investment? * Company Goodwill Crosstabulation

Count
Company Goodwill
Not Low High Very high
Consider consider consider consider Total
What is the Listing 4 6 51 86 147
purpose of Gain
IPO Long 1 13 36 53 103
investment? term
Gain
Total 5 19 87 139 250
Chi-Square Tests
Asymptotic
Value df Significance
(2-sided)
Pearson
7.281a 3 0.063
Chi-Square
Likelihood
7.293 3 0.063
Ratio
Linear-by-
Linear 1.700 1 0.192
Association
N of Valid
250
Cases
Interpretation:
 The Above Analysis represents that there is significant relation between What is the
purpose of IPO investment and Company Goodwill.
WHAT IS THE SOURCE OF INFORMATION YOU USE BEFORE INVESTING IN
IPO? * SIZE OF THE IPO ISSUED:
H0: There is no significance relation between What is the source of information you use
before investing in IPO and Size of the IPO issued.
H1: There is significance relation between What is the source of information you use before
investing in IPO and Size of the IPO issued.
What is the source of information you use before investing in IPO? * Size of the IPO
Issued Crosstabulation
Count
Size of the IPO Issued
Not Low High Very high Total
Consider consider consider consider
What is the Print Media 6 10 10 8 34
source of Electronic
information 7 30 40 32 109
Media
you use Expert
before 6 30 29 8 73
Opinion
investing in Friend
IPO? 7 12 11 4 34
Advice
Total 26 82 90 52 250
Chi-Square Tests
Asymptotic
(2-sided)
Pearson
19.268a 9 0.023
Chi-Square
Likelihood
18.986 9 0.025
Ratio
Linear-by-
Linear 4.997 1 0.025
Association
N of Valid
250
Cases
Interpretation:
 The Above Analysis represents that there is significant relation between What is the
source of information you use before investing in IPO and Size of the IPO issued.
WHAT DIFFICULTIES DID YOU FACE AFTER APPLYING IPO’S? *
CORPORATE GOVERNANCE PRACTICES:
H0: There is no significance relation between What difficulties did you face after applying
IPO’s and corporate governance practices.
H1: There is significance relation between What difficulties did you face after applying
IPO’s and corporate governance practices.
What difficulties did you face after applying IPO’s? * Corporate Governance
Practices Crosstabulation
Count
Corporate Governance Practices
Not Low High Very high Total
Consider consider consider consider
What Refund
1 9 13 5 28
difficulties Problem
did you No Clarity
face after in 4 18 25 11 58
applying allotment
IPO’s? Delay in
crediting
allotted
shares to 4 14 29 7 54
your
demat
Account
None of
7 29 57 17 110
the above
Total 16 70 124 40 250
Chi-Square Tests
Asymptotic
(2-sided)
Pearson Chi-
2.562a 9 0.979
Square
Likelihood
2.634 9 0.977
Ratio
Linear-by-
Linear 0.000 1 1.000
Association
N of Valid
250
Cases
Interpretation:
 The Above Analysis represents that there is significant relation between What
difficulties did you face after applying IPO’s and corporate governance practices.
CHAPTER 7
FINDINGS
FINDINGS
• From the age perspective, 176(70.40%) investors age between 21-30 years.
• From the gender wise, 143(57.2%) respondents are male investors.
• From the marital status perspective, 139(55.6%) investor are unmarried.
• From the occupation wise, 75(30%) investors are retired and others.
• From the annual income group wise, 110(44%) investors monthly income between
Rs. 20,001 to Rs. 30,0000.
• 147 (58.8%) investors are investing for the purpose of listing gain.
• 109 (43.6%) investors use electronic media as a source of information for investment.
• 88 (35.2%) investor’s looks for performance of existing companies before investing.
• 110 (44%) investors are trading in IPO from 2 years to 5 years.
• Through television 76 (30.4%) investors come to know about IPO.
• 100 (40%) respondents are considering very high factor of Company Goodwill for
IPO.
• 91(36.4%) respondents are high considering Board of Members as a factor for IPO.
• 10 (4%) respondents are neutral about Future Prediction and Forecast for IPO.
• 82(32.8%) respondents are low considering Size of the IPO Issued for IPO.
• 101(40.4%) respondents are high considering Current Financial Position for IPO.
• 13(5.2%) respondents are very low considering Key Share holder for IPO.
• 44(17.6%) respondents are neutral about Corporate Governance Practice for IPO.
• 56(22.4%) respondents are very high considering New Project Risk and Prospects for
IPO.
• 26(10.4%) respondents are very low considering Legal Matter for IPO.
• 62(24.8%) respondents are low considering Historical Background for IPO.

• 10(4%) respondents are Neutral about Legitimacy for IPO.
• 202(80.8%) respondents are grading before investing in IPO.
• 126(50.4%) respondents gained 10% to 15% from IPO listing.

• 85(34%) respondents say that the procedure for IPO’s is easy.
• 72(28.8%) respondents are taking help of a broker while investing in IPO.
• 77(30.8%) respondents say that partly invest in IPO and pick the stock on listing is
better.
CHAPTER 8
LIMITATION OF THE STUDY

LIMITATION:
For the purpose of study and present report data was collected and interpreted with utmost
reliability in consistency but still there are various limitation which are as follows:
 The data given by the respondents are subjective matter and may change from person
to person as a result generalization made may not be universally acceptable.
 The study depicts the present scenario in Ahmedabad city and result may vary from
city to city.
 Data of the questionnaire depends upon the beliefs and partiality of investors and may
be respondent bias.
 May the data have given by the respondents are incorrect.
 The study is limited to only 250 responses only.
 The present study is restricted to information collected about Decision of Individual

Investors with regard to IPOs with the help of questionnaire.
 The study is always subject to time horizon, after a period of time newly collected
data may so differently results.
CHAPTER 9
CONCLUSION
CONCLUSION:
 The present study is an in-depth study of investment decisions of individual investors

with regards to IPOs was done and analysis has been made with the help of various
statistical tools. The collected data have been interpreted and then the following
conclusions have been drawn.
 From finding I found that majority of investors are male and they are young and
educated.
 Most of the traders are retired and others & their monthly income between Rs.20,001
to 30,000, and their trade experience in investment are between 2 years to 5 years.
 I concluded that majority investors are knowing about new IPO listing with the help
of television and they look for the performance of existing company before investing
in it.
 Majority of investors are highly considered company goodwill and key shareholders
as well as size of IPO and they also highly concern with the market share and legal
matters along with new project risk and prospects.
 Majority of investors are observed current financial position as factor to be considered

and also observed that they are not worry about future prediction and forecast.
 Majority of investors feel the procedure of IPO is easy but some faces the problem of
clarity in allotment after applying for IPO.
 Majority of investors agree to take broker advice while investing in IPO and they also
do partly investment in IPO and pick the stock on listing.
CHAPTER 10
REFERENCES
REFERENCES:
 Agarwal (2002) study Initial Public Offerings (IPOs) in India.

 Alweraz and Gonzalez (2001) analyze all the Spanish Initial Public Offerings (IPOs)
during the period 1987-1997.
 Chopra (2009) analyzed long and short performance of Indian IPO.
 Datta (1997) price performance of corporate straight debt IPOs
 Divya (2010) IPOs of various companies adopting the book-building route also face
underpricing
 Drobetz et al. (2005) analyses the underpricing for Swiss IPOs.
 Giudici and Paleari (2001) study of the most recent IPOs.
 Gompers and Lerner (2001) analyzed the performance for underperform the market.
 John and Kumar (2010) determined the Indian IPO market
 Khurshed et al. (1999) UK evidence on long-run performance of IPOs.
 Kooli and Suret (2001) analyzed the aftermarket performance of initial public
offerings in Canada.
 Krishnamurti etal(2002) in their study analyses the IPOs issued in the period from
1990- 2000.
 Krishnamurti (2002) analyses sample of IPOs issued during the period from 1988 to
1994.
 Kumar (2010) research paper.
 Majum (2003) analyses a sample size of 628 IPO issued in the time from 1992 -
1994.
 Panday (2004) paper analyzed that Indian IPO market.
 Rajan et al (1997) study analyses a sample of IPOS which were issued during the
time from 1975 and 1987.
 Sahoo and Rajib IPOs underperform.
 Vaidyanathan (2003) study analyses the pricing of IPOs in the NSE
WEB SITES:
https://www.investopedia.com/terms/i/ipo.asp
https://en.wikipedia.org/wiki/National_Stock_Exchange_of_India
https://en.wikipedia.org/wiki/Stock_market
https://www.nirmalbang.com/knowledge-center/all-about-equity-market.html
https://www.angelbroking.com/research/fundamental-research/latest-ipo
https://www.mbaknol.com/business‐finance/features‐of‐option‐contract/
https://www.indianivesh.in/kb-blog/what-is-ipo
https://en.wikipedia.org/wiki/Initial_public_offering
https://www.moneycontrol.com/glossary/ipo/what-is-an-introduction_831.html
https://www.5paisa.com/school/introduction-to-stock-market
ANNEXURE-I
QUESTIONNAIRE
Dear Sir/Madam,
We are pursuing MBA at Gandhinagar Institute of Technology, approved by

AICTE and affiliated to Gujarat Technological University, Ahmedabad. As a part
of our Comprehensive Project (MBA Semester-IV), we have prepared a brief
questionnaire. We solicit your help for the same. We assure you that the
information provided by you will be used for academic purposes only and will not
be divulged to anybody.
Thanking you for your valuable time.
Ms. Hiral Savlani(197150592056) & Mr. Ankit Koshti(197150592026)
DEMOGRAPHIC DETAILS OF INVESTORS
1. Name:
2. Age: ☐10-20
☐20-30
☐30-40
☐41 & above
3. Gender ☐ Male
☐ Female
☐ Others
4. Marital Status ☐ Married
☐ Unmarried
5. Occupation ☐ Salaried
☐ Businessman
☐Professional
☐Retired & others
6. Approximately Monthly ☐Below 20000
☐20001-30000
☐30001-40000
☐Above 40000
PRIMARY DATA
7. What is the purpose of IPO investment?
☐Listing Gain
☐Long Term Gain
8. What is the source of information you use before investing in IPO?
☐Print Media
☐Electronic Media
☐Expert Opinion
☐Friend Advice
9. What do you see before investing in IPO?
☐Promoters Background
☐Sector Performance
☐Performance of existing companies
☐Premium Amount
10. How long are you trading in stock & IPO?
☐0 years- 2 years
☐2 years- 5years
☐5yeras- 10 years
☐10 years & above
11. How do you come to know about new IPO listing?
☐Through Broker
☐Through Television
☐Through Newspaper
☐Through Friend
12. Factors considered for IPO.
Very High High Neutral Low Very Low

Consider Consider Consider Consider
Company
Goodwill
Market Share
Board
Members
Future
Prediction &
Forecast
Size of IPO
issued
Current
Financial
Position
Key
Shareholders
Corporate
Governance
Practices
New Project
Risk &
Prospects
Legal
Matters
Historical
Background
Legitimacy
13. Do you go by the grading before investing?
☐Yes
☐No
14. How much percentage have you gained in IPO listing?
☐Up to 10%
☐10%- 15%
☐15%- 20%
☐20% & Above
15. How do you feel about the procedure of IPO?
☐Easy
☐Complicated
☐Difficult
☐Lengthy
16. What difficult you face after applying IPO’s?
☐Refund problem
☐No clarity in allotment
☐Delay in crediting allotment shares to demat account
☐None of the above

17. You always take the help of broker while investing in IPO?
☐Strongly Agree
☐Agree
☐Neutral
☐Disagree
☐Strongly disagree
18. Is it better to invest in IPO or pick the same stocks on listing?
☐Invest in IPO’s
☐Pick the same stock on listing
☐Partly invest in IPO & pick the stock on listing
☐Wait sometime after listing

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OBJECTIVE OF THE STUDY:

 To identify the level of awareness among investors regarding IPO investment.

INTRODUCTION OF STOCK MARKET

1. Negotiate the best price for the trade.

3. Take delivery of securities purchased.

PROCEDURE OF SECURITIES TRADING:

2. Opening an Account with the Broker

4. Selection of Time for Trading

6. Preparation of Contract Note

MAJOR STOCK EXCHANGES IN INDIA:

BSE AND NSE:

DIFFERENT MARKET PARTICIPANTS:

 Domestic Retail Participants-These are individuals who transact in the markets.

REGULATOR OF THE INDIAN STOCK MARKET:

Depository and Depository Participants:

National Security Clearing Corporation Ltd (NSCCL) and Indian Clearing

WHO CAN INVEST IN INDIA?

Foreign institutional investors mainly consist of mutual funds, pension funds,

INTRODUCTION OF IPO INVESTMENT

HISTORY OF INITIAL PUBLIC OFFERINGS (IPOS):

REASON FOR LISTING IPO:

OBJECTS OF THE OFFERING NEW IPO:

ADVANTAGES & DRAWBACKS OF IPO:

• Low cost financing

• No commitment of fixed returns

• No restrictions attached to financing

• No issues such as mortgaging, hypothecation etc.

• Entire money received in one stroke without linking to any milestones

• No issues with returning of finance

• Success of IPO has an element of risk.

• IPO can only finance part of the project

• IPO performance post listing has also bearing.

FACTORS DECIDING IPO PRICE:

 Promoters and their background.

IPO INVESTMENT STRATEGIES:

2) GATHER KNOWLEDGE: It would be beneficial to gather as much knowledge as

3) INVESTIGATE BEFORE INVESTING: The prospectus of the company can serve as a

FACTORS BY CONSIDERED WHILE INVESTING IN IPO:

Check company background

Future prospects of the company

Look at the Valuation

Always read the prospectus

RECENTLY LISTED IPO:

 Heranba Industries IPO Details:

IPO Opening Date Feb 23, 2021

IPO Closing Date Feb 25, 2021

Issue Type Book Built Issue IPO

Face Value ₹10 per equity share

IPO Price ₹626 to ₹627 per equity share

Market Lot 23 Shares

Min Order Quantity 23 Shares

Listing At BSE, NSE

Fresh Issue Eq Shares of ₹10

Offer for Sale 9,015,000 Eq Shares of ₹10

 RailTel IPO Details:

IPO Opening Date Feb 16, 2021

IPO Closing Date Feb 18, 2021