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2024, International journal of applied research
A well-developed capital marked is the backbone of any economy. Its growth depends on active issuing companies and even the investors. Initial Public Offer (IPO) is one of the most popular techniques of raising capital by companies. The number of IPOs and the amount raised through them is on the rise over the years. Investors consider IPOs as a good option to earn financial gains in quick time. They take advantage of the difference in the issue price fixed during IPO and the price on the listing day. However all IPOs do not fetch higher price on the listing day. In the secondary market also, the issued shares generate fluctuating returns in short term and long term. The research paper studies all mainboard IPOs issued in the year 2021. It also analyses the performance of these IPOs on listing day, and even over two years.
The government institutions and corporate companies raise finance through debt and/ or equity. The unlisted companies can issue shares through Initial Public Offering (IPO) from the primary market. It is an opportunity for these companies which are planning to expand, diversify, and grow with better future business prospects. For an investor holding shares issued through IPO can consider it as a mere speculative opportunity in short term or an opportunity to earn high dividends with capital appreciation in the long run. The study attempts to evaluate the value of share premium and pricing on listing day, assess progressive growth of IPO return. Further the study compares short-term performance with the long-term performance of IPO returns using Wilcoxon Signed Rank Test. The sample includes twenty-six companies issued IPOs that were successfully listed in the year 2016. The study considered a period of three years from the date of issue for analysis, i.e., 2016 to 2019. The study found that return on IPO fluctuated during the study period. Among the select sample, twenty IPOs have provided returns on the listing day. The IPOs traded on the stock exchange are found to be promising in long term when compared to short term period. It is also found that the companies that have overpriced issue price have failed to grow during the study period. This study acknowledges the fact that holding investment for a longer period provides an opportunity to earn higher returns. The study suggests the investors to hold investment for more than one year for better returns. Further the investors can sell the shares that are overpriced by the end of the listing day to minimize the losses.
Asian Journal of Empirical Research, 2018
The research is aimed at the short term IPO returns that are issued on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The evaluation of IPO is done on the basis of the returns generated on the day of issue, 10 and 30 days after the day of issue. The significance of this paper can be realized from the fact whether the return generated in short term in comparison to the market are more or less i.e. the IPO has outperformed the index as a benchmark. The study includes a sample of 28 IPO`s issued from the year 2013 to 2015. The results showed that the mean % performance of IPO on the day of issue, 10 and 30 days after the day of issue is 9%, 10% and 10% respectively for NSE and 8%, 9% and 14% respectively for BSE. The above results are also supported with relative valuation index which thus brings us to a very important conclusion that the Indian Stock market provides significant returns within 30 days from the date of issue of share.
Shanlax International Journal of Management/Shanlax international journal of management, 2024
The pricing of IPO's in the short-term has been analyzed by several theoretical and empirical studies referring to the world's major stock markets. Studies have also observed that IPOs cause increase in price considerably on the first day of trading and provide huge returns to investors who buy at the initial offer price and sell immediately in the secondary market. This research presents the results of the analysis related to the short-term performance of the Indian IPOs under study. Event study methodology is used to analyze the short term performance of IPOs from January 2016 to December 2022 issued in Bombay Stock Exchange (BSE), India. The average positive return on the listing day is 18.5 percent which indicates that the IPOs are underpriced.
Sage, 2012
This paper examines the performance of 648 initial public offerings (IPOs) listed on the Bombay Stock Exchange (BSE) from June 1992 to March 2002 over a five-year period. Voluminous research across the world suggests that IPOs unanimously witness very high returns in the short run; as opposed to it, the long-run performance of IPOs does not observe any ubiquitous pattern and this paper is an attempt to draw conclusions about the performance of IPOs in India. In order to get robust conclusions on IPO performance, the patterns of IPO performance have been analyzed for 60 months subsequent to listing. Furthermore, the study attempts to find out the factors that determine the performance of Indian IPOs.
Cogent Economics and Finance , 2018
This study examines listing day performance of IPOs, book-built and fixed-price IPOs, post-listing aftermarket performance of IPOs, book-built and fixed-price IPOs in the Indian stock market. We examine pricing as well as long run performance of 464 (365 book-built IPOs and 99 fixed-price IPOs) Indian IPOs that went public between 2001 and 2011. The study covers 15 years from the financial year 2001 to 2015. Analysis of the results reveals that compared to fixed-price IPOs, book-built IPOs are underpriced by lesser magnitude. Moreover, book-built IPOs are associated with negative cumulative average abnormal returns (CAARs) up to five years and beyond, the negative CAARs associated with fixed-price IPOs turn positive after one and one-half year and continue to be positive thereafter.
Most widely view of investors in Initial Public Offerings (IPOs) is underpriced. However, literature including international studies witnessed IPOs underpriced in short run and overpriced in long run. While investor expects only positive returns from their each investment and therefore, knowledge and understanding about IPOs in short and long run is required. This study aimed at long run performance of select Indian IPOs. Total sample of n=50 from population 373 was finalized which are large volume and actively traded on National Stock Exchange (NSE) from the period of 2006-2011 was considered. Findings: From the analysis using Wealth relative and BHAR computation it is clear that highest gains observed in Finance-Term Lending Institutions sector among select sectors whereas, highest losses observed in Real Estate, Construction & Contracting sector. There is a difference in the calculated values of Wealth relatives and BHAR. However, these values indicate same sign (Positive/Negative) in the results but calculated values of same IPO using BHAR observed with higher value than Wealth Relative.
2012
The published work relating to the topic is reviewed by the Researcher. The relevant literature is reviewed on the basis of Books, Periodicals, News Papers and Websites. The detailed review is given below:-Arwah Arjun Madan (2003), in his article 'Investments in IPOs in the Indian Capital Market', published in Bimaquest conclude that in the long run (five-year after listing), there is a drastic fall in the return on IPOs returns; returns are found to be negative from the second to the fifth year of listing. Anand Adhikari (2010), "New Listings -Pied Pipers of Primary Market" published in Business Today point out that companies with unique business models got listed in the year 2009-10 and made their investors rich. Atul Mehra (2010) "IPO Boom", Business Today, point out that promoters are in hurry to IPO because they do not want to be left out.
VIKALPA, 2010
This paper is motivated by the apparent belief that IPOs are underpriced on the initial listing day and thereafter underperforms compared to the market benchmark. While evaluation of the listing day performance seems straightforward on surface, it actually invokes several ...
In this paper, we studied a variety of issues -especially long term performance -pertaining to 184 IPOs in India during April 2001 and March 2009. We found that there is, on the average only, significantly positive return on the listing-day and the day following that, which gets reversed -but not annulled -within ten days. When we group the firms into two groups based on whether they yielded positive or negative absolute return, many new insights are obtained. Not only does the 50%-plus day-0 average Ri for the former group is in sharp contrast with the -14% day-0 Ri for the latter, but we found that the positive group does not gain anything from an up-market preceding the IPO, whereas a down-market is a major cause for the poor listing-day performance of the negative group. Positive-group IPOs also experience significant intra-day volatility in the after-market up to thirty days and it is the reverse for the negative group; but, whereas the negative group's day-0 Ri is related to its post-IPO standard-deviation of returns in the after-market, they are unrelated for the positive group. Even the average holding-period return of the negative group (starting day-1, not day-0) becomes significant only after four years, while it is positive throughout for the positive group. Corresponding CARs -from day-1 onwards -continue to be positive for the positive group throughout and negative for the negative group up to two years, becoming statistically zero thereafter. Overall, in the long-run, however, a random IPO portfolio only yields a return equal to the market, if we ignore the day0 abnormal return. Unlike most other studies, we adjusted for risk of an IPO by taking its post-issue risk, assuming that the market had rationally anticipated how risky a share would be after the IPO. We measured risk by the CAPM-Beta, LPM (Lower Partial Moment)-Beta, Variance Ratio, and LPM 2 (LPM of Order 2)-Ratio. We measured abnormal return by CAR (Cumulative Abnormal Return), where AR (Abnormal Return) was determined in a variety of ways, using the above risk measures -not all of which have been traditionally used by other researchers -and different models like the Market Model, CAPM, and LPM-CAPM.
The main objective of this research paper is to examine the short run performance of IPOs by taking one-month performance. There exists a notion that the performance of IPO stocks has improved in the short run after going public. In this study, the data for short run analysis are taken for 30 days. We try to test the empirically the short run performance for a sample of 89 IPO firms that approached the market during the period 2006-09. We have calculated listing gain, short run gain, short run excess gain and Index growth. We have used a logistic regression model to test the basic hypothesis, with the help of data on 89 IPOs, from the Indian stock market. The study uses pre-listing information on which IPO pricing is based. In this paper we have seen that many of the IPOs have significant returns on the day of listing but thereafter they do not give much return in the short-run, it shows that market overreacts to the initial public offers.
The scope of the present study is to find out how far the publicly available information 1 is being used by the IPO firms and IPO investors. The models designed in the study all are based on publicly available information. The study period is from the year 2004 to 2013. It is based on a sample of 200 IPOs issued during the study period. The objectives of the study are: to see the relationship between long run and short run returns of IPOs and find out the determinants of long run returns of IPOs.
The robust economic growth achieved by the Indian Economy in the post reform period attracted lot of interest from foreign institutions which stimulated strong performance of the Indian Capital market. This has led to large influx of primary issues, as promoters wanted to take advantage of booming market. With Indian economy is slowing down for last three years and the surge in gold prices, it is imperative to know the performance of Indian IPOs which came in market during this period. The paper deals with the analysis of performance of Initial public offers which were offered to public through Bombay Stock Exchange, in-between July 2010 to June 2013 are studied. Sector wise performance of these IPOs that is appreciation in price over and above issue price in secondary market over a period from six to thirty-six months is studied. (key words –Initial public offerings, performance, listing gain)
Initial Public Offers (IPOs) market is considered to be the safest way to invest in the stocks and it also assures profits due to underpricing. Therefore, it attracts every type of investors and very particularly the retail investors. However, gaps do appear in perceived profits and the actual profits. Expectations have been built around some sector stocks such as Public sector – considered as safe bet; Petrochemical and Infrastructure sector stocks – for assured long term appreciation; Finance and IT sector for quick profits, etc. This study is an attempt to capture the performance of IPOs across different sectors, over different time frames, to identify the performing sectors and the effect of the non-performing IPOs. Our results indicate that public sector stocks outperform all other sector stocks during short as well as long term period. Manufacturing sector stocks appear to be least performing stocks during short as well as long term duration. Further, if non-performing IPOs could be checked out, there would be substantial gains for the investors. We expect our study to serve as a guiding tool for retail investors to enable them to focus their investments.
2016
This study has examined the IPO performance in India from 2007 to 2013. Results show that under-pricing exists in the first day of trading during the particular period, but results show that the degree of under-pricing is dramatically decreased in comparison with what is shown in previous studies. The study finds that the IPOs are influenced by its issue variables. The face value of the shares and oversubscription subscription of the share are highly affected factor for underpriced in initial day of listing. After 36 months of listing the IPOs are underperformed by 29.06 percent and market capitalisation of the firm, issue premium of the share, face value of the share, issue price, and oversubscription of IPOs are highly influencing IPOs performance in long run. The study has considered 146 companies for identifying the factors influencing the Initial Public Offerings (IPO) in the Bombay Stock Exchange (BSE), India. KEywORDS: Face Value, India, Initial Public Offering, Issue Size, O...
2016
In this paper, we examine the Long-run performance of initial public offerings (IPOs). The data has been taken for 31 IPOs from the year 2000 to 2003. We have used Logistic Regression Model through SPSS Version 16 to test for the relationship between long run performance of IPOs and short run performance variables of the company. The analysis shows that the long run variables have no relationship with short-run variables or else have negative relationship. With some of the variables it has positive relationship. It shows anomaly. The companies having listing gain have negative current ratio, debt equity ratio and return on net worth and the companies having short-run gain has negative current ratio and debt equity ratio. The theory supports the view that for IPO markets to be efficient there should be low listing gain, moderate short-run gain and high long-run gain. Only then there will be long term development of IPO market. But the actual situation is opposite. The companies have listing gain, short-run gain but they are not able to give long run gain.
Paripex Indian Journal of Research, 2013
Many studies have documented that Initial Public Offerings (IPOs) of equity are substantially underpriced. This paper provides evidence on comparison of under pricing in India with the help of the whole population of firms that went public between 2004 and 2008. Since the Indian economy was liberalized in the early ‘90s, India has seen a tremendous growth of its capital markets with close to 5,000 Initial Public Offerings (IPOs), second only to the United States of America. It is found that a significant number of companies earn large positive returns on the first day of listing. It is reported that on an average the Indian IPOs are underpriced to the tune of 32.30 per cent on the listing day. It has been found that the positive initial return persists for 72.92 per cent of the total IPOs. Descriptive Statistics like Mean, Median and Standard deviation and interferential test like Kruskal Wallis and Mann Whitney U test have been used for comparison of IPOs based on their IPOs issue size, based on their sector, based on type of ownership, based on type of activity period and based on year of issuance. Evidence is found that, underperformance is not influenced by offer size, sector, ownership and timing of issue. Whereas, under performance is influenced by Year of issuance.
International Journal of Corporate Finance and Accounting, 2016
This study has examined the IPO performance in India from 2007 to 2013. Results show that under-pricing exists in the first day of trading during the particular period, but results show that the degree of under-pricing is dramatically decreased in comparison with what is shown in previous studies. The study finds that the IPOs are influenced by its issue variables. The face value of the shares and oversubscription subscription of the share are highly affected factor for underpriced in initial day of listing. After 36 months of listing the IPOs are underperformed by 29.06 percent and market capitalisation of the firm, issue premium of the share, face value of the share, issue price, and oversubscription of IPOs are highly influencing IPOs performance in long run. The study has considered 146 companies for identifying the factors influencing the Initial Public Offerings (IPO) in the Bombay Stock Exchange (BSE), India.
International Journal of Asian Business and Information Management, 2015
The authors analyze 146 Indian Initial Public Offerings (IPOs) that were listed in Bombay Stock Exchange (BSE) between January 2007 and December 2009. The units of the sample are selected on the basis of companies available in the Indian stock market for three years for calculating short-term and long-term returns. The evidence suggests that the IPOs are initial day underpriced by 4.25 per cent and underperformed by 29.06 per cent after 36 months of listing. The study also finds that issue variables are highly influencing the IPOs performance in short run and long run but age of the company doesn't have any influence on its performance during the study period. The JEL classifications are G12, G14, G24, and G32.
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