PERFORMANCE
OF RECENT INDIAN IPOs
OF RECENT INDIAN IPOs
Sudindra
V R
V R
1.
INTRODUCTION:
INTRODUCTION:
Initial
public offerings (IPO’s) have generated gigantic amount of public interest in
the last few decades. Three basic anomalies in Initial public offerings are
short term underpricing of IPO’s, issue market and long run performance. It is
observed that the issuers offer shares to investors at price considerably below
the listing day price. The phenomena
exist in both developing and developed countries. If the issues are
underpriced, IPOs will be oversubscribed and overpriced, IPOs will be
undersubscribed.
public offerings (IPO’s) have generated gigantic amount of public interest in
the last few decades. Three basic anomalies in Initial public offerings are
short term underpricing of IPO’s, issue market and long run performance. It is
observed that the issuers offer shares to investors at price considerably below
the listing day price. The phenomena
exist in both developing and developed countries. If the issues are
underpriced, IPOs will be oversubscribed and overpriced, IPOs will be
undersubscribed.
2.
OBJECTIVE
OF THE STUDY:
OBJECTIVE
OF THE STUDY:
The
main objective of the study is to measure the IPO’s initial performance on first
day of trading against the market performance (Nifty)
main objective of the study is to measure the IPO’s initial performance on first
day of trading against the market performance (Nifty)
3.
METHODOLOGY:
METHODOLOGY:
For
the purpose of study the sample of all Indian firms which went to public on the
Stock exchange for the period of May 2015 to May 2016. Secondary data has been
used to collect the data related to pre issue and listing and closing price of
firms collected from NSE websites. Measure of underpricing: Firstly we calculate the Return on security,
Index return and market adjusted abnormal return for each IPOs to analyze
whether initial performance of the IPO relative to market.
the purpose of study the sample of all Indian firms which went to public on the
Stock exchange for the period of May 2015 to May 2016. Secondary data has been
used to collect the data related to pre issue and listing and closing price of
firms collected from NSE websites. Measure of underpricing: Firstly we calculate the Return on security,
Index return and market adjusted abnormal return for each IPOs to analyze
whether initial performance of the IPO relative to market.
Equation
1: Ri = (P1-P0)/P0 whereas
Ri returns on the IPO stock,
P1 closing price of
1: Ri = (P1-P0)/P0 whereas
Ri returns on the IPO stock,
P1 closing price of
Stock on the day of listing, P0 offer
price of IPO
price of IPO
Equation
2: Mi = (I1-I0)/I0 whereas Mi returns on the Nifty, I1 closing
price of
2: Mi = (I1-I0)/I0 whereas Mi returns on the Nifty, I1 closing
price of
Nifty on
the day of listing, I0 previous trading day closing price
the day of listing, I0 previous trading day closing price
Equation 3: MAARO = (100* ((1+ Ri)/ (1+ Mi))
– 1)
– 1)
Up to -5 | Poor performance |
>-5.1 | Very poor performance |
0 to 5 | Par performance |
5.1 to 10 | Good performance |
10.1 to 25 | Very good performance |
>25.1 | Exceptional performance |
4.
DATA
ANALYSIS:
DATA
ANALYSIS:
Table 1: Table
showing Return on Security, Return on Market and Market adjusted abnormal
return for IPO’s listed period of 5th May 2015 to 10th May 2016.
showing Return on Security, Return on Market and Market adjusted abnormal
return for IPO’s listed period of 5th May 2015 to 10th May 2016.
SL NO | IPO COMPANY | LISTING DATE | Ri | Mi | MAARO |
1 | 10-May-16 | 0.1029 | 0.0028 | 10.0 | |
2 | 9-May-16 | 0.3859 | 0.0171 | 36.3 | |
3 | 21-Apr-16 | 0.2295 | -0.0003 | 23.0 | |
4 | 1-Apr-16 | 0.0089 | -0.0033 | 1.2 | |
5 | 18-Feb-16 | -0.2073 | 0.0117 | -21.7 | |
6 | 12-Feb-16 | 0.2023 | 0.0007 | 20.2 | |
7 | 8-Feb-16 | -0.0470 | -0.0136 | -3.4 | |
8 | 6-Jan-16 | 0.3468 | -0.0056 | 35.4 | |
9 | 23-Dec-15 | 0.3157 | 0.0103 | 30.2 | |
10 | 23-Dec-15 | 0.4985 | 0.0103 | 48.3 | |
11 | 16-Nov-15 | 0.1517 | 0.0057 | 14.5 | |
12 | 10-Nov-15 | 0.1483 | -0.0167 | 16.8 | |
13 | 2-Nov-15 | -0.1764 | -0.0019 | -17.5 | |
14 | 21-Sep-15 | 0.0117 | -0.0006 | 1.2 | |
15 | 16-Sep-15 | 0.0306 | 0.0089 | 2.1 | |
16 | 10-Sep-15 | -0.1152 | -0.0039 | -11.2 | |
17 | 10-Sep-15 | -0.0308 | -0.0039 | -2.7 | |
18 | 9-Sep-15 | 0.0735 | 0.0170 | 5.6 | |
19 | 26-Aug-15 | -0.0848 | -0.0198 | -6.6 | |
20 | 11-Aug-15 | 0.2416 | -0.0074 | 25.1 | |
21 | 9-Jul-15 | 0.0214 | -0.0041 | 2.6 | |
22 | 26-May-15 | -0.0471 | -0.0037 | -4.4 | |
23 | 14-May-15 | -0.0419 | -0.0014 | -4.1 | |
24 | 6-May-15 | -0.0325 | -0.0274 | -0.5 |
Sources: Author’s
own calculation
own calculation
5. CONCLUSION:
It is observed that: (1)
MEP infrastructures, UFO movies, PNC infra tech, Shree Pushkar and Precision Camsh
IPO’s are poor performance stocks. (2) Quick
heal, Coffee day, Pennar Engineering and Power Mechanicals IPO’s are very poor
performance stocks. (3) Bharath Wire Rope, Prabhat Dairy, Sadbhav Infrastructure
and Manpasand Beverages IPO’s are par performance stocks. (4) Ujjiavn financial and Navkar Corporation IPO
is good performance stock (5) Equitas
holding, Teamlease, S H Kelkar, Interglobe Avi IPO’s are very good performance
stocks. (6) Thyrocare, Narayana Hrudalaya, Alkem lab, Syngene International and
Dr. Lal Prathap lal IPO’s are exceptional performance stock.
MEP infrastructures, UFO movies, PNC infra tech, Shree Pushkar and Precision Camsh
IPO’s are poor performance stocks. (2) Quick
heal, Coffee day, Pennar Engineering and Power Mechanicals IPO’s are very poor
performance stocks. (3) Bharath Wire Rope, Prabhat Dairy, Sadbhav Infrastructure
and Manpasand Beverages IPO’s are par performance stocks. (4) Ujjiavn financial and Navkar Corporation IPO
is good performance stock (5) Equitas
holding, Teamlease, S H Kelkar, Interglobe Avi IPO’s are very good performance
stocks. (6) Thyrocare, Narayana Hrudalaya, Alkem lab, Syngene International and
Dr. Lal Prathap lal IPO’s are exceptional performance stock.
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