Indian Journal of Accounting (IJA) 133

ISSN : 0972-1479 (Print) 2395-6127 (Online) Vol. XLIX (1), June, 2017, pp. 133-136

PERFORMANCE OF INDIAN IPO’S-FROM ISSUE PRICE TO LISTING

PRICE DURING THE FINANCIAL YEAR 2016-17: A STUDY

Dr. Ashvinkumar H. Solanki∗

Dr. Nishit V. Davda∗∗

ABSTRACT

In India now-a-days IPO has become one of the preferred investments for small investor. There are many
traditional investments places are possible in India but Initial Public Offer become one of the most preferred
investment place where with less investment capital and less risk more gain or return on investment can be
possible. One of the tough parts about the performance is to predict its price on its initial day of trading or we can
say listing price. It is totally depend upon with the market trend i.e. bullish to bearish. In this study, researcher
tried to analysis the average return form an IPO and tried to find out the true return during the study period. In
this research study, researcher has studied 28 ipo’s offer price and listing price. At the end of the research, it can be
concluded that small investor with no expertise knowledge are suggested to invest in new IPO’s as on an average
more return can be seen during study period with very less duration of time period. Out of all the companies taken
in the study we can say that 17.85% companies saws negative return and 82.15% companies saws positive return.
From the empirical study it can be concluded that during the study period IPO’s trend saws very positive trend
which will be very beneficial to the investor.

KEYWORDS: Positive, Performance, Empirical, Traditional, Investment.

_______________

Introduction
Initial Public offering means when any company offers its share to the general public for the first
time is consider being IPO. In India the trend of initial public offering came in the eighties when a many
companies need basic capital and came out with public issues. Market of India saw a dramatic recovery
in IPO sector during last few years. One of the main aims behind IPO is to increase the capital of the
company. IPO helps to get wide range of investor to the company. IPO give an opportunity to small
investor to gain positive return with minimum risk and less capital even without expertise knowledge.
There is general trend and proper empirical evidence that world had noted that IPO generate positive
good return on listing day. So it is in the benefits of small investor to invest their capital with short
duration of time to get abnormal return. IPO also motivate the small investor their funds form

∗
Associate Professor, Department of Commerce & Business Administration, Saurashtra University, Rajkot,
Gujarat.
∗∗
Assistant Professor, Dr. Subhash Mahila Arts, Commerce and Home-Science College, Junagadh, Gujarat.
134 Indian Journal of Accounting (IJA) Vol. XLIX (1), June, 2017
unproductive to high growth opportunities. This Research Article tires to focuses on the performance of
Indian IPO from issue price to listing price during the period from 1/04/2016 to 31/04/2017.
Research Design and Methodology
Objective of the Study
This research article has some of the following objectives.
• To study the performance of IPO’S during the study period.
• To find out the true return on investment on IPO.
• To find out the new horizon for small investor.
• To measure the percentage change in issue price and listing price.
Collection of Data
This research study is totally depending on secondary sources. The data is collected from the
different websites and sources available. Researcher has tried to do the financial performance of IPO which
is listed in Indian secondary market that is NSE during the period from 1 April, 2016 to 31 March, 2017.
Research Problem
One of the main problems for the small investor is to take investment decision with such a limited
capital. And small investors don’t have the expertise knowledge. So with in the short duration of time
with less capital small investor can invest their money and can avail the opportunity of high return than
the traditional one. This study was undertaken by the researcher to analyze to performance of IPO which
is listed in Indian secondary market.
Time Duration of Study
This research study has been done by the researcher for the period of one year that is starting
form 1 April, 2016 to 31 March, 2017. During the study performance of Indian IPO has calculated.
Scope of the Study
The scope of the research study is limited to the Indian initial public offering (IPO) during last
financial year 1 April, 2016 to 31 March, 2017. Within this study period researcher tried to find out
financial performance of 28 Indian IPOs.
Basic Concept Regarding Research
• Issue Price: When any company first time offers it’s share to the market with a certain price is
known as issue price. This price might be at premium, at par or at discount. It is totally depend
upon company’s reputation or wish.
• Listing Price: Listing price is the price at which the company IPO is first listed with a specific
price on listed day in the secondary market (NSE). This price might be more than its issue price or
less than its issue price. It is totally depend upon the market demand of that IPO.
• Over / Under Performed: Here in this Table two words has used by the researcher. When over
performed word is used it indicates positive return means listing price is more than the issue
price. When under-performed word is used it indicates negative return means listing price is less
than the issue price.
Below Table Shows The Percentage Change In IPO’s Issue Price And Listing Price During Last
Financial Year 1 April, 2016 To 31 March, 2017
Issue Listing
Name of IPO Issue Open % Change Performed
Price Price
Shankara Building Products Ltd 5 April, 17 460 555 20.65 Over
Cl Educate Ltd. 31 Mar, 17 502 398 -20.71 Under
Music Broadcast Ltd. 17 Mar, 17 333 420 26.12 Over
Avenue Supermarts Ltd. 21 Mar, 17 299 640.75 115 Over
BSE Ltd. 3 Feb, 17 806 1089 35 Over
Dr. Ashvinkumar H. Solanki & Dr. Nishit V. Davda: Performance of Indian IPO’s- from Issue..... 135

Laurus Labs Ltd. 19 Dec, 17 428 490 14.48 Over

Sheela Foam Ltd. 9 Dec, 17 730 860 17.8 Over
PNB Housing Finance Ltd. 7 Nov, 16 775 863 11.35 Over
Varun Beverages Ltd. 8 Nov, 16 445 430 -3.33 Under
Endurance Technologies Ltd. 19 Oct, 16 472 572 21.18 Over
HPL Electric & Power Ltd. 4 Oct, 16 202 190 -5.94 Under
ICICI Prudential Life insurance 29 Sep, 16 334 329 -1.49 Under
G N A Axles Ltd. 26 Sep, 16 207 252 21.73 Over
L & T Technology Service Ltd. 23 Sep,16 860 920 6.97 Over
RBL Bank Ltd. 31 Aug, 16 225 274 21.77 Over
S P Apparels Ltd. 12 Aug, 16 268 305 13.8 Over
Dilip Buildcon Ltd. 11 Aug, 16 219 240 9.58 Over
Advanced Enzymes Tech. 1 Aug, 16 896 1210 35.04 Over
L & T Infotech Ltd. 21 Jul, 16 710 667 -6.05 Under
Quess Corp Ltd. 12 Jul, 16 317 500 57.72 Over
Mahanagar Gas Ltd. 1 Jul, 16 421 540 28.26 Over
Parag Milk Foods Ltd. 19 May,16 215 217.5 1.16 Over
Ujjivan Finance Service Ltd. 10 May,16 210 231.9 10.42 Over
Thyrocare Technologies Ltd. 9 May,16 446 662 48.43 Over
Equitas Holding Ltd. 21 Apr,16 110 144 30.90 Over
Infibeam incorporation Ltd. 4 Apr, 16 432 458 6.01 Over
Bharat Wire Ropes Ltd. 1 Apr, 16 45 47.35 0.52 Over
Source: http://www.chittorgarh.com/ipo/ipo_list.asp Mean of the data 19.12
LISTING PRICE – ISSUE PRICE
PERCANTAGE CHANGE = --------------------------------------------- * 100
ISSUE PRICE
Interpretation
In this table researcher has taken total 28 companies for the study purpose for the period of 1
financial year 1/04/2016 to 31/03/2017. And in this research article total 28 companies are to be
analyzed. In this table researcher has tried to find out the financial performance of selected Indian
companies IPO’s performance with two prices i.e. issue price and listing price for the study period. Here
in this table researcher has found out percentage change between two prices i.e. issue price and listing
price for the study period. Here in this table researcher has mentioned each company’s performance (i.e.
over performed, underperformed) with the help of two prices i.e. issue price and listing price. If issue
price is more than the listing price, it is called as underperformed. If issue price is less than the listing
price, it is called as over performed.
Findings
• In this research article we can conclude that on an average out of total 28 companies 19.12 %
return can be possible.
• Out of total 28 companies only 5 companies saws negative return means listing price is lower than
issue price.
• Out of total 28 companies only 23 companies saws positive return means listing price is higher
than issue price.
• In this research article we have seen that Avenue Supermarts Ltd has given highest return (115%)
out of all the companies taken in the study.
• In this research article we have seen that Cl Educate Ltd. has given lowest return (-20.71%) out of
all the companies taken in the study.
136 Indian Journal of Accounting (IJA) Vol. XLIX (1), June, 2017
• Out of all the companies taken in the study we can say that 17.85% companies saws negative
return which is not good for the small investor.
• Out of all the companies taken in the study we can say that 82.15% companies saws positive
return which is beneficial for the small investor which also can attract investor.
Conclusion
Investment at right place with good return in India has become more necessity for the common
people. Looking to the traditional investment place we find another modern investment place with high
return with low risk and within the short duration of time. Now-a-days trend of IPO has become very
popular and safe and does not require to have good, sound and expertise knowledge. There need not
have any kind of analytical knowledge to investment in share market. After looking to the study, the
analysis will help different stake holder to find out whether to invest in IPO can become beneficial to all
as average return out of 31 scripts are more positive than the negative. At last after the good research in
this study, it can be find out that for the common people IPO can become the favorite place and rational
place where they can get good return in short run.
References

Dr. A. S. Ambily, Gayatri Krishna, Aswathy K and Deepa Balakrishnan, (2016), “A study on Performance
of Ipo’s under NSE from issue price to last trading price in the year 2013-2015”, Global Journal of Finance
and Management, Volume 8, Number 1.

K. Hema Divya (2013), “Study On Performance Of Indian Ipo’s During The Financial Year 2010-2011”,
International Journal of Marketing, Financial Services & Management Research, Vol.2, No. 7, July.

Krishnamurti Chandrasekhar and Pradeep Kumar, (2002), 'The Initial Listing Performance of Indian
IPOs', Managerial Finance; Vol. 28, 39-5.

http://www.nseindia.com

http://www.investopedia.com

http://www.investinganswers.com

http://www.chittorgarh.com/ipo/ipo_list.asp

http://economictimes.indiatimes.com