“Investment in Ipo: an Analysis”

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PROJECT ON
“INVESTMENT IN IPO: AN ANALYSIS”
Submitted in partial fulfillment of the requirements
For the award of the degree of
Master of Business Administration
(2006-2008)

TABLE OF CONTENTS

* ABSTRACT……………………………………………………2 * INTRODUCTION ABOUT IPO………………………………..9 -EVOLUTION AND GROWTH OF INDIAN PRIMARY MARKET
-REGULATORY FRAMEWORK
-PROCEDURE FOR IPO
-BUY BACK OF SHARES
-ROLE OF INTERMEDIARIES
-IPO GRADING
* REVIEW OF LITERATURE
* RESEARCH METHODOLOGY
* ANALYSIS AND INTREPRETATION
* FINDINGS AND CONCLUSIONS
* SUGGESTIONS
* REFERENCES

ABSTRACT
This project gave me a great insight about the IPO and its Process. The purpose of this Project was to understand the IPOs that were issued in the last 2-3 months; buyback of shares; IPO Grading and Reforms in IPO Process. The IPO was an extensive learning experience in which I involved myself with the live issues hitting the market. I began my study by going through the SEBI guidelines regarding eligibility norms, pricing structure, requirements of the promoters and their obligations, post issue obligations, book building guidelines etc. I enhanced my understanding over IPO issues of various companies by going through their Bid-cum application forms and the Red-Herring prospectus, which contained all the information regarding the issue, purpose of the issue, all the financials and results for the past 3-5 years and many other details which are required by an investor for a sound analysis. Proper study of few IPOs has been done by going through their past financials, business structure, investments, expansion strategies, growth potential, valuations etc. The Project report starts with defining the various public issues with the need for the company to take out an IPO. It goes on further to explain the advantages of an IPO. It analyses in detail the Indian IPO Scenario. It explains the evolution of the IPO in India and explains how the scene has changed dramatically after liberalization esp. after the introduction of book building process.

CHAPTER 1
INTRODUCTION

A company can raise capital through issue of shares or debentures. The various types of issues are: Public Issue, Rights Issue, Bonus Issue, Private Placement and Bought Out Deal There can be two kinds of public issues, namely:

* Initial Public Offer (IPO)
* Further Public Offer (FPO)

Classification of Issues

IPO
An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of issuer’s securities. The sale of securities can be through book building or normal public issue.

FPO
Further Public Offers are issued by companies or corporate bodies whose shares are already being traded in the capital market and they are issuing fresh shares either to fund the expansion of their existing business or to invest into other business activities.

Reasons for Going Public

* Raising funds to finance capital expenditure programs like expansion, diversification, modernization, etc. * Financing of increased working capital requirements
* Financing acquisitions like a manufacturing unit, brand acquisitions, tender offers for shares of another firm, etc. * Debt Refinancing
* Exit Route for Existing Investors

Advantages of Going Public

* Facilitates future funding by means of subsequent public offerings * Enables valuation of company
* Provides liquidity to existing shares
* Increases the visibility and reputation of the company
* Commands better pricing than placement with few investors * Enables the company to offer its shares as purchase consideration or as an exchange for the shares of another company

Disadvantages of Going Public

*...
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