Valuation Analysis of Initial Public Offer (IPO): The Case of India

• Published in: Paradigm (Ghāziabād, India) Vol. 24; no. 1; pp. 7 - 21
• Main Authors: Manu, K. S., Saini, Chhavi
• Format: Journal Article
• Language: English
• Published: New Delhi, India SAGE Publications 01-06-2020; Sage Publications Ltd
• Subjects: Initial public offerings; Investment; Volatility; underpriced; IPO; short run and issue size; Investors; VUCA
• ISSN: 0971-8907; 2394-6083
• DOI: 10.1177/0971890720914100

Abstract
In today’s fast moving and dynamic world, short-term investors face difficulty while choosing which avenue to invest in. Investors view investment in securities as a highly risky avenue due to VUCA (Volatility, Uncertainty, Complexity and Ambiguity) pertaining to future movement of security prices. The study has been carried out to analyse the post-Initial Public Officer (IPO) performance of various companies that have gone public in 2017 using event study methodology. The study also tries to determine whether these IPOs were underpriced in short run and identifies various factors that influence the movement of such IPOs in the short run. The study found that about 70 per cent of the selected IPOs are underpriced in short run and the movement of these IPOs in short run is not influenced by the age of the company, issue size of the IPO, ownership sector and the promoter’s holdings after the issue.