Professional Documents
Culture Documents
IPO stands for Initial Public Offer. An IPO is the first sale of common stocks by a
corporation to the public.
I have undertaken the project at INDIA INFOLINE is a leading full service securities firm
providing the entire gamut of financial services. INDIA INFOLINE provides a breadth of
financial and advisory services including wealth management, investment banking, corporate
advisory, brokerage & distribution of equities, commodities, mutual funds and insurance,
structured products - all of which are supported by powerful research teams. INDIA
INFOLINE has opened its branch in Belgaum in 2005. Since 2005 it has delivered fair &
impressive services. At present INDIA INFOLINEs customer database is more than 7000.
These customers are loyal & are availing regular services from INDIA INFOLINE. It has got
more than 700 DEMAT account holders.
The project deals with the Awareness level of IPO among investors at INDIA
INFOLINE.
1. INTRODUCTION
, This Project Work focuses on the select subject and a project report. As a part of
fulfillment of this requirement a project was taken up at INDIA INFOLINE on Awareness
Level of IPO Investors at INDIA INFOLINE. The project covers detailed data collection,
interaction with the subject experts, interpretation analysis in the light of present economic
and stock market scenario. The final details are as under:
To study how INDIA INFOLINE guides the Investors to apply for IPOs.
To study how INDIA INFOLINE is guiding their investors regarding the amount and
no of shares to apply for an IPO.
To study the factors considered by INDIA INFOLINE in knowing the company who
float IPOs.
To study the marketing methods adopted by the companies for creating awareness
about their IPO.
1.4Research Methodology:
Primary Sources:
o Data comprising of Facts & Figures
o Statistical and Mathematical techniques
o Graphical analysis
o Analysis by the subject experts etc
o Online Trading on Major Stock Exchanges BSE and NSE
Secondary Sources:
Analysis is purely based on the historical data and its behavior in the past.
The future marketing behavior and the economic issues of national and global level
that might influence can not be envisaged at this point of time.
The findings are limited to the scope, survey records, selection of IPOs and the
limited analysis that could be arranged within the time available for completion of the
project.
2. RESEARCH DESIGN
The project has been carried out with the main focus on the subject of the project and
detailed research findings in the backdrop of Indian corporate, economic, stock market
scenario 2009-10. The research methodology adopted to arrive at the conclusion of the
project is underlined below:
Use of identified sources for data and information collection which are Print media,
Outdoor publicity, Institutional marketing, Expert opinion, Sponsorship of Events,
Publicity events Business fairs, exhibitions etc.
Live working on the stock market with reference to project theme and statement of the
problem.
PROFILE
3.1 Industry Profile:
Earliest records of securities trading in India are available from the end of eighteenth
century. Before 1850 there was business conducted in Mumbai in the share of bank and the
securities of east India Company, which were consider as securities for buying, selling and
exchange. The share of commercial bank, mercantile bank and bank of Bombay were some of
the prominent shares traded. The business was conducted under a sprawling banyan tree in
front of the town hall, which is known in the horniman circle park.
In 1850, the companies act was passed and that heralded the commencement of join
stock companies in India.
It was the American civil war that helped Indians to established broking business. The
leading broker, Shri Premchand Roichand designed and developed a procedure to be followed
while dealing in shares.
In 1874 the dalal street became the prominent place for meeting of the brokers to
conduct there business. The broker organized an association on 9th July 1875 known as native
share and stock broker association to protect the character, status and internet of the native
brokers. That was the foundation of the stock exchange, Mumbai. The exchange was
established with 318 members. The stock exchange, Mumbai did not have to look back as it
started raiding high ladder of growth.
The stock exchange is a market place, like any other centralize market where buyers
and sellers can transacted business in securities at given point of a time in a convenient and
competitive manner at the fairest possible prizes.
In Jan 1899, Mr. James M MacLen, MP inaugurated the brokers hall. After the first
world war the stock exchange was housed properly at an old building near the Town hall
in1928, the present premises where acquired surrounded by Dalal street, Mumbai samachar
marg and hamam street. A new building a present location was constructed and was occupied
on 1st Dec 1930.
In 1950 the regulation of business in securities and stock exchange became an
exclusively central Government sub following adaptation of constitution of India. In 1956,
the security contract act was passed by the parliament of India. To regulate the securities
market, SEBI was initial established on Oct 12 1988 as an interim board under control of
ministry of finance, Government of India. In 1992, SEBI act was passed through which the
SEBI came into existence. Hence SEBI acquired statutory status on 30th Jan 1992 by passing
an ordinance, which was subsequently converted into an act passed by the parliament on
April 4th 1992. The main objective of SEBI is to protect the interest of investor, regulate and
promote the capital market by creating an environment, which would facilitate mobilization
of resources through epiciant allocation and to generate confidents among the investor. As
such SEBI is responsible for regulating stock exchanges and other intermediaries who may be
associated with capital market and the process of the public companies rising capital by
issuing instrument that will be traded on capital market. SEBI has been empowered by the
central government to develop and regulate capital markets in India and there by protect the
interest of investors.
In 1992, OTCI (Over the counter exchange of India) came in to existent where
equities of small companies are listed.
In 1994, NSE(national stock exchange) came in to existent which brought an and to
the open but cry system of trading securities which was in vogue for 150 years, and
introduced screen based trading system.
BSE (Bombay stock exchange) online trading system was launched on March 14th
1995. Know the trading in securities is down using screen based trading method through only
authorized members of the exchange.
In screen based trading, investor place there buy and sale orders with brokers whose
enter the orders in the automated trading system. When buy and sale order matches, a trade is
generated and trade details or given to respective brokers. After a trade has taken place, the
buyer has to pay money and seller has to deliver the securities
On the stock exchange hundred & thousands of trades take place every day. Buyers
and sellers are spread over a large geographical area. Due to these problems completing a
trade by paying cash to the seller & securities to buyer immediately on execution of trades on
an individually basis is virtually impossible. So the exchange allows trading to take place for
a specified period which is called trading cycle. A unique settlement number identifies each
trading cycle. Once the trading period is over, buyer broker pays money and seller broker
delivers securities to the CC/CH on a predefined day. This process is called as pay in. after
pay in securities are given to the buyer brokers and money is given to seller brokers by the
CC/CH. This process is called as pay out. This process pay in & pay out is called settlement.
Initially the trading cycle was of one fortnight, which was reduced to one week. The
transactions entered during this period, of a fortnight or one week, were used to be settled
either by payment for purchase or by delivery of shares certificates sold on notified days one
fortnight or one week of expiry of the trading. The settlement schedules are made known to
the members of the exchange in advance.
The weekly settlement period was reduced by daily settlement popularly known as
rolling settlement, in which each day is separate trading day. With effect from December
2001, t+% rolling settlement cycle was introduced for all equities where T is the trading day
and pay in & pay out for the settlement was done on the 5th business day after the trade day.
For e.g. If T was Monday, the pay-in & pay-out were done on next Monday as Saturday &
Sunday are not counted as business days. T+5 cycles were further shortened to T+3
settlement cycle.
3.2Company Profile:
Regd. &
In
its
last
review,
Forbes
editors
have
said,
Vision
The
India
Infoline
group,
comprising
the
holding
India Infoline Ltd, being a listed entity, is regulated by SEBI (Securities and Exchange Board of India). It undertakes equities research
which is acknowledged by none other than Forbes as 'Best of the Web' and 'a must read for investors in Asia'. India Infoline's
research is available not just over the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First Call
and Internet Securities where it is amongst the most read Indian brokers.
Its various subsidiaries are in different lines of business and hence are governed by different regulators. The subsidiaries of India
Infoline Ltd are India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the businesses of
Equities broking and Portfolio Management Services. It holds memberships of both the leading stock exchanges of India viz. the Stock
Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offers broking services in the Cash and Derivatives segments of
the NSE as well as the Cash segment of the BSE.A SEBI authorized Portfolio Manager, it offers Portfolio Management Services to
clients. These services are offered to clients as different schemes, which are based on differing investment strategies made to reflect the
varied risk-return preferences of client
India
Infoline.com
Distribution
Co
Ltd
is
100%
with
the
Insurance
Regulatory
and
Development
Heres a look at the rocketing list of whats on offer from The India
Infoline Group:
Equity Trading and Stock Broking :Cash and Derivatives segments. Member - BSE and NSE, DP
with NSDL.
Portfolio Management :-
Mutual Funds :-
Theoretical Background
Since beginning IPO is one of the major and low cost financing to meet the financial
needs of the corporate world. IPO is the means of financing for setting up a new company as
well as expansion, diversification of the existing companies. Some of the key aspects of IPOs
are as under:
What is an IPO?
Identify Issues
Composition of working group
Structure of offering
Time schedule and assignment of tasks
Legal considerations
Publicity
Financial and accounting matters
Structure of Offering
Size of offering
Primary and secondary components
Number of shares authorized
Existing shareholder list
Lock-up agreements with company, principal shareholders, officers, directors
Selection of listing exchange
Selection of stock symbol
Use of proceeds
Quiet period
Industry presentations
Extensive use of electronic media such as TV, Website, Mobile Phones etc.
Pricing Overview
Once the intended pricing date has been determined, investors are informed of the day
and time on which the book will be closed (i.e., the deadline for submitting
indications of interest)
Once the book has been closed, the lead manager, in consultation with the comanagers, reviews the book of demand in order to assess:
Strength of demand
Price sensitivity
Investors allocation expectations
Likelihood of aftermarket buying/selling
At the time of pricing, the lead manager reviews the book with the Issuer and
recommends an offering price which, in his judgment, will maximize the offering
proceeds to the Issuer consistent with a favorable after market performance.
Once the Issuer and the managers have agreed on an offering price, the underwriting
agreement and the inter syndicate agreements are signed.
Merits of IPO:
Demerits:
For new promoters and new company it is difficult to market their IPOs
Introduction:
As stated earlier in the study IPO is one of the low cost financing of new companies
Project Feasibility
Economic factors
Sector growth
Others
However, the most vital factor influencing success of IPO is marketing of IPOs which
aims at presenting the right kind of information about the above factors in the most
appropriate and impressive way to the target investors so that investors are convinced to
invest in the IPOs
Channels of Marketing:
A detailed study made under this project reveals that most of the good IPOs are using
the following marketing channels widely to have a focused and far reaching impact on the
investors and their decision of investment.
1. Print media
2. Outdoor publicity
3. Institutional marketing
4. Expert opinion
5. Sponsorship of Events
6. Publicity events Business fairs, exhibitions etc
Marketing Mix:
Most of the companies have different marketing (channel) mix to promote their IPOs,
though one can use exhaustively all channels for better marketing of IPOs, but the cost of
IPOs will proportionally increase accordingly.
The company will have to select the marketing mix based on the budgeted cost of the
IPOs. The marketing challenge lies in selecting the right channels wherein the cost is
minimum and the marketing impact on the investors is maximum.
Cost of Marketing:
The cost of marketing of an IPO is the most important factor and every company
wants to keep it at minimum. For each IPO, the cost is fixed well in advance (budget) and the
companies will be operating the marketing of IPOs within this budgeted cost. From the
current study conducted. It is seen that the organization spend heavily on the marketing of
IPOs, as most of them use e-media which is the costliest channel of marketing.
The cost of IPOs varies 5% to 15%. Following are some of the IPO cost which went
into public during 2009-2010
QUESTIONNAIRES
1. Are you aware of IPOs?
Valid
Yes
No
Total
Frequency
45
5
50
Cumulative
Percent
90.0
100.0
Valid
Yes
No
Total
Frequency
41
9
50
Percent
82.0
18.0
100.0
Valid Percent
82.0
18.0
100.0
Cumulative
Percent
82.0
100.0
Valid
1000-10000
10000-50000
50000-500000
500000 and above
Total
Frequency
2
22
19
7
50
Percent
4.0
44.0
38.0
14.0
100.0
Valid Percent
4.0
44.0
38.0
14.0
100.0
Cumulative
Percent
4.0
48.0
86.0
100.0
Valid
upto 10%
10%-50%
50%-100%
100% and above
Total
Frequency
3
17
23
7
50
Percent
6.0
34.0
46.0
14.0
100.0
Valid Percent
6.0
34.0
46.0
14.0
100.0
Cumulative
Percent
6.0
40.0
86.0
100.0
5. What are your assessments of IPOs that have hit the market in 2010-11?
What are your assessments of IPO that have hit the market for the year
2010-11
Valid
very good
Frequency
3
Percent
6.0
Valid Percent
6.0
Cumulative
Percent
6.0
good
17
34.0
34.0
40.0
average
23
46.0
46.0
86.0
bad
14.0
14.0
100.0
Total
50
100.0
100.0
Valid
invest in IPO
Pick the same stock on
listing
partely invest in IPO and
pick the stock on listing
wait sometime after
listing
Total
Frequency
3
Percent
6.0
Valid Percent
6.0
Cumulative
Percent
6.0
17
34.0
34.0
40.0
23
46.0
46.0
86.0
14.0
14.0
100.0
50
100.0
100.0
Intrepretation: 32% of the investors feel that its better to pick the
same stock on the listing. 28% investors feel they would partly invest
in IPO and pick the stock on listing.
7. What do you see before investing in IPOs?
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
Promoters background
18.0
18.0
18.0
sector performance
18
36.0
36.0
54.0
16
32.0
32.0
86.0
premium amount
14.0
14.0
100.0
Total
50
100.0
100.0
performance of existing
companies
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
15
30.0
30.0
30.0
Electronic media
16.0
16.0
46.0
experts opinion
14
28.0
28.0
74.0
friends advice
13
26.0
26.0
100.0
Total
50
100.0
100.0
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
1year-2years
12.0
12.0
12.0
2years-5years
24
48.0
48.0
60.0
5years-10years
14
28.0
28.0
88.0
12.0
12.0
100.0
Total
50
100.0
100.0
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
Go by only promoters
14.0
14.0
14.0
go by only premium
15
30.0
30.0
44.0
go by sector performance
21
42.0
42.0
86.0
14.0
14.0
100.0
Total
50
100.0
100.0
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
yes
24
47.1
47.1
47.1
no
27
52.9
52.9
100.0
51
100.0
100.0
Total
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
below 10%
10
19.6
19.6
19.6
up to 10%
17
33.3
33.3
52.9
10%-15%
17
33.3
33.3
86.3
13.7
13.7
100.0
Total
51
100.0
100.0
Intrepretation: 34% of investors say they have gained upto 10% and
10% to 15%
13. How do you come to know about the new IPO listings?
Cumulative
Valid
Frequency
Percent
Valid Percent
Percent
through brokers
10
19.6
20.0
20.0
through television
10
19.6
20.0
40.0
through friends
19
37.3
38.0
78.0
through newspaper
11
21.6
22.0
100.0
Total
50
98.0
100.0
14. How do you feel about the procedure for applying for IPOs?
Cumulative
Valid
Frequency
Percent
Valid Percent
Percent
Easy
16
30.8
32.0
32.0
difficult
7.7
8.0
40.0
complicated
15.4
16.0
56.0
lengthy
22
42.3
44.0
100.0
Total
50
96.2
100.0
15. Are you aware of the procedures before applying for the IPOs?
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
yes
31
62.0
62.0
62.0
no
19
38.0
38.0
100.0
50
100.0
100.0
Total
16. Are you aware of the documents needed to apply for the IPOs?
Cumulative
Valid
Frequency
Percent
Valid Percent
Percent
yes
40
80.0
80.0
80.0
no
10
20.0
20.0
100.0
Total
50
100.0
100.0
Cumulative
Valid
Frequency
Percent
Valid Percent
Percent
Refund problems
16.0
16.0
16.0
No clarity in allotments
14
28.0
28.0
44.0
15
30.0
30.0
74.0
13
26.0
26.0
100.0
Total
50
100.0
100.0
18. Do you read Disclaimer clause/ Red hearing prospectus before investing?
Cumulative
Frequency
Percent
Valid Percent
Percent
yes
16
32.0
32.0
32.0
no
34
68.0
68.0
100.0
Total
50
100.0
100.0
Valid
Testing of Hypothesis
Q No. 1Hypothesis
(H0):
less than or equal to 70% of the investors are aware about IPO.
(H1):
= 0.9
Interpretation
H0 is rejected
H1 is accepted
Therefore More than 70% of the investers are aware about
IPO.
Q No. 2Hypothesis
H0: less than or equal to 75% of the investors are interested to invest in IPO.
H1: More than 75% of the investors are interested to invest in IPO.
=0.75+0.1058
=0.85
Test Statistic value
P= no. of favorable responses/ Sample size
= 41 / 50
= 0.82
Interpretation
H0 is accepted
H1 is rejected
Therefore less than 75% of the investors are interested to invest in IPO.
Q No. 3Hypothesis
H0: less than 70% of the investors agree that they get 50 to 100 percent return on IPO.
H1 More than 70% of the investors agree that they get 50 to 100 percent return on IPO.
p^=0.86(0.14)/49
p^=0.1204/49
p^=0.049
Critical value = p + 2*p^
=0.7+1.96*0.049
=0.75+0.09604
=0.79
13. 44% of the investors feel the proceedure for applying for an IPO is lengthy, 32% feel
easy and simple.
14. Investors say yes and no at 30% about the awareness of the procedures before
apllying for IPOs.
15. 80% of the investors are aware of the documents needed to apply for the IPOs. 20%
investors are not aware of the documents needed to apply for the IPO.
16. 30% of the investors say the delay in crediting allotted shares to the demat account.
17. 28% say no clarity in allotment and 26% say they never faced difficuties.
18. 32% investors read about the diclaimer clause and 68% investors does not read the
disclaimer clause before investing.
5.2 Suggestions
1. INDIA INFOLINEstock broking ltd must guide their investors and create
confidence in them about investing in IPOs.
2. INDIA INFOLINEStock Broking ltd must contact their investors as and when
good IPOs come.
3. INDIA INFOLINEStock Broking ltd must identify the difficulties faced by
their investors about investing in IPOs.
4. INDIA INFOLINEstock Broking ltd must conduct meetings of their investors
as and when new IPOs come.
5. INDIA INFOLINEstock Broking ltd should ask their clients to get more
investors for them.
5.3 Conclusions
From the study and the research analysis made it can be convincingly concluded that:
1. IPO is one of the cheapest sources of financing.
2. All kinds of investors including small, medium and big go in for IPOs
3. The performance of the IPOs of 2010-11has not been very good due to economic
recessions slump in the global market and expected revival in the IT and other sectors
not forthcoming
4. timing of the IPOs plays a very vital role in the success of the IPOs
5. Price band of the IPOs is very important and IPOs with mid cap price band have by
and large faired well during 2010-11
6. Extensive use of electronic media and very high absorption in IT in IPOs has made
the entire process of IPO marketing quite convenient and smooth.
7. Sector performance as foreseen by the investors also plays and major decisive role in
performance of the IPOs.
8. finally marketing of IPOs has been underlined force behind the success or failure of
the IPOs
BIBLIOGRAPHY
Websites:
www.nseindia.com
www.bseindia.com
www.moneycontrol.com
Books Referred:
Company Manuals
Shri I.M.Ramesh