Post listing IPO returns and performance in India: An empirical investigation

Title

Post listing IPO returns and performance in India: An empirical investigation

Creator

Babu T.R.C.; Dsouza A.E.C.

Description

Objectives: (a) To analyse the performance of Indian IPOs in the short term. (b) To determine the significance of abnormal return of the IPOs. (c) To study the impact of over-subscription, profit after tax, promoters' holdings, issue price and market returns on IPO performance. Design/ Methodology/Approach: This research paper is based on empirical analysis. All the 52 IPO's listed in the NSE (National Stock Exchange, India) during the year 2018 to 2020 were considered for the study. The study is based on secondary data. The daily share price and Nifty-50 index value were taken from NSE website (www.nseindia.com) and other relevant data from red-herring prospectus of the respective company. The research / statistical tools used are: Market adjusted short run performance model, Wealth relative model, 't' test and regression analysis. Scope of the study: The scope of the study is limited to the IPO's listed only in the National Stock Exchange (NSE), India. Period of study: The study covers a period from January 2018 to December, 2020. Limitation of the study: The study considers only the influence of the external factors on the performance of IPOs. Findings: The average IPO return on the first trading day is 13.52%, ranging from -23.15% to 82.16% with standard deviation of 26.72%. The average IPO return on the third trading day was the highest and is found to be14.52%, ranging from -19.22% to 117.55% with standard deviation of 18.57%. The analysis reveals that the over subscription impacts the IPO performance and the other factors namely, issue price, Profit after Tax, market returns and promoters holdings do not influence IPO returns. Originality / Value: This is an original work that analyses the listing gain or loss and the post listing performance of IPO's in India and other factors that might influence the listing gain or loss. Copyright 2021. T. Ramesh Chandra Babu and Aaron Ethan Charles Dsouza. Distributed under Creative Commons Attribution 4.0 International CC-BY 4.0

Source

IBIMA Business Review, Vol-2021

Date

2021-01-01

Publisher

IBIMA Publishing

Subject

IPO performance; IPO underpricing; Listing gains; Market adjusted short run performance model; Subscription ratio; Wealth relative model

Coverage

Babu T.R.C., CHRIST University, Bangalore, India; Dsouza A.E.C., CHRIST University, Bangalore, India

Rights

All Open Access; Gold Open Access

Relation

ISSN: 19473788

Format

Online

Language

English

Type

Article

Identifier

https://doi.org/10.5171/2021.418441

https://www.scopus.com/inward/record.uri?eid=2-s2.0-85113384595&doi=10.5171%2f2021.418441&partnerID=40&md5=d683bdb30643dd2198db95de918614dc