A DISSERTATION REPORT ON

“A study on the performance of initial Public offerings of companies listed in NSE

–case study on Equitas small finance”

A Dissertation Report on submitted in partial fulfillment of the requirement of degree

in

MASTER OF COMMERCE

BENGALURU CITY UNIVERSITY, BENGALURU.

Submitted by

SUJITH SINGH S
[CM195835]
Submitted to
Under the guidance of
Shivakumar M Sajjan
Assistant professor

K.L.E SOCIETY’S

S. NIJALINGAPPA COLLEGE,

DEPARTMENT OF POST GRADUATION IN COMMERCE

2ND BLOCK RAJAJINAGAR, BENGALURU-10

 K.L.E. SOCIETY’S

S. NIJALINGAPPA
COLLEGE
2nd BLOCK, RAJAJINAGAR, BENGALURU-560 010.
COLLEGE WITH POTENTIAL FOR EXCELLENCE
( Re- Accrredited with ‘A+’ Grade by NAAC )

DEPARTMENT OF POST GRADUATION IN COMMERCE

CERTIFICATE

Awarded
to.......................................................................................................

This is to certify that the project titled

............................................................................................................................

...........................................................................................................................

has been submitted in partial fulfilment of the requirement of the Master of

Commerce Degree of Bengaluru City University for the year 2020 - 2021.

Co – Ordinator Principal

College Seal Date

 GUIDE CERTIFICATE

This is to certify that this dissertation report entitled “A STUDY ON

PERFORMANCE OF INITIAL PUBLIC OFFERINGS OF
COMPANIES LISTED IN NSE- A CASE STUDY ON EQUITAS
SMALL FINANCE BANK”, which has been submitted in partial
fulfillment for the award of M.Com Degree, Department of Commerce
Bengaluru city University, was carried out by Mr. SUJITH SINGH S
(Reg.no: CM195835) under the guidance of Shivakumar M Sajjan
K.L.E. Society’s S. Nijalingappa College, Bengaluru.
This has not been submitted to any other University or Institution for the
award of any Degree/Diploma certificate.

Date: Signature of the Guide

Place: Bengaluru Shivakumar M Sajjan

 CO-ORDINATOR CERTIFICATE

This is to certify that this dissertation report entitled “A STUDY ON

PERFORMANCE OF INITIAL PUBLIC OFFERINGS OF
COMPANIES LISTED IN NSE- A CASE STUDY ON EQUITAS
SMALL FINANCE BANK”,
which has been submitted in partial fulfillment for the award of M.Com
Degree, Department of Commerce Bengaluru City University, was
carried out by Mr. SUJITH SINGH S (Reg.no: CM195835) under the
guidance of, Shivakumar M Sajjan K.L.E. Society’s S. Nijalingappa
College, Bengaluru.

This has not been submitted to any other University or Institution for the
award of any Degree/Diploma certificate.

Date: Signature of the Co-ordinator

Place: Bengaluru Shivakumar M Sajjan

 STUDENT DECLARATION

I hereby declare that this dissertation report entitled“A STUDY ON

PERFORMANCE OF INITIAL PUBLIC OFFERINGS OF
COMPANIES LISTED IN NSE- A CASE STUDY ON EQUITAS
SMALL FINANCE BANK”,
Submitted to the Bengaluru City
University in partial fulfillment requirements of M.Com. Degree is a
bonafide work carried by me under the guidance of Shivakumar M Sajjan
, Department of Commerce, K.LE. Society’s S. Nijalingappa College,
Bengaluru.

This has not been submitted earlier to any other University or Institution
for the award of any Degree/Diploma certificate or published any time
before.

Date: Signature of the Student

Place: Bengaluru Mr. SUJITH SINGH S

IVth semester, M.Com

Reg. no: CM195835

 ACKNOWLEDGEMENT

First and foremost, I thank Almighty for keeping me hale and healthy for successful
completion of the project.

I express my deep gratitude and indebtedness to our institution K.L.E Society’s

S. Nijalingappa College, Bengaluru, affiliated to Bengaluru Central University,
which has provided me an opportunity in fulfilling project work which is part of our
academic.

I express my deep sense of gratitude to Principal Dr. Arun Kumar B.

Sonappanavar, for providing me with facilities to complete the project in due course
of time.

I express my deep sense of gratitude to Smt. Dr. Mahananda B. Chittawadagi,

IQAC Coordinator, Department of Post-Graduation in Commerce, for providing me
with facilities to complete the project in due course of time and support.

I convey my sincere gratitude to my internal

guide, Shivakumar M Sajjan, for tremendous help and for
being extremely co-operative by guiding me throughout my project work completion.

Last but not least, I express my sincere gratitude to my parents, family members,
and friends for their valuable help at every stage of my work. I am also thankful to
the faculty members of Department of Post-Graduation in Commerce who have
helped me cordially.

Date: SUJITH SINGH S

Place: Bengaluru (CM195835)

 CONTENTS

CHAP TITLES Pg.

TERS No

1 INTRODUCTION 1-23

2 REVIEW OF LITERATURE AND 24-29

RESEARCH DESIGN

3 INDUSTRY PROFILES 30-61

4 DATA ANALYSIS AND 62-94

INTERPRETATION

5 FINDINGS, SUGGESTIONS AND 95-98

CONCLUSION

BIBLIOGRAPHY

ANNEXURE
 TABLE OF CONTENTS

TABLE NAME PAGE

No No

4.1 Gender of the respondents 63

4.2 Age of the respondents 65

4.3 Annual income of the respondents 67

4.4 Area of respondents 69

4.5 Occupation of the respondents 71

4.6 Risk profile of investors 73

4.7 Investment amount in initial public offerings 75

4.8 Source of information they consider before investing in initial public 77

offerings

4.9 Information they see before investing in initial public offerings 79

4.10 How long they trade in initial public offerings 81

4.11 Percentage of gain they have got on listing day 83

4.12 Purpose of initial public offerings 85

4.13 Procedure for IPO allotment 87

4.14 Difficulties faced after applying for initial public offerings 89

4.15 Taking help of broker while investing in initial public offerings 91

4.16 Advice to new initial public offerings investors 93

 LIST OF GRAPHS AND CHARTS

GRAPH NAME Pg.

No. No

4.1 Gender of the respondents 64

4.2 Age of the respondents 66

4.3 Annual income of the respondents 68

4.4 Area of respondents 70

4.5 Occupation of the respondents 72

4.6 Risk profile of investors 74

4.7 Investment amount in initial public offerings. 76

4.8 Source of information they consider before investing in initial public 78

offerings

4.9 Information they see before investing in initial public offerings 80

4.10 How long they trade in initial public offerings 82

4.11 Percentage of gain they have got on listing day 84

4.12 Purpose of initial public offerings 86

4.13 Procedure for IPO allotment 88

4.14 Difficulties faced after applying for initial public offerings 90

4.15 Taking help of broker while investing in initial public offerings 92

4.16 Advice to new initial public offerings investors 94

Chapter 1
 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

Chapter-1
INTRODUCTION

1.1 INTRODUCTION
Initial Public Offering means when a company sells its share or offer its share in pubic for
the first time. The offer generally issued by the new and smaller companies to expand
their capital but it can also be done by the large privately companies to become public
company. The new companies mostly don’t have resources to conduct the IPO. So, they
generally depend on the other private funding like personal loans, family and friends.
Therefore, they look for the investors which help them for their IPO process.

Investors offer finance to the company for the stake in the company. The investor is liable
in the decision making process and also advice the management in most of the company
issues. When the investors of the company want to liquidate their investment they have
options like sell the equity to different company, sell the whole company to another
company as an acquisition, or sell the equity in the Initial Public offering of the company.
Also, when a company in needs of finance for the development of their company then
they have options like private market equity, issue debt in the market or offer equity in
the public which means initial public offer in the market.

IPOs performance can be affect by different factors like issue size, delay in listing time
etc. Some advantages for going public are like significant access to investment capital,
some stock price support after the listing etc. While some disadvantages for going public
are like for small companies the cost incurred for IPO is very high etc. SEBI is the
regulator of the Indian Capital market including the primary market i.e. IPOs. IPOs have
some fixed process and which every company has to follow when it comes for the IPO in
the market. The most important objective of an IPO is to raise capital for the company. It
helps a company to tap a wide range of investors who would provide large volumes of
capital to the company for future growth and development.

A company going for an IPO stands to make a lot of money from the sale of its shares
which it tries to anticipate how to use for further expansion and development. The
company is not required to repay the capital and the new shareholders get a right to future
profits distributed by the company. The IPO trend came in India in the eighties when a

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 “A study on the performance of initial Public offerings of companies listed in NSE – A
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large number of companies, organization came out with public issues, which triggered a
growth in the primary market. An entire industry of Merchant Bankers, Brokers, Agents
and Retail Investors grew in the primary issues market. During eighties and nineties many
of the companies just disappeared without a trace after the listing was done. There were
estimated of over hundreds of companies which disappeared from the market after raising
funds in the primary market. People lost all their income as the fundamentals of the
company were not known by them. But in late nineties did not see much activity in the
primary market.

The primary issues market resurrected itself after 2003 largely triggered by the
divestment program of public sector companies in the beginning of year in January 2008.
Many investors lost their income, saving which they invested in the company. India saw a
dramatic recovery in its IPO markets in 2010. This revival has been a domestic
consumption led–growth story, driven by an influx of capital from Western economies
and a booming local stock market. India saw a growth of 21.5% in the number of IPOs
compared to 2009. In 2010, India saw a string of IPOs and follow-on offerings from
many previously state-owned enterprises in the materials sector such as steel, oil and gas
which helped the Indian Government raise funds to build roads, ports and power plants.

The global IPO market is off to a very good start in 2014. This has been the best
performing first quarter since 2011 in terms of both number of IPOs and capital raised.
Three sectors that led globally by capital raised in 2014 Q1 were energy, technology and
real estate. Although technology may not always be the leading sector in any geography,
it is often the new or innovative technology which is the driving force behind the
popularity and success of the leading sectors. As boundaries blur between technology and
industries, companies may move away from traditional sector categorization in an effort
to maximize valuation as they come to market.

1.2 History of Initial Public Offerings (IPOs)

The term initial public offering (IPO) has been a buzzword on Wall Street and among
investors for decades. The Dutch are credited with conducting the first modern IPO by
offering shares of the Dutch East India Company to the general public. Since then, IPOs

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have been used as a way for companies to raise capital from public investors through the
issuance of public share ownership.

Through the years, IPOs have been known for uptrend’s and downtrends in issuance.
Individual sectors also experience uptrend’s and downtrends in issuance due to
innovation and various other economic factors. Tech IPOs multiplied at the height of
the dot-com boom as startups without revenues rushed to list themselves on the stock
market.

The 2008 financial crisis resulted in a year with the least number of IPOs. After the
recession following the 2008 financial crisis, IPOs ground to a halt, and for some years
after, new listings were rare. More recently, much of the IPO buzz has moved to a focus
on so-called unicorns; startup companies that have reached private valuations of more
than $1 billion. Investors and the media heavily speculate on these companies and their
decision to go public via an IPO or stay private.

1.3 Features of Indian IPO Market

Effective functioning of the capital market is vital to an economy, in order to achieve an
efficient transfer of monetary resources from those who save money towards those who
need capital. The capital market can influence the quality of investment decisions, i.e., the
gathering of temporary capital that is available in the economy, the reallocation of those
that are insufficiently or inefficiently used. Across the world there was a transformation in
the financial intermediation from a credit based financial system to a capital market based
system which was partly due to a shift in financial policies of financial repression (credit
controls and other modes of primary sector promotion) to financial liberalization. This led
to an increasing significance of capital markets in the allocation of financial resources.
The Indian capital market is the barometer of the country’s economy and provides a
mechanism for capital formation. Since 1980s the market has been growing in leaps and
bounds and has aroused the interests of the investors. The reason for such development
was an increasing opportunity caused due to liberalization and globalization policies
adopted by the nation. Liberalization and globalization has opened the gates to the
following three broad channels for financing the private sector and public sector namely;

a) Domestic capital market

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b) International capital market (American depository receipts and Global depository

receipts)
c) Foreign Institutional investment (FII)

1.4 Primary Market

The primary market is a segment of the capital market where entities such as
companies, governments and other institutions obtain funds through the sale of debt
and equity-based securities.

When a company decides to go public for the first time by raising an Initial Public
Offering (IPO), it is done in the primary market. Since the securities are sold for the
first time here, a primary market is also known as the New Issue Market (NIM).

During an IPO, the company sells its shares directly to the investors in the primary
market. The entire process of raising investment capital by selling new stock to
investors through an IPO is known as underwriting.

Once the shares are sold, they are bought and sold by traders in the secondary market.
In the previous article, you found out what the primary market is all about. Now, let’s
explore what a secondary market is. And for those of you who are big movie buffs: No,
it is not a sequel to the primary market.

1.5 Secondary market

The secondary market is the place where investors and traders trade in securities. This
is done after the Initial Public Offer (IPO) is over and the shares are sold in the primary
market.

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1.6 Difference between Primary and Secondary market

Basic Primary market Secondary market

Also called as New Issue Market (NIM) After Issue Market (AIM)
Role of the Market where stocks are issued for Market where stocks are traded
market the first time once issued
Intermediaries Investment banks Brokers
Sale of securities Directly by companies to investors Sold and purchased amongst
investors and traders
Price of shares Fixed at par value Changes depending on the supply
and demand of shares

1.7 What is an IPO?

An initial public offering (IPO) is the first time a company issues shares to the public.
This is when a private company decides to go ‘public’.
In other words, a company that was privately-owned until then becomes a publicly-
traded company.

1.8 How an Initial Public Offering (IPO) Works

Prior to an IPO, a company is considered private. As a private company, the business has
grown with a relatively small number of shareholders including early investors like the
founders, family, and friends along with professional investors such as venture
capitalists or angel investors.

When a company reaches a stage in its growth process where it believes it is mature
enough for the rigors of SEC regulations along with the benefits and responsibilities to
public shareholders, it will begin to advertise its interest in going public.

Typically, this stage of growth will occur when a company has reached a private
valuation of approximately $1 billion, also known as unicorn status. However, private
companies at various valuations with strong fundamentals and proven profitability

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potential can also qualify for an IPO, depending on the market competition and their
ability to meet listing requirements.

An IPO is a big step for a company as it provides the company with access to raising a lot
of money. This gives the company a greater ability to grow and expand. The increased
transparency and share listing credibility can also be a factor in helping it obtain better
terms when seeking borrowed funds as well.

IPO shares of a company are priced through underwriting due diligence. When a
company goes public, the previously owned private share ownership converts to public
ownership, and the existing private shareholders’ shares become worth the public trading
price.

Share underwriting can also include special provisions for private to public share
ownership. Generally, the transition from private to public is a key time for private
investors to cash in and earn the returns they were expecting. Private shareholders may
hold onto their shares in the public market or sell a portion or all of them for gains.

Meanwhile, the public market opens up a huge opportunity for millions of investors to
buy shares in the company and contribute capital to a company’s shareholders' equity.
The public consists of any individual or institutional investor who is interested in
investing in the company.

Overall, the numbers of shares the company sells and the price for which shares sell are
the generating factors for the company’s new shareholders' equity value. Shareholders'
equity still represents shares owned by investors when it is both private and public, but
with an IPO the shareholders' equity increases significantly with cash from the primary
issuance.

1.9 How are shares allocated in an IPO?

There are different investor categories when it comes to IPOs. This includes:
 Qualified Institutional Buyers (QIBs)
 Non Institutional Investors (NIIs)
 Retail Individual Investors (RIIs)

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The allocation of shares differs for all the above groups in an IPO. As an individual
investor, you come under the last category.

As an individual investor, you are allowed to invest in small lots worth Rs 10,000-
15,000. You can apply for a maximum of Rs 2 lakh in an IPO. The total demand for
shares in the retail category is judged by the number of applications received. If the
demand is less than or equal to the number of shares in the retail category, you are
offered a full allotment of shares.

When the demand is greater than the allocation, it is known as oversubscription. Many
times an IPO can be over-subscribed five times over. This means that the demand for
shares exceeds the supply by five times!

In such cases, the shares in retail category are offered to investors on the basis of a
lottery. This is a computerised process that ensures impartial allocation of shares to
investors.

1.10 Why does a Company go Public?

 To raise capital for growth and expansion

Every company needs money to increase its operations, create new products or pay off
existing debts. Going public is a great way to gain this much-needed capital for a
company.

 Allowing owners and early investors to sell their stake to make money
It is also seen as an exit strategy for initial investors and venture capitalists. A
company becomes liquid through the sale of stocks in an IPO. Venture capitalists sell
their stock in the company at this time to reap returns and exit from the company.

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 Greater public awareness

IPOs are ‘star-marked’ in the stock market calendar. There is a lot of buzz and
publicity around these events. This is a great way for a company to publicise its
products and services to a new set of customers in the market.

1.11 How is an IPO issued?

During an initial public offering (IPO), a company issues its shares to public
shareholders for the first time. In the previous article, we understood why a private
company decides to launch an IPO and how investors can benefit by investing in them.

The next questions that come to mind are: “How is an IPO issued?”

1.12 What is the IPO procedure?

A private company has to take various steps in order to go public. They are:

 Selecting an investment bank

The first step is to select an investment bank as an underwriter. Here, the role of an
investment bank is to help the company establish various details such as

 How much money the company hopes to raise

 The type of securities that will be offered
 The initial price per share

For a large IPO, there can be multiple investment banks involved. In short, investment
banks act as facilitators in the IPO process.

 Creating the Red Herring prospectus

The next step of the IPO process is to create the ‘Red Herring Prospectus’. This is done
with the help of underwriters. The prospectus includes various segments such as
financial records, future plans for the company, potential risks in the market and
expected share price range. Many times, underwriters go on road shows in order to
attract potential institutional investors after they create the red herring prospectus.

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 SEBI approval
The prospectus is presented to the Securities and Exchange Board of India (SEBI). If
SEBI is satisfied, it green-lights the initial public offering (IPO) process. In addition, it
also gives a date and time for the IPO. But in case SEBI is not satisfied, it asks for
changes to be made before the prospectus can be shared with public investors.

 Stock exchange approval

Listing is the process where securities are allowed to deal on a recognised stock
exchange. But for that to happen, the company needs to be approved by the exchange.
For instance, the Bombay Stock Exchange (BSE) has a listing department whose
purpose is to grant approval for securities of companies. The BSE has a list of criteria
which needs to be followed for the company to be listed on its exchange.

For example:
 The minimum issue size should be Rs 10 crore.
 The minimum market capitalization of the company should be Rs 25 crore.
 The minimum post issue paid-up capital of the company should be Rs 10 crore.

Only if the company follows these criteria, it gets an approval from the BSE.

 Subscription of shares
Once all the formalities are done, the company makes the shares available to investors.
This is done on the dates specified in the prospectus. Investors who wish to apply for
shares have to fill out and submit the IPO application form.

 Listing

The shares are allotted to different investors based on the demand and price quoted in
their IPO application forms. Once this is done, investors get the shares credited to
their demat account. In case of oversubscription (if the demand for shares is higher
than the number of shares floated by the company), investors may not get the number
of shares they originally wanted. They may get fewer shares after a lottery is done.

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Some investors may not even get any shares. In such cases, these investors get a refund
of their money.

1.13 How can you benefit from an IPO?

 First-mover advantage
This is especially true when reputed companies announce an IPO. You get a chance to
buy the company’s shares at a much lower price. This is because once the company’s
shares reach the secondary market, the share price may go up sharply.

 High returns

If the company has a potential to grow, buying shares in an IPO can be benefit you.
Strong fundamentals of the company mean that it has a good chance of growing bigger.
This can be advantageous to you as well. You stand a chance to earn good returns over
the long-term.

 Listing gains
When a company gets listed on the stock market, it may be traded at a price that is
either higher or lower than the allotment price. When the opening price is higher than
the allotment price, it is known as listing gains.

Generally, investors expect an IPO to perform well on listing due to factors such as
market demand and positive bias. However, this does not always happen. It is possible
for a stock price to drop by the end of the first trading day too.

In reality, listing gains may not actually result in good returns for the investor in the
long term. So, if you are a trader interested in quick returns, it may be suitable. But for
long term investors, it is important to identify a company that can offer high returns
five or even ten years down the line.

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 To sum up
IPOs are big events in the stock market for a reason. By investing in the right
company, you stand a chance to earn good returns in the long run. But the trick is to
identify the good performers from the rest.

 Abridged Prospectus
A condensed version of the IPO prospectus that contains all the salient features of the
main prospectus. Under the Companies Act of 1956, every IPO application form
should be accompanied by the abridged prospectus.

 Draft Red Herring Prospectus (DRHP)

The draft prospectus submitted by the company to Securities Exchange Board of India
(SEBI) at least 21 days before the IPO. SEBI reviews the prospectus and requests
changes during these 21 days. The general public can also submit their comments to
SEBI during this period.

 Red Herring Prospectus

The final prospectus filed by the company with the Registrar of Companies (ROC)
before launching the IPO. It contains all the information that investors need about the
company and the IPO, including the company’s business description, management
credentials, operating details, future strategy, IPO price band, the intended use of the
proceeds, and the IPO calendar. The prospectus is also known as the offer document.

 Price Band
The price range within which investors can bid for IPO shares. It is set jointly by the
company and the underwriter and is different for each investor category, viz. qualified
institutional buyers (QIBs), retail investors, and high net-worth individuals (HNIs).

It is generally the lowest for retail investors (i.e. private individuals). If the price band
has been fixed at Rs.100-110 per share, you cannot bid below Rs.100 or above Rs. 110.

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 Book Building Process

The process of deciding the issue price for an IPO based on the prices bid by investors.
The issue price will be closer to the upper end of the price band if investors have
shown strong interest in the IPO and bid high. Otherwise, it will be closer to the lower
end of the band.

For example, if the price band for an IPO is Rs. 100-110 per share, the issue price
would be set closer to Rs. 110 if investors have bid high. If investors have bid low, the
issue price would be set closer to Rs. 100.

 Offer Date
This is the first date when you can apply for shares in an IPO. It is also known as the
opening date of an IPO.

 Lot size
The minimum number of shares you can bid for in an IPO. If you want to bid for more
shares, it has to be in multiples of the lots size. For example, if the lot size for an IPO
is 1500 shares, you have to bid for at least these many. If you want to bid for more, it
should be in multiples of 1500, such as 3000 and 4,500.

 Minimum Subscription
This is the minimum percentage of IPO shares that retail investors need to subscribe to
for an IPO to go through. At present, the minimum subscription is 90%. The company
has to refund the entire subscription amount if this 90% threshold is not met.

 Floor Price
The minimum price per share that you can bid when applying for an IPO is called the
Floor Price. In case of IPOs with a price band, this is the lower limit of the price band.

 Issue Price
The price at which shares are allotted to investors once the book building process is
over. The issue price is different for each investor category and is generally the lowest
for retail investors. It is also called offer price at times.

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 Cut-off Price
This is the lowest issue price at which shares are allotted in an IPO. It is generally
reserved for retail investors. If your bidding price is higher than the cut-off price, the
difference will be refunded to you.

 Oversubscribed
An IPO is oversubscribed if investors have bid for more shares than offered by the
company.

 Oversubscription
The excess subscription amount received by the company in case of an oversubscribed
IPO is called oversubscription.

 Underwriter
An investment bank works closely with the issuing company to manage the IPO.
They’re called underwriters. Among their many jobs are deciding the offer price,
marketing the IPO, and distributing the shares to investors. The underwriter receives an
underwriting fee in return for its services.

 Listing Date
This is the date on which IPO shares start trading on the stock exchange. You can sell
the shares you received in the IPO and buy the company’s shares if you don’t receive
them in the IPO.

 The Bottomline
IPO can appear to be a very complicated process first up. But that is only because of its
many technicalities. It is quite simple to understand once you are aware of some key
IPO terms. This IPO glossary will help you master these terms and make the most out
of IPOs.

1.14 FOLLOW UP PUBLIC OFFER

Follow on Public Offer refers to the issuing of shares to financial specialists by an
organization that has been as of now recorded on a trade. FPO is a stock issue of

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supplementary shares made by an organization that has been now freely recorded and has
experienced the IPO process. FPOs known as popular method for companies to raise
additional value capital in the capital markets through a stock issue. Open organizations
as a rule exploit FPO issuing an offer available to be purchased to financial specialists,
which are made through an offer document. FPOs and IPO are different one should not be
confused between them as IPOs are the initial public offering of equity to the public while
FPOs are supplementary issues made after a company has been established on an
exchange.

1.15 REGULATORY REQUIREMENT FOR FPO

In case a company who wants to come out with FPO and they have changed its name
within a year, for this they need to have 50% revenue from last one-year activities defined
by the new name. The issue size should not be more than five times the pre-issue net
worth of the company as mentioned in the balance sheet of the previous financial year.
Nevertheless, a group of companies private and public-sector banks are exempt from
these norms. Also, infrastructure companies whose projects have been appraised and
financed by any public financial institution or companies.

1.16 Factors That Affect the Cost of an IPO

Here are some key factors that affect the pricing of the shares for IPO which should be
considered before the valuation of shares:

 The current cost of shares that are similar to the organisation in the industry
 Number of stocks being sold in an IPO
 The financial performance of the said organisation over the past certain years
 Demand from potential customers for the stocks being sold
 Market trend
 The potential growth rate of the company

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1.17 Two approaches are used for valuation of stock prices of a

business or company which are:

1. Absolute valuation approach

2. Relative valuation approach

 Absolute Valuation Approach

In absolute valuation approach, the present value of the business or company is

determined by estimating the future income sources using Discounted Cash Flow
(DCF) analysis. This calculation is done with the help of financial statements of the
company and books of accounts to understand the worth of the business. The future
cash flow of the company is forecasted with DCF analysis which is then discounted to
the present value of the firm to get the absolute value.

But this approach does not involve any comparison between similar companies in the
industry or sector which could be a drawback of this model. Another challenge faced in
absolute valuation approach can be forecasting the future cash flow of the business and
estimating it correctly.

 Relative Valuation Approach

In relative valuation approach, the firm’s value is compared with its competitors in the
industry to understand the financial worth of the business. Investors may also use this
approach to estimate if the stock is worth purchasing.

Various trading multiples and ratios like price-to-earnings (P/E), free cash flow,
Enterprise Value (EV), etc. are applied for calculation. When compared to the absolute
valuation approach, the relative model uses benchmarks, ratios, and averages to
estimate the company’s value. This said benchmark could be determined by carrying
out broad industry analysis and calculating an average.

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1.18 Why Should an Investor Know IPO Valuation?

Organisations hire investment banks to underwrite the value of the shares while
launching an IPO. They study the firm’s current financial condition, work out the
assets and liabilities and then serve the financial needs of valuing the shares. Thus, the
IPO offer is supposed to be lucrative as well as the price of the stocks. But if the
investor goes through the balance-sheets provided by the firm, they can estimate the
correct stock price and if the market has valued them accurately.

Thus, you as an investor, can now correctly estimate and understand the valuation of
an Initial Public Offering made by a company or firm. Due to this, you can determine
the IPO pricing accurately before investing your money and buying the shares. But it is
advised to heed caution before choosing to purchase any upcoming IPO and go through
the prospectus and other papers thoroughly.

1.19 Procedure for Allotment of Shares in IPO

After an organisation launches an IPO to the general public, all bids for the shares are
registered online. Then through an online process, all invalid bids that were incorrectly
submitted are eliminated from the total number of bids. With this, you now have the
final number of successful bids for the said IPO.

1.20 There are two cases amongst which the situation of a company
may fall in, that are:

1. The total number of successful bids is less than or equal to the number of shares
offered by the firm
2. The total number of successful bids is more than the number of shares offered by the
firm

Case 1: Total number of bids is less than or equal to the number of shares offered

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If the total number of bids made by the applicants is less than or equal to the number of
shares being offered, then complete allotment of stocks will take place. Thus, every
applicant who has applied will be assigned shares.

Case 2: Total number of bids is more than the number of shares offered

If the total number of bids made by the applicants is more than the number of shares
being offered, then the allotment process of shares requires more planning. SEBI or
Securities and Exchange Board of India mandates that at least one lot should be
allotted to every individual who has applied.

Let’s understand case 2 with an example:

Assume that there are 5 lakh shares offered to the investors and the minimum lot size is
50. Then the maximum number of investors who will get at least one lot is = 5 lakh/50
= 10,000
Thus, 10,000 investors will be allotted at least one lot.

For the allotment procedure for case 2, there are two types:

1. Small oversubscription
The minimum lot will be distributed amongst all applicants and the remaining shares
will be assigned proportionally to the investors who have bid for more than one lot.

2. Large oversubscription
In the case where there is such an oversubscription that even one lot cannot be allotted
to every applicant, then allotment takes places via lucky draw. This lottery draw will
be computerised without any partiality. Thus, during large oversubscription, some
names are not drawn in the lottery system, and shares are not assigned to many
applicants.

 Reason for No Allotment of Shares

There are two reasons if no shares were allotted to you, which are:

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1. You bid for the IPO was termed invalid due to incorrect Demat account number,
incorrect PAN number, or multiple applications submitted for the IPO
2. Your name wasn’t picked out in the lucky draw in the case of large oversubscription

You can now purchase shares via an IPO and know why you didn’t get any lots allotted
if your application is not accepted. Be updated about upcoming IPOs so you get a
chance to enter your bid.

1.21 Corporate Finance Advantages of an Initial Public Offering (IPO)

The primary objective of an IPO is to raise capital for a business. It can also come with
other advantages.

 The company gets access to investment from the entire investing public to raise
capital.
 Facilitates easier acquisition deals (share conversions). Can also be easier to
establish the value of an acquisition target if it has publicly listed shares.
 Increased transparency that comes with required quarterly reporting can usually
help a company receive more favorable credit borrowing terms than as a private
company.
 A public company can raise additional funds in the future through secondary
offerings because it already has access to the public markets through the IPO.
 Public companies can attract and retain better management and skilled employees
through liquid stock equity participation (e.g. ESOPs). Many companies will
compensate executives or other employees through stock compensation at the
IPO.
 IPOs can give a company a lower cost of capital for both equity and debt.
 Increase the company’s exposure, prestige, and public image, which can help the
company’s sales and profits.

1.22 Initial Public Offering (IPO) Disadvantages and Alternatives

Companies may confront several disadvantages to going public and potentially choose
alternative strategies. Some of the major disadvantages include the following:

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 An IPO is expensive, and the costs of maintaining a public company are ongoing
and usually unrelated to the other costs of doing business.
 The company becomes required to disclose financial, accounting, tax, and other
business information. During these disclosures, it may have to publicly reveal
secrets and business methods that could help competitors.
 Significant legal, accounting, and marketing costs arise, many of which are
ongoing.
 Increased time, effort, and attention required of management for reporting.
 The risk that required funding will not be raised if the market does not accept the
IPO price.
 There is a loss of control and stronger agency problems due to new shareholders
who obtain voting rights and can effectively control company decisions via the
board of directors.
 There is an increased risk of legal or regulatory issues, such as private securities
class action lawsuits and shareholder actions.
 Fluctuations in a company's share price can be a distraction for management
which may be compensated and evaluated based on stock performance rather than
real financial results.
 Strategies used to inflate the value of a public company's shares, such as using
excessive debt to buy back stock, can increase the risk and instability in the firm.
 Rigid leadership and governance by the board of directors can make it more
difficult to retain good managers willing to take risks.

1.23 Investing in an Initial Public Offering (IPO)

When a company decides to raise money via an IPO it is only after careful consideration
and analysis that this particular exit strategy will maximize the returns of early investors
and raise the most capital for the business. Therefore, when the IPO decision is reached,
the prospects for future growth are likely to be high, and many public investors will line
up to get their hands on some shares for the first time. IPOs are usually discounted to
ensure sales, which makes them even more attractive, especially when they generate a lot
of buyers from the primary issuance.

Initially, the price of the IPO is usually set by the underwriters through their pre-
marketing process. At its core, the IPO price is based on the valuation of the company

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using fundamental techniques. The most common technique used is discounted cash flow,
which is the net present value of the company’s expected future cash flows.

Underwriters and interested investors look at this value on a per-share basis. Other
methods that may be used for setting the price include equity value, enterprise value,
comparable firm adjustments, and more. The underwriters do factor in demand but they
also typically discount the price to ensure success on the IPO day.

It can be quite hard to analyze the fundamentals and technicals of an IPO issuance.
Investors will watch news headlines but the main source for information should be
the prospectus, which is available as soon as the company files its S-1 Registration. The
prospectus provides a lot of useful information. Investors should pay special attention to
the management team and their commentary as well as the quality of the underwriters and
the specifics of the deal. Successful IPOs will typically be supported by big investment
banks that have the ability to promote a new issue well.

Overall, the road to an IPO is a very long one. As such, public investors building interest
can follow developing headlines and other information along the way to help supplement
their assessment of the best and potential offering price.

The pre-marketing process typically includes demand from large private accredited
investors and institutional investors, which heavily influence the IPO’s trading on its
opening day. Investors in the public don’t become involved until the final offering day.
All investors can participate but individual investors specifically must have trading access
in place. The most common way for an individual investor to get shares is to have an
account with a brokerage platform that itself has received an allocation and wishes to
share it with its clients.

1.24 Eligibility norms required to invest in an IPO

Any individual who is an adult and is capable of entering into a legal contract can
serve the eligibility norms to apply in the IPO of a company. However, there are some
other inevitable norms an investor needs to meet. The eligibility criteria are:

 It is required that the investor interested in buying a share in an IPO has a

PAN card issued by the Income Tax department of the country.

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 One also needs to have a valid Demat account.

 It is not required to have a trading account, a Demat account serves the

purpose. However, in case an investor sells the stocks on listings, he will
need a trading account.

It is often advised to open a trading account along with the Demat account when an
investor is looking forward to investing in an IPO for the first time.

1.25 Things To Do Before Investing in an IPO

● Check Company’s Background

Since the company is coming up with its Initial Public Offering, often there won't be any
historical data available to check your decision about investing in the company. However,
the company floating it does provide a prospectus. You must carefully scrutinise and read
all the details provided in it before arriving at any decision about investing in the
company.

● Check the Underwriters

The success of the IPO depends upon the big broker who is endorsing the new issue. If
the underwriters are well established then you may look at investing in such offerings.

● Lock-in Period

Before applying for an IPO, you must read the contractual obligation of the company’s
executives and investors about the lock-in period of their shareholding. Often, the prices
of shares drop drastically after the company completes the offerings as the shareholders
of the company sell their shares in the open market once the lock-in period ends.

The above points will help you in taking the right decision about investing in an IPO. Let
us now read about the points that you must be aware of before investing in them.

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1.26 IPO challenges

It would be erroneous to assume that the IPO implementation process is a challenge-free

undertaking. In order to benefit from the aforementioned merits of an IPO, a public
company and its shareholders have to be able to meet certain challenges. These are:

1. Share price of a public company is exposed to the stock market fluctuations

Regardless of how well the company is managed, in certain circumstances imposed by the
external market, price and liquidity of the shares may drop. For example, smaller
companies may discover that their shares are not sufficiently liquid, while the medium-
sized and large companies may experience share price movements based on unfounded
market expectations, general economic trends, or even unrelated events in the industry,
sector or country. In order to minimise the influence of such unfavourable events on a
public company’s share price, the management should retain constant communication
with the market and investors, keeping them informed about the company’s current
developments and prospects.

2. The interests and expectations of the minority public investors must be taken into
consideration

Sale of an equity stake during the IPO inevitably transfers a certain degree of influence to
the new public shareholders; their interests and opinions must be considered going
forward. This means that the owners of a formerly private business are no longer allowed
the same autonomy in making strategic decisions. In order to satisfy current expectations
of the public investors, the company might need to achieve the short-term operational
goals at the expense of the longer-term strategic prospects.

3. Wide-ranging disclosure requirements and financial reporting

The IPO implementation process and a listing on a reputed stock market are only possible
when the company discloses the necessary financial information and provides periodic
financial reporting of scope and quality substantially in excess of those required from a
private company. For example, a public company must disclose the names of its ultimate

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beneficiaries, provide detailed information about the financial position and development
plans, disclose remuneration of the directors, and other relevant information.

4. Substantial investment in the IPO process

Aggregate investment in the IPO process on a leading stock exchange (such as the
London Stock Exchange) may be quite significant. Even though most of these expenses
will be reimbursed from the funds raised during the IPO and therefore will not impact the
operating results of the company, a part of the preparation expenses will have to be
funded by the company’s own resources before the IPO takes place. Thus it is necessary
to plan the investments into the IPO process carefully.

5. New responsibilities and restrictions for the management

The IPO process, as well as the ongoing responsibilities that arise from the new public
status, require substantial amounts of the executives' time that otherwise might have been
spent on the operational business. The directors and executives of a public company also
face certain restrictions, for example related to dealings with the company shares and
disclosures of the market-sensitive information. Hence the activities of the directors and
top management of public companies are more regulated and require additional attention.

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Chapter 2
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CHAPTER-2
REVIEW OF LITERATURE AND RESEARCH DESIGN

2.1 INTRODUCTION:
Research means systematic investigative process employed to increase or revise current
knowledge by discovering new facts. Research is defined as
i. Careful or diligent search
ii. Studious inquiry or examination; especially: investigation or experimentation aimed at the
discovery and interpretation of facts, revision accepted theories or laws in the light of new facts,
or practical application of such new or revised theories or laws
iii. The collecting of information about a particular subject A broad definition of research is
given by Martyn Shuttle worth- “In the broadest sense of the world, the definition research
includes any gathering of data, information and facts for the advancements of knowledge.”
Research Design:
It is task of defining the research problem and the preparation of the research project. Decision
regarding what, where, when, how much, by what means concerning an inquiry or a research
study constitute a research design.
A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.

2.2 TITLE OF THE STUDY

“A study on the performance of initial Public offerings of companies listed in NSE – A

case study on Equitas small finance”

2.3 REVIEW OF LITERATURE

Gowtham Ramkumar (2017): In their article “Influences of stock market factors on

investors perception” concluded that whether factors influencing investor perceptions has a
important impact on their investment choices and which can advantage people dealing in stock
exchanges

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Poornima, AalaaJ.Haji, Deepa(2016)Initial public offerings are gaining importance

worldwide as an important source of funds for the companies to accelerate their growth by
using the mobilized funds to implement innovative strategies as well as considered as an
important tool for investment since it offers huge profits on the listing day. In this study the
short run performance of the companies is analyzed to understand the anomaly of abnormal
returns as well long term performance to analyze the performance of the IPO’s in the long run.
The period of study is from Jan 2013 – Dec 2014.

Garima Baluja, Balwinder Singh (2016): In their research paper stated IPO market
has witnessed vast fluctuations in the post SEBI era. Still several new issues have entered the
market during this period, and only a few managed to survive well. A lot of researchers have
verified the aftermarket performance of such IPOs; however the phenomenon of IPO's survival
has remained a neglected issue in India. Therefore, the need arises to probe the factors behind
and the success and fiasco of new issues in the market. The purpose of this paper is to critically
analysis the voyage of IPOs in terms of their survival in the aftermarket

Ashish Kumar Suri and Bhupendra Hada (2018) in their paper stated they considered 107
IPO’s launched during the period 2011 to June 2017 on the basis of two performance indicators
i.e. over-subscription and listing day gains. This study aims at comparing the performance of
the IPO’s for two periods January 2011-May 2014 and June 2014-June 2017. The results of the
study shows that the performance of the IPO’s launched during the period 2011-May 2014
significantly differs from the performance of the IPO’s which were launched between June
2014-June 2017. It was also examined that the number of IPO’s and the fundraised through
them also differ considerably for the two periods.

Aloysius Edward J (2019): In this article the researcher analyzed that the capital market
promotes economic growth through promoting savings and increases productivity. One of the
major reforms is the primary market including IPOs started emerging as one of the foremost
source of funds for Indian companies and also an important opportunity for retail investors to
apportion their funds for higher return. To address one of issue in this paper SEBI has changed
the basis of allotment of IPO to retail investors from pro-rata basis to lottery method since
2012. Two methods are widely used for an IPO, book building and fixed price issue. Out of 132
companies raised funds through IPO 14 companies are taken for study based on its issue size. It
is found that the companies which had listing gain also had current market price gain.

Batool K. Asiri and Aalaa J. Haji (2014) documented the phenomenon of underpricing initial
public offerings(IPOs) for 194 firms that went public between 2000 and 2013 in the markets of
the six gulf cooperation council (GCC) countries. It investigates factors that potentially

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influence abnormal returns on the first day trading and focuses on assessing the most prominent
determinants of the underpricing of IPOs in the GCC region. In addition to previously tested
variables such as firm age and offer size, additional variables and external factors such as
seasonal affective disorder have been added.

Nurwati A. Ahmad-Zaluki 1and Lim Boon Kect (2012)provided evidence on both the short-
run and long-run investment performance of Malaysian initial public offering (IPO) companies
that are listed on the Mesdaq market. The factors that influence the performance are also
investigated. In line with past Malaysian studies, the results of the raw and market-adjusted
initial returns show that IPO companies are significantly underpriced in the short-run. However,
in the long-run, both the car and the BHAR methods reveal that these companies underperform
the market.

Deb and Marisitty (2011) examined the IPO grading was an assessment of the quality of
initial equity offers. India is the only market in the world that introduced such grading process.
They tested the efficiency of this unique certification mechanism with the data of 159 Indian
IPOs. They found that IPOs grading decreased IPO underpricing and influenced demand of
retail investors.

Alok Pande and R. Vaidyanathan(2007), looks at the pricing of IPOs in the NSE. In
particular, it seeks to empirically explain the first day underpricing in terms of the demand
generated during the book building of the issue, the listing delay between the closure of the
book building and the first day listing of the issue and the money spent on the marketing of the
IPO by the firms. It also seeks to understand any emerging patterns in Indian IPO market with
reference to the previous studies.

Ray Ball and Lakshmanan Shivakumar(2006) hypothesize that IPO firms supply the higher
quality financial reports demanded by public investors, who face higher information asymmetry
than private investors. Once public, firms are subject to greater regulatory scrutiny and
penalties. From the point of releasing the public prospectus document onwards, IPO firms face
a greater threat of shareholder litigation and regulatory action if they do not meet higher
reporting standards.

Mayur and Kumar (2006) examined the determinants of the going public decision of the
Indian companies. A probity regression model was used to analyse the influence of
fundamental financial data of Indian companies on their going public decision. The size,
profitability, age and leverage emerged as the significant determinants of going public decision
of Indian companies.

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Khurshedet al.(1999) found the great need for the UK evidence on long-run performance of
IPOs and there is a relationships between pre IPO management decisions and long-run
performance that have not been documented before. They also found that there is a greater need
for future research to focus on ownership structure and long-run returns of IPO firms.

Narasimhan and Ramana (1995) focussed on the determination of the short-run returns of
IPOs listed on the BSE. The analysis was carried out in two different time periods; phase-1, in
which market index was on the rise and phase-II, when the index was on the decline. The study
observed homogeneity in the degree of underpricing across time period. It further observed that
the extent to which premium issues were underpriced was greater than in the case of par issues

2.4 STATEMENT OF THE PROBLEM

The study was undertaken to analyze the financial performance of IPO in selected
companies.Performance of IPO is important and necessity to the companies to raise the capital
quickly by reaching a large number of investors.

Evaluating the performance and trends of IPO helps to see whether IPOs offer better
investment opportunities or not.IPOs received high initial first day gains compared to the
market performance.

The study was undertaken to analyze the financial performance of IPO companies.The study is
mainly based on the detailed profit & loss account of the IPO

2.5 SCOPE OF THE STUDY

This analysis can increase the knowledge of investors.The companies are ranked in
descending order are selected

The Price of the particular sectors from the day of issues and the taken the data from
the NSE and calculates the daily returns and annual returns. The study can be forecasting the
fluctuate of the stock price

Understanding the IPO can be a long term investment tool or a speculative opportunity
to earn booming profits.

2.6 OBJECTIVES OF THE STUDY

The main objective of the study was to evaluate the performance of IPOs in India. Keeping the
above in consideration, the present study has been conducted with the following objectives

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• To find out the performance of Indian IPOs for short period, i.e. from the date of offer to the
public to the date of their first day of trading after listing on stock exchange
• To measure the long term performance of Indian IPOs including and excluding initial
returns
• To analyse whether the returns are more in short term or long term for better conclusion

• To conceptualized the concept of capital market in IPO

• To know the status of subscription of IPOs of companies listed in Indian Index

• To evaluate the performance of different companies from different sector, which are listed in
Indian index
• To give the suggestions on the basis of analyzing data

• To statistically examine relationship oversubscription ratio and listing day gain

2.7 RESEARCH INSTRUMENTS

The data for the study is mainly collected from NSE and BSE website. The analysis is based on
the companies listed under NSE and BSE during the years 2015-2019. The secondary data was
collected from the various sources available like website wherever necessary. The study was
mainly analytical and partly descriptive in nature

• Primary Data: It refers to the data that is fresh and collected for the first time. It refers to
the data collected by the researcher and original in character. Personal discussion was
adopted for collection of primary data from Share khan Ltd. Such as information of
Capital market in India, details of Trading, Initial Public Offerings (IPO) and Stock
Market (i.e. BSE & NSE) related information.
• Secondary Data: It is the information that already exists. The source of secondary data
were collected from various published sources like text books, journals, articles, annual
reports and company websites etc.

2.8 LIMITATIONS OF THE STUDY

1. The study is restricted only to the companies which are listed in NSE.

2. The only 4 years (2018-2021) data will be considered to analyze the performance of
IPOs

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3. Non-availability of data of certain companies.

4. Due to De-listing of companies their analysis is not being made.

5. The findings of today may not hold good tomorrow

2.9 CHAPTER SCHEME:

CHAPTER1: INTRODUCTION
This is first chapter in the study which introduces the topic to the reader. It covers some topic
regarding the study like its history, significance, defines some concepts involved, importance of
the topic etc.

CHAPTER2: RESEARCH DESIGN

This chapter deals with research, meaning, statement of problem, review of literature, scope of
study, objectives of study, methodology of the study, source of data, limitations of the study.

CHAPTER3: COMPANY PROFILE

This chapter gives the complete profile of the company, its products, its customers, its projects
etc.

CHAPTER4: DATA ANALYSIS AND INTERPRETATIONS

This chapter makes on analysis of data collection in primary and secondary source complied
and classified tabulated tables, graphs and interpretation thereof.

CHAPTER5: FINDINGS, SUGGESTIONS AND

CONCLUSIONS
This chapter provides the findings, suggestions and conclusions based on the study.

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Chapter 3
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Chapter -3

Company Profile

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3.1 INTRODUCTION

Equitas Small Finance Bank (erstwhile Equitas Microfinance Ltd) is a small finance
bank founded in 2016 by Equitas as a microfinance lender. The bank has headquarters
in Chennai, India. After receiving license from the Reserve Bank of India (RBI) on 30
June 2016, Equitas Small Finance bank began banking on 5 September 2016 as
a subsidiary of holding company Equitas Holdings Ltd. With effect from 4 February
2017, Equitas became a scheduled bank. However, the company missed on RBI's
mandate of listing within 3 years of commencement of its operations. Review from
the Securities and Exchange Board of India and RBI is awaited.

The bank planned to build a network of 412 branches located in 11 Indian states by the
end of fiscal year 2016-17. However, for rendering technology oriented services, 83% of
transactions occurring online as of July 2017. This includes the bank providing an RFID
sticker to pay road tolls automatically, with settlements occurring digitally.

(i) They were the largest SFB in India in terms of a number of banking outlets, and the
second-largest SFB in India in terms of assets under management and total deposits in
Fiscal 2019. (Source: CRISIL Report). As of September 30, 2019, they have distribution
channels comprised of 853 Banking Outlets and 322 ATMs across 15 states and union
territories in India.

(ii) They offer a range of banking products and services to customers with a focus on
serving the financially unserved and underserved customer segments in India.

(iii) The loan book includes the loans to small business loans comprising LAPs, housing
loans, and agriculture loans to micro-entrepreneurs, microfinance to JLGs predominantly
comprising women, used, and new commercial vehicle loans to drivers and micro-
entrepreneurs typically engaged in logistics, MSE loans to proprietorships, and corporate
loans.

(iv) To get the money for the business they target customers comprise of mass and mass-
affluent individuals to whom they offer current accounts, salary accounts, savings
accounts, and a variety of deposit accounts.

(v) Loan Profile

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Type of Loan (Cr) 2017 2018 2019 % of % of % of

Loan 2017 Loan Loan
2018 2019
Small Business Loans 1181 2113 3672 19% 27% 33%

Housing Finance 196 270 376 3% 4% 3%

Agriculture Loans 30 286 527 0% 4% 5%
Micro-Finance 2859 2257 3069 46% 29% 27%
Vehicle Financing 1855 2237 2951 30% 29% 26%
MSME Finance 0 7 180 0% 0% 2%
Corporates & Others 134 514 469 2% 7% 4%

Total Loan book 6255 7684 11244

3.2 MISSION AND CORE VALUES

Mission Statement:

Create the most valuable bank for all stake holders through happy employees.

Our Core Values:

 Customer First

 Pride Of Performance

 Fair And Transparent

 Respect For People

 Ownership

VISION

vision is to "serve 5% of households by 2025"

3.3 EQUITAS HOLDINGS LIMITED

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Equitas Holdings Limited (‘the Company’) is a Non-Deposit Taking Systemically

Important - Core Investment Company – (CIS-ND-SI) registered with The Reserve Bank
of India. The activity of the company is to making investment in subsidiary companies
and providing loans to them. It has no other operations.

The company has the following Wholly Owned Subsidiaries:

 Equitas Small Finance Bank Limited, licensed under Section 22 of the Banking
Regulations Act, 1949 to carry on the business of Small Finance Bank.
 Equitas Technologies Private Limited (ETPL), a Company registered under the
Companies Act, 2013 engaged in the business of freight aggregation.

3.4 EQUITAS SMALL FINANCE BANK LIMITED(ESFBL)

Equitas Small Finance Bank Limited is a Small Finance Bank (SFB), licensed by Reserve
Bank of India under Section 22 of the Banking Regulation Act, 1949 to carry on the
business of Small Finance Bank. The Bank commenced the business of SFB on
September 5, 2016. It is the first Private Sector Bank from Tamil Nadu to commence
operations post Indian Independence.

ESFBL, with pan India operations, is focused on providing financing solutions for
individuals and micro and small enterprises (MSEs) that are underserved by formal
financing channels while providing a comprehensive banking and digital platform for all.

True to its tag line - “It’s Fun Banking”, the bank offers customized savings products with
a focus towards giving children, youth, families and entrepreneurs across India, a new and
a fun way to bank.

3.5 EQUITAS TECHNOLOGIES PRIVATE LIMITED (ETPL)

Equitas Technologies Private Limited is engaged in freight facilitation business under the
brand name of ‘Wowtruck’. The Company provides a common platform for transporters
and customers to connect 'online' and carry out transactions on real-time basis.

3.6 EQUITAS HOLDINGS LTD. (EQUITAS) - COMPANY HISTORY

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Equitas Holdings Limited (EHL) the holding company of the Equitas Group of
Companies is a Non-Deposit taking - Systemically Important - Core Investment Company
(ND SI - CIC) as per RBI Regulations. The company is the holding company of its
subsidiaries Equitas Small Finance Bank Limited (ESFBL) and Equitas Technologies
Private Limited (ETPL). Apart from investments in the subsidiaries EHL also provides
loans to subsidiaries and also places deposits with its banking subsidiary Equitas Small
Finance Bank Limited (ESFBL)

Equitas Small Finance Bank Limited formerly Equitas Finance Limited (EFL)
commenced operations as a Small Finance Bank (SFB) on 5 September 2016. Prior to
commencement of operations as a bank EFL a wholly owned subsidiary of EHL operated
as an NBFC. In order to comply with the conditions prescribed in the in-principle'
approval received from RBI to set-up the SFB the other two wholly owned subsidiaries of
EHL viz. Equitas Micro Finance Limited (EMFL) and Equitas Housing Finance Limited
(EHFL) merged into EFL to form the bank.

The name of EFL was changed to Equitas Small Finance Bank Limited vide a fresh
Certificate of Incorporation dated September 2 2016. The strategy of ESFBL on the
advances side is to stay focused on the low and moderate income segment of the
population and roll out products relevant to their needs.

The bank's lending business is divided into 5 segments viz. Agri Micro Enterprise
& Inclusive Banking Emerging Enterprise Banking Business Banking Outreach Banking
and Corporate Banking. The Bank is also distributing Third Party Products like Life
Insurance General Insurance Health Insurance and Mutual Funds on a non-risk sharing
basis. The Bank has also launched digital Wealth Management services where customers
can invest in Mutual Funds through online' mode.On the deposit side the strategy of the
bank is to focus not only on the existing borrower segments but also on the mass and the
mass affluent segments of the population and provide them strong product offerings
delivered seamlessly through physical and digital channels.Since starting the banking
operations in September 2016 the Bank has built a strong network of 392 banking outlets
and 321 ATMs/Cash Recycler Machines spread across 13 States and 2 Union Territories
as of March 31 2018. As of March 31 2018 the Bank has over 2.7 lakh deposit

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customers.Equitas Holdings Ltd was incorporated as UPDB Micro Finance Private

Limited on June 22 2007 at Chennai as a private limited company under the Companies
Act 1956.

Pursuant to a special resolution passed by the Shareholders on December 17 2007

the name of the Company was changed to Equitas Micro Finance India Private Limited to
convey the principle of fairness and transparency of the Company and a fresh certificate
of incorporation consequent to change of name was issued by the RoC on February 1
2008. The microfinancebusiness of the Company was demerged into Singhivi pursuant to
a Demerger Scheme with effect from April 1 2011. Singhivi was later renamed as Equitas
Micro Finance Private Limited. Pursuant to the Demerger Scheme a resolution was
passed by the Shareholders on January 30 2012 and the name of our Company was
changed to Equitas Holdings Private Limited and a fresh certificate of incorporation
consequent to change of name was issued by the RoC on February 29 2012.

Pursuant to an order issued by the RBI on December 3 2012 the Company was
designated as a Non Systemically Important Core Investment Company and pursuant to
the request made by the Company the certificate of registration as a NBFC under Section
45 IA of the RBI Act was cancelled.

Thereafter pursuant to a special resolution passed by the Shareholders on June 12

2015 the Company was converted into a public limited company and the name was
changed to Equitas Holdings Limited. The RoC issued a fresh certificate of incorporation
consequent to change of name on June 18 2015.In 2015 the company got In-principle
approval for Small Finance Bank pursuant to RBI Letter dated October 7 2015 under
reference DBR.PSBD.NBC (SFB-Equitas). No 4915/ 16.13.216/2015-16.Equitas
Holdings (EHL) raised Rs 720 crore through an Initial Public Offering (IPO) in April
2016 to fund the capital requirements of the subsidiaries.

The Equity Shares of the Company were listed on BSE Limited and National Stock
Exchange of India Limited on April 21 2016. From out of the IPO proceeds EHL infused
Rs 616 crore in April 2016 into the three subsidiaries viz. Equitas Finance Limited
Equitas Micro Finance Limited and Equitas Housing Finance Limited EHFL.During FY

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2017-18 the Company infused a capital of Rs 5 crore in its subsidiary Equitas

Technologies Private Limited by subscribing to its equity shares on a rights basis.During
the financial year ended 31 March 2018 the micro finance portfolio collections of the
bank in specific geographies were impacted post demonetisation.

In a few states a large number of micro finance borrowers misguided by local

vested elements about probable loan waivers defaulted in their repayments. Out of such
defaults the bank had identified certain loan assets as loss assets and had made full
provision for the same during the year. Subsequently these loss assets were written off to
the tune of Rs 142.11 crore. This has significantly impacted the overall profitability of the
bank for the year. The rollout of the liabilities branches was completed as of September
2017 increasing the total number of branches to 375.

Another 17 Business Correspondents (BCs) led banking outlets were also made
operational during the year taking the overall banking outlets to 392.During the financial
year ended 31 March 2018 the bank introduced Business Loans addressing the credit
needs of micro enterprises. It also introduced funding for purchase of new (Light
Commercial Vehicles as well as funding small and medium sized fleet operators having
ownership of 5+ and 10+ vehicles respectively for working capital purposes on the
security of their vehicles.During FY 2017-18 Equitas Small Finance Bank Limited
(ESFBL) the wholly-owned Subsidiary of the Company was penalised for having
commenced the business of distribution of third party products without obtaining prior
approval of Reserve Bank of India.

The subsidiary ESFBL was formed by merger of three NBFC subsidiaries; carrying
on the business of micro finance vehicle finance and housing finance respectively. These
Companies were arranging / distributing insurance for its borrowers primarily to secure
the loans in the event of their death or incapacitation due to accident or otherwise as well
as insuring the asset which is secured to the loan such as vehicles property etc.

This legacy arrangement was continued after becoming a Small Finance Bank
however there was an oversight in seeking RBI's prior approval. Soon after noticing this
omission in an internal compliance review ESFBL promptly reported the matter to RBI

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admitting its lapse and sought its approval for distribution of third party products. The
approval was received from RBI vide letter dated December 29 2017. RBI also levied a
monetary penalty of Rs 10 lakh on ESFBL for the aforesaid omission to obtain prior RBI
approval.

 Arun Ramanathan
He is the Part-time Chairman and Non-Executive Independent Director of our Bank

He holds a bachelor’s degree in science from University of Madras, a master’s degree in

nuclear physics from Andhra University, a master’s degree in business administration
from University of Madras and a master’s of philosophy degree in economics and politics
of development from University of Cambridge. Further, he is an associate member of the
Institute of Cost and Works Accountants of India. Prior to his becoming a Director of our
Bank, he was a member of the Indian Administrative Service (Tamil Nadu Cadre, 1973).
In his stint of more than 34 years of service in the Indian Administrative Service, he held
several postings in the Government of India at the level of Secretary in various ministries,
including Secretary in the department of Chemicals and Petrochemicals (Ministry of
Chemicals and Fertilizers), Secretary in the department of Financial Services (Ministry of
Finance) and at superannuation in 2009, the Union Finance Secretary.

He has served as a director on the boards of several companies including State Bank of
India, IDBI Bank Limited, ICICI Bank Limited, India Infrastructure Finance Company
Limited, IDFC Limited, Oil and Natural Gas Corporation Limited, Shipping
Corporation of India Limited, Tamil Nadu Petroproducts Limited, National Textile
Corporation Limited, ONGC Videsh Limited, Titan Industries Limited, United Stock
Exchange of India Limited, Indian Clearing Corporation Limited, Jenson and
Nicholson (India) Limited, JCT Electronics Limited, Religare Enterprises Limited and
L&T Infra Debt Fund Limited. He was a member of the Life Insurance Corporation of
India. He has served as chairman of the audit committees of Oil and Natural Gas
Corporation Limited and Shipping Corporation of India Limited. He has also served on
the Indian advisory council of Daimler (India) Commercial Vehicles Private Limited
between 2010 and 2016.

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He is a serving member on the investment committee of the Tamil Nadu Infrastructure

Fund Management Corporation Limited and has been included in the panel of outside
experts of Oil and Natural Gas Corporation Limited in the finance/commercial
category.

 Vasudevan Pathangi Narasimhan

He is the MD and CEO of our Bank. He holds a bachelor’s degree in science (physics)
from University of Madras. He is a qualified company secretary from the Institute of
Company Secretaries of India.
He has extensive experience in the financial services sector and had served as the
executive vice president and head of consumer banking group in Development Credit
Bank Limited, for more than one and half years.
He has also worked for about two decades in Cholamandalam Investment and Finance
Company Limited, part of the Murugappa Group, where he joined as a management trainee and
resigned as the vice president and head of vehicle finance.
He was also the chairman of the managing committee of the South India Hire Purchase
Association for Fiscal 2006. He joined erstwhile Equitas Finance Limited, now our Bank on July
25, 2016. Prior to joining our Bank, he was the Managing Director of EHL.

3.7 LISTING OF SHARES OF THE BANK

In accordance with the terms and conditions of the grant of Small Finance Bank
(SFB) license, the Bank is required to list its shares within three years of commencement of
business i.e., on or before September 4, 2019. Further, Equitas Holdings Limited (EHL), the
promoter of the Bank is required to retain at least 40% of shareholding in the Bank till
September 4, 2021. In order to ensure compliance with the aforesaid licensing
conditions, a Scheme of Arrangement was formulated between the Bank, EHL and
its shareholders, proposing issue of shares of the Bank for no cash
consideration to shareholders of EHL by capitalizing securities premium, free reserves
and surplus in the profit and loss account. This Scheme was submitted to SEBI through
Stock Exchanges for approval in February 2019. As this Scheme was returned by
SEBI in September 2019. The Bank has initiated steps to list its shares through an
Initial Public Offer (IPO). The Bank filed Draft Red Herring Prospectus (DRHP) for

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the proposed IPO, with SEBI on December 16, 2019. The DRHP proposed primary
issue of upto `550 crore and Offer For Sale by Equitas Holdings Limited, the promoter
selling shareholder of upto 8,00,00,000 (Eight crore only) shares.
However, due to the COVID-19 global pandemic and consequent lockdowns across
the country, the launching of the IPO and listing have been delayed. Management
and the Board of Directors remain committed to completing the IPO of shares, once
normalcy in business operations following the lockdown is restored

3.8 SMALL BUSINESS LOANS (INCLUDING HOUSING FINANCE)

 Secured business loans
 LAP (Self employed and salaried)
 Agri loans
 Housing Microfinance
 Group Loans to microentrepreneurial women Vehical Finance
 Used Commercial Vehicles
 New Commercial Vehicles
 Used Passenger Cars Micro and Small Enterprise Finance
 Working Capital Loans
 Fund based (cash credit, Overdraft (OD), etc.)
 Non-fund based (Bank Guarantee, Letters of Credit) Corporates Loans
 Loans to Financial institutions
 Loans to corporates Others
 Loans against gold, OD facilities against fixed deposits,

3.9 RETAIL PRODUCTS

 Current Account
 Saving Account
 Salary Account
 Term Deposit

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3.10 INSTITUTIONAL PRODUCTS

 Current Account
 Bulk Deposit
 Certificate of Deposit

Third party
3.11 FEE-BASED PRODUCTS
 Insurance
 FASTag
 Asset Management — Mutual Funds (MFs) — Portfolio Management Service
(PMS)

3.12 CHANNELS
 Banking Outlets
 ATM/Debit Cards/Point of Sale (POS)
 Mobile Banking
 Phone Banking
 Internet Banking
 Call Centre

3.13 MANUFACTURED CAPITAL

 Extensive network of branches and ATMs among Small Finance Banks
 Creating omni-channel experience by seamlessly combining physical
touchpoints with digital platforms
 Improved customer convenience
 Human Capital
 Employee base of 16,104 as on March 31, 2020
 14,183 Man Days of classroom learning programmes
 45,043 Man Hours of e-learning programmes
 Women employees constitute 11% of the total workforce
 Intellectual Capital

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 Industry first features like ‘Facial Recognition on mobile banking app’

introduced to provide enhanced security
 Relaunched Selfe platform to provide customers with digital onboarding option
from the comfort of their homes
 Introduced Tab-based onboarding facility for Bank personnel, to meet
prospective customers and complete their onboarding digitally, in minutes
 Opened our API kit enabling Banking as a Service (BAAS) facilitating our
Bank to collaborate with fintech talent and leverage innovation-led co-creation
 Enabled us to immediately empower most of our employees to Work From Home,
when the need arose towards the end of March 2020

3.14 SOCIAL AND RELATIONSHIP CAPITAL

 5,94,777 CSR beneficiaries
 Through our Microfinance Loan programmes, we supported ~18,134 persons
with disabilities during FY20 and cumulatively over 50,849 persons
 4,19,512 beneficiaries from health and eye check-up camps
 Over 6,000 students enrolled across seven schools
 26,228 candidates placed through job placement fairs
 308 families settled in organised housing through Pavement Dwellers
Rehabilitation programme

3.15 NATURAL CAPITAL

 50,000 saplings distributed
 45,043 Man Hours of E-Learning Programs
 96,758 paperless account opened
 Spread awareness among the sanitary workers in Chennai municipal
corporation on source segregation and zero waste management concepts

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3.16 CORPORATE SOCIAL RESPONSIBILITY (CSR) REPORT

1. A brief outline of the Bank’s CSR policy, including overview of projects or

programs proposed to be undertaken and a reference to the web-link to the
CSR policy and projects or programs:
CSR Policy of the Bank is available on our website, www.equitasbank.com. As per
the CSR Policy, the Bank makes contribution upto the higher of 5% of its net profits
of each
financial year or 2% of average profits of the Bank for the past three years for
undertaking such CSR projects or activities as approved by the CSR Committee
from time to time. The oversight of Projects undertaken by Equitas Development
Initiatives Trust (EDIT) through which the Company carries on CSR activities, is
done by the CSR Committee and the Board. A brief note on various projects
undertaken by the Bank is enclosed as annexure.

2. The Composition of the CSR Committee as at March 31, 2020 is as follows:

 Mr. Nagarajan Srinivasan, Non-Executive, Non-Independent Director
 Mr. Sridhar Ganesh, Independent Director
 Mr. Srinivasan N, Independent Director
 Ms. Tabassum Inamdar, Independent Director
 Mr. Navin Puri, Independent Director
 Mr. Vasudevan P N, Managing Director

3.17 ANNEXURE TO CSR REPORT – FY 2019-20

The mission of Equitas is “Empowering through Financial Inclusion”. In line
with this mission, besides providing finance at reasonable cost to those who are
not effectively serviced by the mainstream financial institutions, Equitas has also
developed
a wide range of ecosystem initiatives towards improving the quality of life of
people belonging to Economically Weaker Sections (EWS) and Low Income
Groups (LIG). These initiatives are carried out through notfor-profit trusts
named Equitas Development Initiatives Trust (EDIT) and Equitas Healthcare

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Foundation (EHF),
registered public charitable trusts established by Equitas Holdings Limited. As per
the CSR Policy, the Bank, in addition to carrying out direct CSR activities,
contributes upto 5% of its net profits every year to EDIT and EHF to carry on
CSR initiatives on behalf of the Company. CSR activities carried out by
Equitas Development Initiatives Trust (EDIT) are detailed below:
 Educational Initiatives
Education is a key lever to enable upward social mobility for low income Self Help
Group members’ children. Equitas has rolled out its Gurukul initiatives to
“empower childrenfrom low income households, through high quality education at
affordable cost”. EDIT is currently running 7 such schools at Trichy,
Dindigul, Salem, Karur, Cuddalore, Coimbatore and Kumbakonam with more than
6,000 students. More such schools are planned in the future. About 98% of Gurukul
students are from Backward Class, Most Backward Class and Scheduled Caste
categories and about 80% of Gurukul parents are from Economically Weaker Sections.
 Skill development
Equitas has imparted training to more than 549953 Self Help Group women
members in skills such as tailoring & embroidery, agarbathi / candle making,
detergent / phenyl manufacturing and preparing processed foods such as pickles
& jams. These training programs are structured as week-long programs. The skill
development
program has helped to improve the income of the beneficiaries. Studies reveal
that 52% of the trained members earn additional supplemental income in the
range of ` 500 to ` 2,000 per month using the newly acquired skills.
 Pavement dwellers rehabilitation program (Equitas Birds Nest)
This programme was commenced in 2010 for “Rehabilitation of Pavement
Dwellers” in
Chennai. Under this program, the Trust pays the rent on their behalf for 6 months
during
which they are taught livelihood skills and linked to local markets. From the 7th
month
onwards, they are required to make the rent payment by themselves. These families
have attained self sustenance

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status through this intervention from Equitas. Many people have received Voter ID
cards
and have applied for ration cards for the first time in their lives. In 2019-20, 308
families
have been moved into houses, taking the cumulative beneficiaries under the program
to about 1,991 families. Out of these rehabilitated families, under a graduation
program,
members
were formed into a group. After inputs on financial literacy and counselling,
following all
the regular MF process, MFI loan was sanctioned. 100% collection was observed
in
those loans till date. Encouraged by this positive response, 5 more groups have been
included in the program, thus
mainstreaming them into the community and fulfilling their dream of economic
empowerment.

 Placement Cell:
In another proactive step, Equitas facilitates conduct of job fairs for unemployed youth
of low income communities, with the help of recruiters and employers. Till date, gainful
employment to over 1,87,087 youth has been arranged in companies and retail outlets like
textile showrooms, malls, hospitals, BPOs etc
 Health care services Equitas
 Understands that access to affordable healthcare is of paramount
importance
 Health Education for Healthy living:
A team of 500 women skill trainers have been trained with Technical support from
“Freedom from Hunger” to impart Health Education to Members which would help in
early detection of noncommunicable diseases. Cumulatively imparted to over 2.68 lakh
women.
 Medical Camps:
Through a tie up with about 900 hospitals spread across 7 states, Equitas
conducts nearly 400 medical camps every month, benefiting about 50,000

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people every month. Cumulatively nearly 6.10 million people have benefited
so far under this program.
 Equitas Sugam Clinics:
Based on popular demand another new service has been piloted, specifically to
address the need among families belonging to Low Income Households
(LIH) for doctors’ consultation. Under this model at EDIT clinic a qualified doctor
will be available from 10-1 pm. The patient’s history is documented and medicines
are prescribed
as per the need. EDIT has opened 2 such clinics and proposes to scale up in the
coming years. EDIT runs two clinics specifically to address the need among
families belonging to Low Income Households (LIH) for doctors’ consultation.
Under this model at EDIT clinic a qualified doctor will be available from
10-1 pm. The patient’s history is documented and medicines are prescribed as per
the need.

 Health care services done directly by the Bank

 Primary Health Care:
The Bank has conducted free primary health care medical camps benefiting
cumulatively 61,07,985 members so far.
 Secondary Health Care & Health Help line:
The Bank has also tied up with a large number of hospitals to help our clients get
inpatient treatment for serious illnesses at a discount to normal cost. This
initiative has benefited nearly 32,056 members.

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3.18 ABOUT US
Equitas Small Finance Bank.

Type:- Small finance bank

Traded as:- NSE: EQUITASSFB

Industry:- Banking, financial services

Founded:- 2016

Headquarters:- Phase-II, 4th Floor, Spencer Plaza, No-769, Anna Salai, Chennai
,India

Key people:- Shri Arun Ramanathan (Part-time Chairman)

Mr. Vasudevan P N (MD & CEO)

Website:- www.equitasbank.com

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3.19 BALANCE SHEET

BALANCE MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

SHEET OF
EQUITAS SMALL
FINANCE
BANK (in Rs. Cr.)
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share 1,139.28 1,053.40 1,005.94 1,005.94 1,005.94
Capital
TOTAL SHARE 1,139.28 1,053.40 1,005.94 1,005.94 1,005.94
CAPITAL
Revaluation 0.00 0.00 0.00 0.00 0.00
Reserve
Reserves and 2,257.06 1,690.75 1,248.38 1,037.81 1,005.98
Surplus
Total Reserves and 2,257.06 1,690.75 1,248.38 1,037.81 1,005.98
Surplus
TOTAL 3,396.34 2,744.15 2,254.32 2,043.75 2,011.92
SHAREHOLDERS
FUNDS
Deposits 16,391.97 10,788.41 9,006.74 5,603.93 1,921.29
Borrowings 4,165.32 5,134.87 3,973.03 5,177.21 4,778.90
Other Liabilities 761.59 647.12 528.61 485.07 533.24
and Provisions
TOTAL CAPITAL 24,715.22 19,314.55 15,762.69 13,309.96 9,245.34
AND
LIABILITIES

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ASSETS
Cash and Balances 514.81 380.86 402.70 386.08 247.93
with Reserve Bank
of India
Balances with 2,863.90 2,155.98 857.91 825.08 866.14
Banks Money at
Call and Short
Notice
Investments 3,705.17 2,342.51 2,344.45 3,856.84 1,890.50
Advances 16,847.95 13,747.24 11,595.00 7,706.69 5,701.83
Fixed Assets 185.05 212.77 237.34 280.88 288.35
Other Assets 598.35 475.19 325.28 254.38 250.59
TOTAL ASSETS 24,715.22 19,314.55 15,762.69 13,309.96 9,245.34
OTHER
ADDITIONAL
INFORMATION
Number of 0.00 854.00 987.00 392.00 375.00
Branches
Number of 0.00 16,106.00 14,608.00 13,490.00 13,320.00
Employees
Capital Adequacy 0.00 23.61 22.44 29.63 35.51
Ratios (%)
KEY
PERFORMANCE
INDICATORS
Tier 1 (%) 0.00 22.44 20.92 27.09 32.30
Tier 2 (%) 0.00 1.17 1.52 2.54 3.21
ASSETS
QUALITY
Gross NPA 642.78 417,320.00 295,710.00 212,530.00 206,480.00
Gross NPA (%) 4.00 3.00 3.00 3.00 4.00
Net NPA 266.17 247,620.00 186,420.00 131,500.00 104,950.00

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Net NPA (%) 1.58 1.66 1.44 1.46 1.51

Net NPA To 0.00 2.00 1.00 1.00 2.00
Advances (%)
CONTINGENT
LIABILITIES,
COMMITMENTS
Bills for Collection 0.00 0.00 0.00 0.00 0.00
Contingent 0.00 26.98 32.72 33.15 49.31
Liabilities

3.20 PROFIT AND LOSS ACCOUNT

PROFIT & LOSS MAR MAR 20 MAR MAR MAR

ACCOUNT OF 21 19 18 17
EQUITAS SMALL
FINANCE BANK (in
Rs. Cr.)
12 mths 12 mths 12 mths 12 mths 12 mths
INCOME
Interest / Discount on 2,900.83 2,420.01 1,823.66 1,342.24 909.73
Advances / Bills
Income from 219.39 157.65 257.96 181.24 55.64
Investments
Interest on Balance with 74.20 67.79 30.32 19.23 15.68
RBI and Other Inter-
Bank funds
Others 0.00 0.00 0.00 0.00 0.00
TOTAL INTEREST 3,194.42 2,645.44 2,111.93 1,542.71 981.05
EARNED

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Other Income 418.05 282.35 282.90 241.22 233.23

TOTAL INCOME 3,612.47 2,927.80 2,394.83 1,783.93 1,214.28
EXPENDITURE
Interest Expended 1,396.45 1,150.14 960.20 682.17 447.16
Payments to and 791.45 709.79 551.31 515.41 318.04
Provisions for
Employees
Depreciation 0.00 96.45 91.78 87.51 31.71
Operating Expenses 537.98 373.84 365.40 278.20 159.50
(excludes Employee
Cost & Depreciation)
TOTAL OPERATING 1,329.43 1,180.08 1,008.49 881.11 509.24
EXPENSES
Provision Towards 127.04 133.08 137.86 35.87 59.80
Income Tax
Provision Towards 0.00 0.00 0.00 0.00 0.00
Deferred Tax
Other Provisions and 375.32 246.64 102.41 172.12 96.43
Contingencies
TOTAL PROVISIONS 502.36 353.94 215.58 188.81 153.75
AND
CONTINGENCIES
TOTAL 3,228.24 2,684.16 2,184.27 1,752.10 1,110.15
EXPENDITURE
NET PROFIT / LOSS 384.23 243.64 210.57 31.83 104.13
FOR THE YEAR
NET PROFIT / LOSS 384.23 243.64 210.57 31.83 104.13
AFTER EI & PRIOR
YEAR ITEMS
Profit / Loss Brought 0.00 0.00 0.00 0.00 0.00
Forward
TOTAL PROFIT / 0.00 243.64 210.57 31.83 104.13

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LOSS AVAILABLE
FOR
APPROPRIATIONS
APPROPRIATIONS
Transfer To / From 0.00 60.91 52.64 7.96 26.03
Statutory Reserve
Transfer To / From 0.00 0.00 0.00 0.00 0.00
Capital Reserve
Transfer To / From 0.00 0.00 0.00 0.00 0.00
Revenue And Other
Reserves
Dividend and Dividend 0.00 0.00 0.00 0.00 0.00
Tax for The Previous
Year
Equity Share Dividend 0.00 0.00 0.00 0.00 0.00
Tax On Dividend 0.00 0.00 0.00 0.00 0.00
Balance Carried Over 0.00 175.13 146.86 20.91 76.68
To Balance Sheet
TOTAL 0.00 243.64 210.57 31.83 104.13
APPROPRIATIONS
OTHER
INFORMATION
EARNINGS PER
SHARE
Basic EPS (Rs.) 3.53 2.39 2.09 0.32 1.30
Diluted EPS (Rs.) 3.49 2.39 2.09 0.32 1.30
DIVIDEND
PERCENTAGE
Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00
(%)

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3.21 SWOT ANALYSIS

 STRENGTH
 Company with high TTM EPS Growth
 Growth in Net Profit with increasing Profit Margin (QoQ)
 Growth in Quarterly Net Profit with increasing Profit Margin (YoY)
 Increasing profits every quarter for the past 4 quarters
 Annual Net Profits improving for last 2 years
 Book Value per share Improving for last 2 years
 Company with Zero Promoter Pledge
 FII / FPI or Institutions increasing their shareholding

 WEAKNESS

 Promoter decreasing their shareholding

 OPPORTUNITIES

 Brokers upgraded recommendation or target price in the past three months

 Highest Recovery from 52 Week Low
 Decrease in Provision in recent results
 RSI indicating price strength
 Insiders bought stocks

 THREATS

 Increasing Trend in Non-Core Income

 Increase in NPA in Recent Results

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3.22 EQUITAS SMALL FINANCE BANK IPO DETAILS

 Allocation of the IPO

About 50% of the offer for the Equitas Small Finance Bank Ltd IPO is open to

Qualified Institutional Buyers, while 35% of the offer is reserved for retail investors.

Meanwhile, an additional 15% is reserved for Non-institutional Investors.

Equitas Small Finance Bank Ltd is also reserving about 10% of its offer, or

Rs 51 crore, for its shareholders. All investors holding shares under Equitas Holding Ltd

as of October 11, 2020, are eligible to apply under the shareholder's category for

the Equitas Small Finance Bank Ltd IPO. Under this category, the shareholders can apply

for a bid of up to Rs 2 lakh. In addition, a reservation of up to Rs 1 crore is open for

eligible Equitas Holdings employees with a maximum bid of Rs 2 lakh.

 Listings of the IPO

The Equitas Small Finance Bank Ltd IPO has received in-principle approvals from both

the Bombay Stock Exchange (BSE) as well as the National Stock Exchange (NSE).

Therefore, the shares of Equitas Small Finance Bank Ltd are set to be listed on both the

stock exchanges.

 Objective of the IPO

According to the Equitas Small Finance Bank Ltd IPO, the net proceeds received by the

company are to be utilised for a single objective: to augment the bank’s tier-I capital

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base to meet their future capital requirements such as organics growth and expansion.

The bank proposes to utilize the Net Proceeds from the fresh issue offer towards

augmenting the Bank's Tier I capital base to meet the future capital requirement.

IPO Opening Date Oct 20, 2020

IPO Closing Date Oct 22, 2020

Issue Type Book Built Issue IPO

Face Value ₹10 per equity share

IPO Price ₹32 to ₹33 per equity share

Market Lot 450 Shares

Min Order Quantity 450 Shares

Listing At BSE, NSE

Issue Size [.] Eq Shares of ₹10

(aggregating up to ₹517.60 Cr)

Fresh Issue [.] Eq Shares of ₹10

(aggregating up to ₹280.00 Cr)

Offer for Sale 72,000,000 Eq Shares of ₹10

(aggregating up to ₹237.60 Cr)

Retail Discount ?0

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Employee Discount ?0

3.23 EQUITAS SMALL FINANCE BANK IPO TENTATIVE

TIMETABLE

The Equitas Small Finance Bank IPO open date is Oct 20, 2020, and the close date is

Oct 22, 2020. The issue may list on Nov 2, 2020.

IPO Open Date Oct 20, 2020

IPO Close Date Oct 22, 2020

Basis of Allotment Date Oct 27, 2020

Initiation of Refunds Oct 28, 2020

Credit of Shares to Demat Account Oct 29, 2020

IPO Listing Date Nov 2, 2020

3.24 EQUITAS SMALL FINANCE BANK IPO LOT SIZE

The Equitas Small Finance Bank IPO market lot size is 450 shares. A retail-individual

investor can apply for up to 13 lots (5850 shares or ₹193,050).

Application Lots Shares Amount (Cut-off)

Minimum 1 450 ₹14,850

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Maximum 13 5850 ₹193,050

3.25 EQUITAS HOLDINGS (EHL) SHAREHOLDERS

RESERVATION IN IPO

Investors who hold EHL shares on October 11, 2020, are eligible to apply under the

shareholder's category of Equitas Small Finance Bank IPO. The company reserved 10%

of the offer for Shareholders (approximate Rs 51 Cr). The EHL shareholders can apply up

to Rs 2 lakh in

the Shareholders category. EHL shareholders can also apply under the retail category.

Further, if an EHL shareholder is also an employee, he/she is also eligible to

apply in all the three categories- RII (up to Rs 2 lakhs), Shareholder (up to Rs 2 lakhs)

and Employees (up to Rs 5 lakhs).

3.26 EQUITAS HOLDINGS EMPLOYEES RESERVATION IN IPO

Full-time or permanent employees of EHL can apply in the SBI Employees category

of Equitas Small Finance Bank IPO. The maximum limit defined to apply in the Employee

category is Rs 5 lakhs. The maximum allotment to employees cannot be above Rs 2

lakhs when the category is fully or oversubscribed. In case of under-subscription

in the employee category, the unsubscribed portion will be available for allocation,

proportionately to all Eligible Employees who Bid above Rs 2 lakhs, subject to a

maximum limit not exceeding Rs 5 lakhs.

Investors Portion and Basis of Allotment

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Category Percentage of Offer size Basis of Allotment

QIB Not More than 50% Proportionate

NII Not less than 15% Proportionate

Retail Not less than 35% Minimum 1 lot to each investor,

subject to availability.

Employee Not More than 5% of the post- Proportionate*

offer paid-up equity share capital

Shareholders Not More than 10% Proportionate**

 * Unless the Employee Reservation Portion is under-subscribed, the value of

allocation to an Eligible Employee shall not exceed Rs 200,000. In the event of

under-subscription in the Employee Reservation Portion, the unsubscribed

portion may be allocated, on a proportionate basis, to Eligible Employees Bidding

in the Employee Reservation Portion for value exceeding Rs 200,000, subject to

total Allotment to an Eligible Employee not exceeding Rs 500,000.

 ** Subject to minimum Bid Lot

3.27 IMPORTANT CLARIFICATIONS

 Zerodha allows 1 IPO application per customer even though the option is

available for applying in the retail and shareholders category. To apply the 2nd

application, please use your net banking facility.

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 The shareholder list is prepared on PAN. Shareholders can apply from a

different demat account (on the same name) where they do not hold EHL shares.

 An investor will be identified by the PAN Number and not the Demat Account.

 When using UPI as a payment method, the primary account holder in the bank and

demat should be the same person. Use of 3rd party UPI ID or 3rd party bank

account is not allowed.

 When using ASBA, up to 5 IPO applications can be applied from the same bank,

if the bank offers this facility. Public sector banks (like SBI) offer this facility.

 Minors can only apply using ASBA from the banks that offer the 3rd Party ASBA

IPO application. i.e. SBI.�Click here�for more detail.

3.28 DRHP ADDENDUM

Date: September 25, 2020

Pursuant to relaxation permitted by SEBI, the company had filed an addendum to its

DRHP revising its Offer Size for the proposed IPO of its equity shares as below:

 the size of the Fresh Issue has been reduced from up to Rs 5,500 million to up to

Rs 2,800 million;

 the number of Equity Shares offered through the Offer for Sale by the Company,

has been reduced from up to 80,000,000 Equity Shares to up to 72,000,000 Equity

Shares;

 the Employee Reservation Portion for Eligible Employees has been reduced

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from up to Rs 50 million to up to Rs 10 million; and

 the EHL Shareholder Reservation Portion for Eligible EHL Shareholders has been

reduced from up to Rs 1,000 million to up to Rs 510 million.

3.29 EQUITAS SMALL FINANCE BANK IPO

SUBSCRIPTION STATUS (BIDDING DETAIL)

The Equitas Small Finance Bank IPO is subscribed 1.95x times on Oct 22, 2020 17:00.

The public issue subscribed 2.08x in the retail category, 3.91x in the QIB category, and

0.22x in the NII category. Check Day by Day Subscription Details (Live Status)

Category IPO Subscription

QIB 3.91x

NII 0.22x

RII 2.08x

Employee 1.84x

Others 0.42x

Total 1.95x

3.30 EQUITAS SMALL FINANCE BANK IPO LISTING DATE

Listing Date Monday, November 2, 2020

BSE Script Code 543243

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NSE Symbol EQUITASBNK

Listing In B Group of Securities

ISIN INE063P01018

IPO Price ₹33 per equity share

Face Value ₹10 per equity share

3.31 LISTING DAY TRADING INFORMATION

. BSE NSE
IPO Price ₹33.00 ₹33.00
Open ₹31.00 ₹31.10
Low ₹30.10 ₹30.05
High ₹33.05 ₹33.15
Last Trade ₹32.75 ₹32.80
Volume 3,721,057 23,099,679

3.32 COMPANY CONTACT INFORMATION

Equitas Small Finance Bank Ltd

4th Floor, Phase II, Spencer Plaza, No. 769,
Mount Road, Anna Salai, Chennai 600 002,
Tamil Nadu, India

Phone: +91 44 4299 5000

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Email: [email protected]

Website: https://www.equitasbank.com/

3.33 EQUITAS SMALL FINANCE BANK IPO REGISTRAR

KFintech Private Limited

KFintech, Tower-B, Plot No 31 & 32, Financial District, Nanakramguda,
Gachibowli,
Hyderabad, Telangana India - 500 032.

Phone: 04067162222, 04079611000

Email: [email protected]

Website: https://karisma.kfintech.com/

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CHAPTER-4

DATA ANALYSIS AND INTERPRETATIONS

INTRODUCTION:

Data analysis means the Categorizing, Ordering, Manipulating and Summarizing of data to
obtain answers to research questions. Interpretation is concerned with relationships within the
collected data, partially overlapping analysis. Interpretation also extends beyond the data of. The
study includes the results of others research, theory and hypotheses.

MEANING OF ANALYSIS:

It is the process by which body of gathered data facts figures and idea is converted into
meaningful and useful information the data is placed on its appropriate setting and relationship
drawing general interfaces following is the procedure involve in the intergraded operation of
analysis of data: Classification of data

 Tabulation of data
 Statistical analysis of data

MEANING OF INTERPRETATION:

Interpretation is concerned with relationships within the collected data, partially Overlapping
analysis. Interpretation also extends beyond the data of the study includes the results of other
research, theory and hypotheses.

This chapter presents the analysis, presentation and interpretation of the findings resulting from
this study. The analysis and interpretation of the data is carried out in single phase. The single
phase, which is based on the results of the questionnaire, deals with a quantitative analysis of the
data. And also, which is based on the results of the interview and focuses group discussions, is a
qualitative interpretation. The total sample of the present study comprises of 83 respondents

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PRIMARY DATA

DEMOGRAPHIC PROFILE OF THE RESPONDENDS

TABLE 4.1

TABLE SHOWING GENDER OF THE RESPONDENDS

GENDER RESPONSES PERCENTAGE

Male 48 58.5%

Female 34 41.5%

Others 0 0

Total 82 100%

ANALYSIS

From the above table we would be able to analyse the quantity of Male and female respondents.
The above table demonstrates that the male respondents are more than the female respondents.
The male respondents are 48 and female respondents are 34 in numbers.

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CHART 4.1

CHART SHOWING RESPONDENTS RESPONSE TOWARDS GENDER OF THE

RESPONDENTS

INTERPERTATION

From the pie chart we can come to the point that there is a increase in Male respondents who
answered or gave their opinion on this project. There is increase in 14 members in Male
respondents with reference to the Female respondents who are 34 in numbers.

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TABLE 4.2

TABLE SHOWING AGE OF THE RESPONDENTS

AGE (IN YEARS) RESPONSES PERCENTAGE

18-30 70 84.3%

31-40 1 1.2%

41-50 7 8.5%

51&ABOVE 5 6.0%

TOTAL 83 100%

ANALYSIS

From the above table we can analyze that the respondents who have put forth their opinions
come under the age between 18 to 30 years. There are only few respondents who are aged
between 31 to51&above. This is because the most of the respondents are graduated literally.

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CHART 4.2

CHART SHOWING RESPONDENTS RESPONSE TOWARDS AGE OF THE

RESPONDENTS

INTERPRETATION

From the above chart, it clearly depicts that the information which is provided by the
respondents are more from the age of 18 to 30 years and few respondents from age group of 31
to 51 years &above. This basically entails the preference was given to the young generation.

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TABLE 4.3

TABLE SHOWING ANNUAL INCOME OF THE RESPONDENTS

ANNUAL INCOME RESPONSES PERCENTAGE

BELOW RS 5,00,000 67 80.7%

RS 5,00,001-10,00,000 4 4.8%

RS 10,00,001 & ABOVE 12 14.5%

TOTAL 83 100%

ANALYSIS

From the above table we came to know that out of total respondents 67 respondents are belongs
below RS 5,00,000 slab, 4 respondents are belongs to RS 5,00,001-10,00,000 slab, 12
respondents are belongs to RS 10,00,001 & above slab. By this we came to know that most of
the respondents are middle class people and daily wages people.

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CHART 4.3

CHART SHOWING RESPONDENTS RESPONSE TOWARDS ANNUAL INCOME OF

THE RESPONDENTS

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents are 80.7% towards below Rs 5,00,000 slab, 4.8% towards Rs 5,00,001-10,00,000
slab, 14.5% towards 10,00,001 & above slab .. By this we can interpret that most of the
respondents are middle class and lower middle class people.

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TABLE 4.4

TABLE SHOWING AREA OF RESPONDENTS

AREA RESPONSES PERCENTAGE

RURAL 16 19.3%

URBAN 56 67.5%

SEMI URBAN 11 13.2%

TOTAL 83 100%

ANALYSIS

From the above table we came to know that out of total respondents 56 respondents are from
urban.16 respondents are from rural and 11 respondents from semi urban.

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GRAPH 4.4

CHART SHOWING RESPONDENTS RESPONSE TOWARDS AREA OF THE

RESPONDENTS

INTERPRETATION

From the above chart , it clearly depicts that the information which is provided by the
respondents 67.5% respondents are from urban ,19.3% respondents are from rural, 13.3%
respondents are from semi urban. By this we Can interpret that most of the respondents are from
urban areas.

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TABLE 4.5

TABLE SHOWING OCCUPATION OF THE RESPONDENTS

OCCUPATION RESPONSES PERCENTAGE

BUSINESSMAN 5 6%

EMPLOYEE 27 32.5%

STUDENT 46 55.4%

HOUSEWIFE 3 3.6%

INDUSTRIALIST 2 2.5%

TOTAL 83 100%

ANALYSIS

From the above table we came to know that out of total respondents 46 respondents are have
marked has students, 27 respondents are employee,5 respondents are businessman,3 are
housewife and only 2 are industrialist.

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CHART 4.5

CHART SHOWING RESPONDENTS RESPONSE TOWARDS OCCUPATION OF THE

RESPONDENTS

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents are 55.4% towards student,32.5% towards employee,6% towards businessman,3.6%
towards housewife and only 2.5% towards industrialist.

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RESEARCH QUESTIONS

TABLE 4.6

RISK PROFILE OF INVESTERS

PROFILE RESPONSES PERCENTAGE

LOW 17 20.5%

MODERATE 54 65.1%

HIGH 12 14.5%

TOTAL 83 100%

ANALYSIS

From the above table we came to know that out of total respondents 54 respondents have
marked moderate risk profile, 17 respondents have marked to low risk profile and 12
respondents have marked high risk profile.

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GRAPH 4.6

CHART SHOWING RESPONDENTS RISK PROFILE

INTERPRETATION:

From the above chart it clearly depicts out of the total respondents, 65.1% respondents are
moderate risk takers,20.5% respondents are low risk takers and only 14.5% respondents are high
risk takers. By this we can interpret that majority respondents are moderate risk takers while
investing in IPO.

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TABLE 4.7

TABLE SHOWING RESPONDENTS INVESTMENT AMOUNT IN INITIAL PUBLIC

OFFERINGS

AMOUNT(RS) RESPONSES PERCENTAGE

BELOW 15,000 63 75.9%

15,001-30,000 15 18.1%

30,001-45,000 1 1.2%

45,000 & ABOVE 4 4.8%

TOTAL 83 100%

ANALYSIS

From the above table we came to know that out of total respondents 63 respondents are
investing below 15000 Rs, 15 respondents are investing between 15,001-30,000 Rs, 4
respondents are investing 45,000 Rs and above and only 1 respondents are investing between
30,001-45,000 Rs.

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GRAPH 4.7

CHART SHOWING RESPONDENTS RESPONSE TOWARDS INVESTMENT

AMOUNT IN INITIAL PUBLIC OFFERINGS

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 75.9% respondents are investing below 15,000 Rs, 18.1% respondents are investing
between 15,001-30,000 Rs, 4.8% respondents are investing above 45,000 Rs and above and only
1.2% respondents are investing between 30,001-45,000 Rs. By this we can interpret that most of
the respondents are ready to invest 1 lot quantiy of share, means below 15,000 Rs to take low
risk.

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TABLE 4.8

TABLE SHOWING RESPONDENTS RESPONSE FOR SOURCE OF INFORMATION

THEY CONSIDER BEFORE INVESTING IN INITIAL PUBLIC OFFEERINGS

SOURCE OF RESPONSES PERCENTAGE

INFORMATION

PRINT MEDIA 18 21.7%

ELECTRONIC MEDIA 28 33.7%

EXPERT OPINION 22 26.5%

FRIENDS ADVICE 15 18.1%

Total 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 28 respondents havegot the
source of information from electronic media, 22 respondents have got source of information
from expert opinion, 18 respondents have got source of information from print media and only
15 respondents has got source of information from friends advice.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 77

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.8

CHARTSHOWING RESPONDENTS RESPONSE TOWARDS THE SOURCE OF

INFORMATION THEY TO KNOW BEFORE INVESTING IN INITIAL PUBLIC
OFFEERINGS.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 33.7% respondents gets information from electronic media, 26.5% respondents gets
information from expert opinion, 21.7% respondents gets information from print media and only
18.1% respondents gets information from friend advice. By this we can interpret that majority of
respondents gets information from electronic media such as social networks, Television
channels etc before investing in initial public offerings.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 78

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.9

TABLE SHOWING RESPONDENTS RESPONSE OF INFORMATION THEY SEE

BEFORE INVESTING IN INITIAL PUBLIC OFFERINGS

INFORMATION RESPONSES PERCENTAGE

PROMOTERS 18 21.7%
BACKGROUND

SECTOR 20 24.1%
PERFORMANCE
PERFORMANCE OF A 35 42.2%
COMPANY

PREMIUM AMOUNT 10 12.0%

TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 35 respondents see the
performance of a company, 20 respondents see the sector performance, 18 respondents see the
promoters background and only 10respondents see the premium amount before investing.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 79

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.9

CHART SHOWING RESPONDENTS RESPONSE THEY SEE BEFORE INVESTING

IN INITIAL PUBLIC OFFERINGS

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 42.2% respondents see the performance of the company, 24.1% respondents see the
sector performance, 21.7% respondents see the promoters background and only 12%
respondents see the premium amount. By this we can interpret that majority respondents see the
past performance of the company and then invest in initial public offerings.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 80

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.10

TABLE SHOWING RESPONDENTS RESPONSE TOWARDS HOW LONG THEY

TRADE IN INITIAL PUBLIC OFFERINGS

TIME DURATION RESPONSES PERCENTAGE

1YEAR-2YEARS 65 78.3%

2YEARS-5YEARS 15 18.1%

5YEARS-10YEARS 0 0%

10YEARS& ABOVE 3 3.6%

TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 65 respondents trade
between 1year-2years, 15 respondents trade between 2years-5years, 3 respondents trade between
10years and above and no respondents trade between 5years-10years.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 81

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.10

CHART SHOWING RESPONDENTS RESPONSE TOWARDS THE TIME DURATION

THEY TRADE IN IPO.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 78.3% respondents trade between 1year-2years, 18.1% respondents trade between
2years-5years, 3.6% respondents trade between 10years and above, no respondents trade
between 5years-10years.By this we can interpret that majority respondents invest in initial
public offerings for short term. They take their profits and exit.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 82

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.11

TABLE SHOWING RESPONDENTS RESPONSE TOWARDS PERCENTAGE OF

GAIN THEY HAVE GOT ON LISTING DAY.

SCALE RESPONSES PERCENTAGE

BELOW 10% 50 60.3%

UPTO 10% 18 21.7%

10%-15% 8 9.6%

15% & ABOVE 7 8.4%

TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 50 respondents have gained
below 10%, 18 respondents have gained upto 10%, 8 respondents have gained 10%-15% and
only 7 respondents have gained 15% and above.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 83

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.11

CHART SHOWING RESPONDENTS RESPONSE TOWARD LISTING DAY GAINS.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 60.2% respondentshave gained below 10%, 21.7% respondents have gained upto
10%, 9.6% respondents have gained 10%-15%, 8.4% respondents have gained 15% and
above.By this we can interpret that majority respondents have gained below 10% on listing day
because investers sell before it gets list.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 84

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.12

TABLE SHOWING RESPONDENTS RESPONSE TOWARDS PURPOSE OF INITIAL

PUBLIC OFFERNGS

SCALE RESPONSES PERCENTAGE

LISTING DAY GAIN 36 43.4%

LONG TERM GAIN 29 34.9%

SHORT TERM GAIN 18 21.7%

TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 36 respondents have gained
on listing day gain, 29 respondents have gained on long term gain and 18 respondents have
gained on short term gain.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 85

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.12

CHART SHOWING RESPONDENTS RESPONSE TOWARDS THE PURPOSE OF

INITIAL PUBLIC OFFERINGS.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 43.3% respondents have gained listing day gain, 34.9% respondents have gained
long term gain, 27.7% respondents have gained short term gain.By this we can interpret that
majority respondents have gained on the day of listing because of oversubscription of
appilcation and grey market premium.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 86

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.13

TABLE SHOWING RESPONDENTS RESPONSE TOWARDS PROCEDURE FOR IPO

ALLOTMENT.

SCALE RESPONSES PERCENTAGE

EASY 42 50.6%

LENGTHY 31 37.3%

DIFFICULT 6 7.3%

COMPLICATED 4 4.8%

TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 42 respondents find it easy
to apply,31 respondents find it lengthy to apply,respondents find it difficult to apply and only 4
respondents find it complicated to apply.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 87

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.13

CHART SHOWING RESPONDENTS RESPONSE TOWARDSPROCEDURE FOR IPO

ALLOTMENT.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 50.6% respondents feel easy to apply, 37.3% respondents feel it lengthy to
apply,7.3% respondents feel it difficult to apply and only 4.8% respondents felt itscomplicated
to apply.By this we can interpret that majority respondents feel the procedure is comfortable to
apply.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 88

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.14

TABLE SHOWING RESPONDENTS RESPONSE TOWARDS DIFFICULTIES FACED

AFTER APPLYING FOR INITIAL PUBLIC OFFERINGS.

SCALE RESPONSES PERCENTAGE

REFUND PROBLEM 22 26.5%

DELAY IN CREDITING 29 34.9%

ALLOTMENT OF
SHARES TO DEMAT
ACCOUNT

NO CLARITY IN 18 27.7%
ALLOTMENT

TECHNICAL PROBLEM 14 16.9%

TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 29 respondents find difficult
in delay in crediting allotment of 26shares to demat account, 22 respondents find difficult in
refund problem, 18 respondents find difficult in no clarity in allotment and only 14 respondents
have technical problem.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 89

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.14

CHART SHOWING RESPONDENTS RESPONSE TOWARDSDIFFICULTIES FACED

AFTER APPLYING FOR INITIAL PUBLIC OFFERINGS.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 34.9% respondents are facing problem in delay in crediting allotment of shares to
demat account, 26.5% respondents are facing problem in refund problem, 21.7% respondents are
facing problem inno clarity in allotment and only 16.9% respondents are facing problem in
technical problem. By this we can interpret that majority respondents are facing problem with
delay in crediting allotment of shares to demat account because of more number of application.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 90

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.15

TABLE SHOWING RESPONDENTS RESPONSE TOWARDS TAKING HELP OF A

BROKER WHILE INVESTING IN INITIAL PUBLIC OFFERINGS.

SCALE RESPONSES PERCENTAGE

STRONGLY AGREE 14 16.9%

AGREE 43 51.8%

NEUTRAL 20 24.1%

DISAGREE 1 1.2%

STRONGLY 5 6%
DISAGREE
TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 43 respondentshas agreed
that they take the help of the broker while investing, 20 respondents have marked neutral, 14
respondents have strongly agreed with the statement, 5 respondents have strongly disagreed and
only 1 respondents have marked disagree.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 91

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.15

CHART SHOWING RESPONDENTS RESPONSE TOWARDSTAKING HELP OF A

BROKER WHILE INVESTING IN INITIAL PUBLIC OFFERINGS.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 51.8% respondents have agreed the above statement, 24.1% respondents are neutral,
16.9% respondents are strongly agree, 6% respondents are strongly disagree and only 1.2%
respondents are disagree. By this we can interpret that majority respondents have agreed with
above statement.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 92

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

TABLE 4.16

TABLE SHOWING RESPONDENTS RESPONSE TOWARDS ADVICE TO NEW

INITIAL PUBLIC OFFERINGS INVESTERS

SCALE RESPONSES PERCENTAGE

GO BY ONLY 21 25.3%
PROMOTERS
GO BY ONLY 21 25.3%
PREMIUM
GO BY ONLY SECTOR 17 20.5%
PERFORMANCE

GO BY YOUR RISK 24 28.9%

TAKING CAPACITY
TOTAL 83 100%

ANALYSIS:

From the above table we came to know that out of total respondents 24 respondents have
marked go by your risk taking capacity,21 respondents have marked go by only promoters and
go by premium only 17 respondents have marked go by only sector performance.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 93

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

GRAPH 4.16

CHART SHOWING RESPONDENTS RESPONSE TOWARDSADVICE TO NEW

INITIAL PUBLIC OFFERINGS INVESTERS.

INTERPRETATION:

From the above chart, it clearly depicts that the information which is provided by the
respondents 28.9% respondents have adviced to go by your risk taking capacity, 25.3%
respondents have adviced to go by only premium and go by promoters and only 20.5%
respondents have adviced go by sectors performance.By this we can interpret that majority
respondents have adviced to go by your risk taking capacity.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 94

Chapter 5
 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

CHAPTER-5

FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS

1. Out of total respondents 48 are male and 34 are female.

2. Out of 83 respondents, 70 of them belong to the age group of 18-30.

3. Out of total respondents 67 respondents are belongs to below 5,00,000

annual income.

4. Out of total respondents 56 respondents belongs to urban area.

5. Out of total respondents 46 respondents have marked as students.

6. Out of total respondents 65.1% respondents are moderate risk takers they
don’t want to take high risk.

7. Out of total respondents 75.9% respondents invest below 15,000 Rs in

initial public offerings this shows majority are investing minimum amount of
investment that is 1 lot of shares.

8. Out of total respondents 33.7% respondents gets source of information

from electronic media because of change in technology.

9. Out of total respondents 42.2% respondents see performance a company

before investing in initial public offerings this means they do fundamental
analysis of a company.

10. Out of total respondents 78.3% respondents trade between 1year-2years

in initial public offerings this shows they are short term investors.

11. Out of total respondents 60.3% respondents have gained below 10% on
listing day.

12. Out of total respondents 43.4% respondents invest in initial public

offerings for listing day gains.

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 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

13. Out of total respondents 50.6% respondents find the procedure for initial
public offerings to be easy.

14. Out of total respondents 34.9% respondents find problem in crediting

allotment of shares to DEMAT account.

15. Out of total respondents 51.8% respondents have agreed that they take
the help of broker.

16. Out of total respondents 28.9% respondents has adviced to by their risk
taking capacity.

5.2 SUGGESTIONS:

1. Investors who are ready to take risk should invest in initial public
offerings.

2. Chance of getting allotment is less when the oversubscription takes place.

3. Before investing in initial public offerings the investor must do

fundamental analysis of the company,

4. Majority investors invest in initial public offerings for listing day gain,
sometimes it even lists with losses.

5. Investors must understand the business model the company, then do

economy analysis, industry analysis, company financial analysis and watch
grey market premium.

6. Read Draft Red Hiring Prospectus (DRHP) of a company before investing

in initial public offerings.

7. Do your own research and know where your funds are invested.

8. Invest at cutoff price and plan an exit strategy.

9. Apply in more than 1 account for the same initial public offerings to
increase the chance of allotment.

10. The investment in IPO can prove too risky because the investor does not

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 96

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

know anything about the company because it is listed first time in the market
so its performance cannot be measure.

11. Primary market is more volatile than the secondary market because all the
companies are listed for the first time in the market so nothing can be said
about its performance.

5.3 CONCLUSION:

Initial public offerings consider as sale of company’s stock to the public for
the first time, when an IPO gets listed on the stock exchange there are certain
parameters to evaluate the performance of the IPO. The performance of IPO
can be evaluated in short run as well as in long run, for short run say after 1
month of listing, after 3 months of listing, after 6 months of listing and for
long run it can be after 1 year of listing, after 2 years of listing, after 3 years
of listing. IPOs can be underpriced, overpriced or they can be normal priced.
Underpricing of an IPO means when listing price is more than offer price,
over pricing means when offer price is more than listing price and normal
priced means when both the prices are same. Offer price and listing price are
two different prices. Offer price is price at which company issues the share to
public but listing price is that price at which IPO gets listed in the stock
market.

The Indian economy is growing and India has a big demand potential due
to the size of the population. Satisfying such big business opportunities with
bigger structures required a big amount of investment. The business which
has the potential to create and satisfy the demanding economy is coming in
public and trying to get funding for the next levels of growth. The promoters
who have a bigger vision for the next ten to fifteen years are utilizing the
current market to grow their business and encash these huge opportunities

The steps taken by the central banks to face the challenges of Covid-19 have
pushed ample amount of liquidity in the global market. So, it is the best time
for IPO globally. At the same time, markets are showing higher potential

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 97

 “A study on the performance of initial Public offerings of companies listed in NSE – A
case study on Equitas small finance”

returns for the next few years as recovery is faster-than-expected.

Participation of retailers is the highest ever in history.

This shows that the overall performance of IPO is good and many are yet to
come.

K.L.E’s Society S.NIJALINGAPPA COLLEGE Page 98

BIBLIOGRAPHY
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Bank-Limited-FY-2019-20.pdf

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price/financials-balance-sheet/

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Annexure
 ANNEXURE

Primary Data

Questionnaire

Dear Sir/madam

I am Sujith Singh S studying IV semester M.com in K.L.E Society’s S Nijalingappa Collage

Rajajinagar Bengaluru-560010 affliated to Bengaluru City University

I request you to kindly fill below questionnaire of my academic project titled as “ A Study
on the performance of Initial Public Offerings of companies listed in NSE – A case study
on Equitas Small finance Bank” doing this survey to know performance of IPO

All responses/opinions will be treated with most confidence and the results of the survey will
be extremely for academic purpose only and no attempt will ever be made to identify the
individual response. I would very much appreciate your help since the success of the project
depends upon your responses. Please attempt to answer every question. There is no right or
wrong answer I am seeking your opinion only.

Respondents Demographic profile

1. Name (Optional)
2. Gender
a) Male
b) Female
c) Others

3. Age
a) 18-30
b) 31-40
c) 41-50
d) 51 & above

4. Annual Income
a) Below 5,00,000
 b) 5,00,001 to 10,00,000
c) Above 10,00,000

5. Which area you belong to?

a) Rural
b) Urban
c) Semi Urban

6. Occupation
a) Businessman
b) Employee
c) Student
d) House Wife
e) Industrialist
f) Others please specify

RESEARCH QUESTIONS

7. Mention your risk profile

a) low
b) Moderate
c) High

8. How much do you invest in IPO’s?

a) Below 15000
b) 15000 - 30000
c) 30001- 45000
d) 45000 and above

9. What is the source of information you use before investing in IPO?

a) Print Media
b) Electronic Media
c) Expert Opinion
 d) Friend Advice

10.What do you see before investing in IPO?

a) Promoters background
b) Sector performance
c) Performance of a company
d) Premium Amount

11. How long are you trading in stock and IPO’s?

a) 1year-2years
b) 2years- 5years
c) 5years-10years
d) 10years and Above

12. How much percentages have you gained on IPO listing day?
a) Below 10%
b) up to10%
c) 10%-15%
d) 15% and Above

13. What is the purpose of IPO investment?

a) Listing day Gain
b) Long term Gain
c) Short term Gain

14. How do you feel about the procedure for IPO Investment?
a) Easy
b) Difficult
c) Complicated
d) Lengthy

15. What difficulties did you face after applying IPO’s?

a) Refund Problem
b) Delay in crediting allotted shares to your DEMAT Account
 c) No clarity in allotment
d) Technical Problem

16. You always take the help of a broker while investing in IPO.
a) Strongly agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree

17. What is your advice to new investors in IPO?

a) Go by only promoters
b) Go by only premium
c) Go by only sectors performance
d) Go by your risk taking capacity
 K.L.E. SOCIETY’S S. NIJALINGAPPA COLLEGE

(AFFLIATED TO BENGALURU CITY UNIVERSITY)

DEPARTMENT OF POST GRADUATION IN COMMERCE

II BLOCK RAJAJINAGAR BENGALURU-560 010

PROJECT REVIEW REPORT(COLLEGE)

Name of the project guide: Project title:

Name of the student: Project starting date:

Student Reg. no: Project completion date:
Date Progress of the report Comments by project guide Signature of the student and guide
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Blue print of the
project
Final report
 K.L.E. SOCIETY’S S. NIJALINGAPPA COLLEGE

(AFFLIATED TO BENGALURU CITY UNIVERSITY)

DEPARTMENT OF POST GRADUATION IN COMMERCE

II BLOCK RAJAJINAGAR BENGALURU-560 010

PROJECT REVIEW REPORT(COMPANY)

Name of the project guide: Project title:

Name of the student: Project starting date:

Student Reg. no: Project completion date:
Date Progress of the report Comments by project guide Signature of the student and guide
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Blue print of the
project
Annual report