A Presentation On

IPO .

Submitted By:
Bhupendra Khatri
What is IPO???...
when a company (called the issuer) issues common
stock or shares to the public for the first time in
Primary market.

Capital can be raised by way of

-Public Issue
- Rights Issue
- Private Placements.
Why IPO is needed??
• Desire to raise capital for a growing firm.

• Create liquidity for founders and other

shareholders.
• Exposure and Prestidge.
• Creating multiple Financial Opportunities.
Steps in a Public Issue….
Vetting of Prospectus by SEBI.
-A draft prospectus is prepared giving out details of the
Company, promoters background, Management,
terms of the issue, project details, modes of financing,
past financial performance, projected profitability and
others.
Appointment of Underwriters.
shoulder the liability and subscribe to the shortfall in
case the issue is under-subscribed.
Commision-2.5% on the amt underwritten.
Appointment Of Bankers
- collecting agencies and process the funds procured
during the public issue .
Appointment of Registrars : Registrars process the
application forms, tabulate the amounts collected
during the issue and initiate the allotment
procedures.
 Appointment of the brokers to the issue: Recognized
members of the Stock exchanges are appointed as
brokers to the issue for marketing the issue. They are
eligible for a maximum brokerage of 1.5%.
 Filing of prospectus with the Registrar of Companies.
 Printing and dispatch of Application forms: The prospectus and
application forms are printed and dispatched to all the
merchant bankers, underwriters, brokers to the issue.
Filing of the initial listing application: A letter is sent to the
Stock exchanges where the issue is proposed to be listed giving
the details and stating the intent ;of getting the shares listed on
the Exchange. The initial listing application has to be sent with
a fee of Rs. 7,500/-.
 Statutory announcement: the Issue start and close dates are
published in major English ;dailies and vernacular newspapers.
Four Classes Of Investors..
Retail Ind Investors
- limit of investing upto one lakh.
- 35% shares are Allotted to RII

High Networth Individuals.

- investment of more than one lakh.
Non Institutional bidders :
 Individual investors , NRI’s, Companies , trusts, etc. who bid for
more than Rs 1 lakh are known as Non Institutional bidders.
Non- Institutional bidders have an allocation of 15% of shares of
the total issue size in Book build IPOs.
Qualified Institutional Bidders (QIBs):
Financial institutions , banks , FII’s and Mutual funds who are
registered with SEBI are called QIB’s. They usually apply in very
high quantities. QIBs are mostly representatives of small
investors who invest through mutual funds, ULIP schemes of
insurance companies and pension schemes . QIB have an
allocation of 50% of shares of the total issue size in book build
IPOs
IPO Grading…
IPO  grading  assesses  the  fundamentals  of  the
 Initial  Public  Offerings  (IPOs)  and  is  reflected  on
 a   fivepoint  point  scale  with  a  higher  score
 indicating  stronger  fundamentals  of  the  IPO
 issuing  firm.
Done prior to Issue and it is onetime Assessment.
Indepth Measuement of Qualititative and
Quantitative Measurement.
Who Does Grading….?
The grading Agencies which are approved by SEBI..

CARE-Credit Analysis and Research Ltd.

CRISIL-Credit Rating Information ServicesOf India
FITCH Ratings
ICRA Ltd.
The grading is assigned on a five point basis:-
IPO grade 1 : Poor fundamentals
IPO grade 2: Below Avg fundamentals
IPO grade   3 : Average  fundamentals  
IPO grade   4 : Aboveaverage  fundamentals  
IPO grade  5:  Strong  fundamentals  
Fundamentals….
Business and Compititive Position.
Financial Position and Prospects.
Management Quality.
Corporate Governance Practices
Example… (4/5)
 The  grading  reflects  the  firm’s  position  as  the  largest  player  in
 the  mobile  valueadded  services  (VAS)  market  in  India….”  
 “The  grading  also  reflects  the  firm’s  ability  to  leverage  on  the
 unique  voice  recognition  capability…..and  its  ability  to  offer
 customer  contact  products  to  companies  by  virtue  of  having  a
 voice  channel  relationship  with  almost  al  telecom  operators.”  
 “The  grading  also  factors  in  the  management's  strong
 understanding  of  market  dynamics,  as  reflected  in  the
 company’s  consistent  track  record  in  product  innovation,  and
 proactiveness  in  setting  up  a  corporate  governance  system…,  as
 indicated  by  the  appointment  of  independent  directors.”  
  “The  firm  plans  to  reduce  its  dependence  on  the  Indian  market
 by  expanding  into  international  markets.   In  the  last  one  year
 the  company  has  made  two  acquisitions.
 Conclusion….
Before Investing…
Undersatnd the working Of IPO.
Gather Knowledge.
Investigate Before Investing.
Know your Broker.
Measure the risk Invovled.
Invest at your Own Risk.
Refrences…
 Books
-How to Make Money in Stocks By William J. O'neil
-Practical Speculation by Victor Niederhoffer and Laurel Kenner
-Kothari , C.R Research methodology

 Magazines
-Business Week
-Business World
-Business today

 Websites
-www.relianceinsider.com
-www.moneycontrol.com
-www.reliancepower.com
-www.ipoindia.com
Thank You……..