IPO Performance Analysis: How to Maximize Gains Bhatia Parul1, Annu2,*, Matai Akshay3, Sen Shayan4 1Assistant Professor, Shri Vishwakarma Skill University, Haryana, India 2Banker, Axis Bank and Former Student, Apeeja School of Management, Delhi, India 3Former Student, New Delhi Institute of Management, Delhi, India 4Former Student, New Delhi Institute of Management, Delhi, India *Corresponding author email id: annu122796@gmail.com
Online Published on 20 January, 2024. Abstract Initial Public Offerings (IPOs) have become an investment avenue for wealth generation, given the attractive rate of returns. In such circumstances, it is imperative for investors to know and understand the risks associated with and factors affecting the returns and performance of IPOs. Investors would prefer informed and planned investments regarding risk characteristics. This study has been carried out to analyze the performance of IPOs and determine if they were underpriced or overpriced. Here, using the data analysis method, we have examined the performance of 57 SME companies listed on the BSE (Bombay Stock Exchange) that went public between 2018 and 2021. The presented study also endeavors to identify several key factors that significantly impact the short-term performance of IPOs. These factors include Issue Price, Issue Size, Lot Size, Subscription Ratio, 3-year Profit After Tax, 3-year Revenue growth, and Promoter Holdings, all of which are carefully considered in the analysis. During the conducted study, it was discovered that 63% of the IPOs were underpriced. Among all the variables analyzed, the “Subscription Ratio” emerged as the sole significant factor in determining both the underpricing and overpricing of IPOs, as well as their short-term performance. Top Keywords Risk-return, IPO, Issue price, Subscription ratio, Issue size. Top |