IPO at BSE

"INITIAL PUBLIC OFFER AT BOMBAY STOCK EXCHANGE”
PROJECT REPORT
Submitted in partial fulfillment of the requirements for the award of the

INTERNATIONAL MBA IN FINANCE

by
PRASAD TULSIDAS CHOWDHARY A00006847
Under the guidance of

MR. RANJIT SHINDE (C.A.)
Manager – Finance Shared Service Center, Grindwell Norton Ltd. (Saint – Gobain Group)

JARO EDUCATION MUMBAI JULY 2011

DECLARATION
I, Prasad Tulsidas Chowdhary hereby declare that this project report titled submitted in partial fulfillment of the requirement for the International Executive MBA in Finance is my original work and it has not formed the basis for the award of any other degree.

Prasad Tulsidas Chowdhary

Place: Mumbai Date : 16th Jan. 2012

ACKNOWLEDGEMENT

I would like to acknowledge my sincere thanks to Dr. Sayee Srinivasan (Head – Product Strategy) and Mr. Rahul Parulekar (Head – Market Development) of Bombay Stock Exchange for allowing me to carry out my project in the organization and the Librarian of BSE for appraising my situation with necessary background and helping me to complete the project. Firstly, my deepest gratitude to my senior, Mr. Ranjit Shinde (Chartered Accountant), Manager – Finance Shared Service Center of Grindwell Norton Ltd. (Saint - Gobain Group) for his invaluable support and continuous guidance. I heartfelt thanks to all the authors of the various articles referred to by me as well as to all those people who shared their valuable time and knowledge with us. This project would not be complete without thanking United Business Institute and Jaro Institute of Technology, Management & Research Pvt. Ltd. or giving us an opportunity to have an enriching experience in terms of this project. I feel very grateful and wish to thank all those who have helped me in giving a productive shape to my ideas in the form of this project report.

Prasad Tulsidas Chowdhary

SR. NO.

DESCRIPTION

1

Industry Profile

2

Company Profile Need for Study

3

? Introduction ? Scope of the Study Literature Survey

4

? Initial Public Offering (IPO) ? Book Building Process

5

Objectives of the Study

6

Research Methodology

7

Analysis ? Initial Public Offering (IPO) Valuation & Date Interpretation

8

Conclusion & Recommendation

9

References

1. INDUSTRY PROFILE

Indian Capital Market
A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Financial regulators: • • • • Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI) Forward Markets Commission (India) (FMC) Insurance Regulatory and Development Authority (IRDA) The capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties. Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere. There are 22 stock exchanges in India. Over the last few years, there has been a rapid change in the Indian securities market, especially in the secondary market. Advanced technology and online-based transactions have modernized the stock exchanges. In terms of the number of companies listed and total market capitalization, the Indian equity market is considered large relative to the

country’s stage of economic development. The number of listed companies increased from 5,968 in March 1990 to about 10,000 by May 1998 and market capitalization has grown almost 11 times during the same period. The debt market, however, is almost nonexistent in India even though there has been a large volume of Government bonds traded. Banks and financial institutions have been holding a substantial part of these bonds as statutory liquidity requirement. A primary auction market for Government securities has been created and a primary dealer system was introduced in 1995. There are six authorized primary dealers. Currently, there are 31 mutual funds, out of which 21 are in the private sector. Mutual funds were opened to the private sector in 1992. Earlier, in 1987, banks were allowed to enter this business, breaking the monopoly of the Unit Trust of India (UTI), which maintains a dominant position. Before 1992, many factors obstructed the expansion of equity trading. Fresh capital issues were controlled through the Capital Issues Control Act. Trading practices were not transparent, and there was a large amount of insider trading. Recognizing the importance of increasing investor protection, several measures were enacted to improve the fairness of the capital market.

Securities and Exchange Board of India (SEBI)
The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as

“….to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto.”

Establishment and Incorporation of Board. (1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, a Board by the name of the Securities and Exchange Board of India.

(2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued.

(3) The head office of the Board shall be at Bombay.

(4) The Board may establish offices at other places in India.

Management of the Board. (1) The Board shall consist of the following members, namelya) a Chairman; (b) two members from amongst the officials of the 1[5][Ministry] of the Central Government dealing with Finance 2[6][and administration of the Companies Act, 1956(1 of 1956)]; (c) one member from amongst the officials of 3[7][the Reserve Bank];

(d) five other members of whom at least three shall be the whole-time members to be appointed by the central Government.

(2) The general superintendence, direction and management of the affairs of the Board shall vest in a Board of members, which may exercise all powers and do all acts and things which may be exercised or done by the Board.

(3) Save as otherwise determined by regulations, the Chairman shall also have powers of general superintendence and direction of the affairs of the Board and may also exercise all powers and do all acts and things which may be exercised or done by that Board.

(4) The Chairman and members referred to in clauses (a) and (d) of sub-section (1) shall be appointed by the Central Government and the members referred to in clauses (b) and (c) of that sub-section shall be nominated by the Central Government and the 4[9][Reserve Bank] respectively.

(5) The Chairman and the other members referred to in clauses (a) and (d) of subsection (1) shall be persons of ability, integrity and standing who have shown capacity in dealing with problems relating to securities market or have special knowledge or experience of law, finance, economics, accountancy, administration or in any other discipline which, in the opinion of the Central Government, shall be useful to the Board. In the primary market securities are issued to the public and the proceeds go to the issuing company. Secondary market is term used for stock exchanges, where stocks are bought and sold after they are issued to the public.

PRIMARY MARKET: The first time that a company’s shares are issued to the public, it is by a process called the initial public offering (IPO). In an IPO the company offloads a certain percentage of its total shares to the public at a certain price. Most IPO’S these days do not have a fixed offer price. Instead they follow a method called BOOK BUILDIN PROCESS, where the offer price is placed in a band or a range with the highest and the lowest value (refer to the newspaper clipping on the page). The public can bid for the shares at any price in the band specified. Once the bids come in, the company evaluates all the bids and decides on an offer price in that range. After the offer price is fixed, the company allots its shares to the people who had applied for its shares or returns them their money.

SECONDARY MARKET: Once the offer price is fixed and the shares are issued to the people, stock exchanges facilitate the trading of shares for the general public. Once a stock is listed on an exchange, people can start trading in its shares. In a stock exchange the existing shareholders sell their shares to anyone who is willing to buy them at a price agreeable to both parties. Individuals cannot buy or sell shares in a stock exchange directly; they have to execute their transaction through authorized members of the stock exchange who are also called STOCK BROKERS.

2.

COMPANY PROFILE

Bombay Stock Exchange Ltd.

BSE Limited is the oldest stock exchange in Asia what is now popularly known as the BSE was established as "The Native Share & Stock Brokers' Association" in 1875. Over the past 135 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient capital raising platform.

Today, BSE is the world's number 1 exchange in the world in terms of the number of listed companies (over 4900). It is the world's 5th most active in terms of number of transactions handled through its electronic trading system. And it is in the top ten of global exchanges in terms of the market capitalization of its listed companies (as of December 31, 2009). The companies listed on BSE command a total market capitalization of USD Trillion 1.28 as of Feb, 2010.

BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. It is also the first Exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-22002 certification for its BSE On-Line trading System (BOLT). Presently, we are ISO 27001:2005 certified, which is a ISO version of BS 7799 for Information Security. The BSE Index, SENSEX, is India's first and most popular Stock Market benchmark index. Exchange traded funds (ETF) on SENSEX, are listed on BSE and in Hong Kong. Futures and options on the index are also traded at BSE.

Management Team No. 1 2 3 4 5 6 7 8 9 Name Mr. Madhu Kannan Mr. Ashishkumar Chauhan Mr. Balasubramaniam V Mr. Nehal Vora Mr. Kersi Tavadia Mr. V K Agrawal Dr. Sayee Srinivasan Mr. Rahul Parulekar Mr. Lakshman Gogulothu Designation Managing Director & Chief Executive Officer Dy. Chief Executive Officer Chief Business Officer Chief Regulatory Officer Chief Information Officer Chief Financial Officer Head – Product Strategy Head – Market Development CEO – SME Exchange

Vision "Emerge as the premier Indian stock exchange by establishing global benchmarks" Logo The Stock Exchange, Mumbai is now BSE Limited a new name, and an entirely new perspective... a perspective born out of corporatization and demutualization. As a corporate entity, our new logo reflects our new mission... smoother, seamless, and efficient, whichever way you look at it. BSE is Asia's oldest stock exchange... carrying the depth of knowledge of capital markets acquired since its inception in 1875. Located in Mumbai, the financial capital of India, BSE has been the backbone of the country's capital markets Technology BSE places a great deal of emphasis on Information Technology for its operations and performance. The 'Operations & Trading Department' at BSE continuously upgrades the hardware, software and networking systems, thus enabling BSE to enhance the quality and standards of service provided to its members, investors and other market intermediaries. BSE strictly adheres to IS policies and IS Security

policies and procedures for its day-to-day operations on 24x7 basis which has enabled it to achieve the BS7799 certification and the subsequent ISO 27001 certification. In addition, BSE has also been successful in maintaining systems and processes uptime of 99.99%. BOLT: To facilitate smooth transactions, BSE had replaced its open outcry system with the BSE On-line Trading (BOLT) facility in 1995. This totally automated, screenbased trading in securities was put into practice nation-wide within a record time of just 50 days. BOLT has been certified by DNV for conforming to ISO 27001:2005 security standards. The capacity of the BOLT platform stands presently enhanced to 80 lakh orders per day. BSEWebx.co.in: BSE has also introduced the world's first centralized exchange based Internet trading system, BSEWEBx.co.in. The initiative enables investors anywhere in the world to trade on the BSE platform. bseindia.com: BSE's website www.bseindia.com provides comprehensive

information on the stock market. It is one of the most popular financial websites in India and is regularly visited by financial organizations and other stakeholders for updates. Other Technology-based Initiatives BSE, along with its strategic partners, have put into place several critical processes/systems such as
• • •

Derivatives Trading & Settlement System (DTSS) Electronic Contract Notes (ECN) Unique Client Code registration (UCC)

• • • • • •

Real-time Data Dissemination System Integrated Back-office System - CDB / IDB Book Building System (BBS) Reverse Book Building System (RBBS) Debt Market Director's Database

A Large Private Network BSE operates a large private network in India. The network uses following segments to cater to market intermediaries:-

BSE's Campus LAN: Connects market participant offices across 20 floors of BSE campus to BSE systems. BSE Campus comprises of 3 BSE buildings: P.J. Towers, Rotunda and Cama building.

BSE WAN: TDM / MPLS lines from different service providers cater to connectivity requirements of market participants across the country. Wired / Wireless media is used. VSATs: Satellite based communication system serves the connectivity requirements of market participants in remote areas. Services are provided through BSE's Satellite Communication Hub in Mumbai. Connectivity forms are available at url: http://www.bseindia.com/about/bolt_connect_forms.asp

BSE Online Surveillance System - integrated (BOSS-i). an Real-time system to closely monitor the trading and settlement activities of the member-brokers. This system enables BSE to detect market abuses at a nascent stage, improve the risk management system and strengthen the self-regulatory mechanisms. State-of-the-art Hardware BSE uses higher-end, fault-tolerant systems for its trading and related functionalities. It uses Integrity Non-stop NS16000 and S88000 systems for its online trading systems (BOLT). The systems have been designed to deliver the best performance without compromising on key factors of availability, scalability, ROI and TCO.

RISC based Unix Severs rp8420 from HP: for our Derivatives, Settlement, Backoffice, Data Feed, BBS, RBBS and other systems related to trading and related functionalities. The systems are facilitated by the use of the robust and high available storage subsystems from HP. Intel blade servers running on Microsoft platform are used for the Internet based trading system (ITS) enabling the end users to carry out the trading activities from any location facilitated by the internet.

Intel blade servers running on Microsoft platform are also used for bseindia.com website, one of the best portals on the capital market which is also facilitated by the regional languages viz Hindi and Gujarati.

3. NEED FOR STUDY Introduction
Initial public offering (IPO), also referred to simply as a "public offering", is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. In an IPO, the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market. Initial Public Offering (IPO) in India means the selling of the shares of a company, for the first time, to the public in the country's capital markets. This is done by giving to the public, shares that are either owned by the promoters of the company or by issuing new shares. During an Initial Public Offer (IPO) the shares are given to the public at a discount on the intrinsic value of the shares and this is the reason that the investors buy shares during the Initial Public Offering (IPO) in order to make profits for themselves. IPO in India is done through various methods like book building method, fixed price method, or a mixture of both. The method of book building has been introduced in the country in 1999 and it helps the company to find out the demand and price of its shares. A merchant banker is nominated as a book runner by the Issuer of the IPO. The company that is issuing the Initial Public Offering (IPO) decides the number of shares that it will issue and also fixes the price band of the shares. All these information are mentioned in the company's red herring prospectus. During the company's Initial Public Offering (IPO) in India, an electronic book is opened for at least five days. During this period of time, bidding takes place

which means that people who are interested in buying the shares of the Company makes an offer within the fixed price band. Once the book building is closed then the issuer as well as the book runner of the Initial Public Offering (IPO) evaluate the offers and then determine a fixed price. The offers for shares that fall below the fixed price are rejected. The successful bidders are then allotted the shares IPO’s can be a risky investment. For the individual investor, it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPO’s are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value.

Different kinds of Issues
Issues Public Rights Preferential

Initial Public Offering Fresh Issue

Further Public Offering Fresh Issue

Offer for Sale

Offer for Sale

Major reasons for listing IPO
The increase in the capital: An IPO allows a company to raise funds for utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing.

Liquidity: The shares once traded have an assigned market value and can be resold. This is extremely helpful as the company provides the employees with stock incentive packages and the investors are provided with the option of trading their shares for a price.

Valuation: The public trading of the shares determines a value for the company and sets a standard. This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the shareholders of the company with the present value of the shares.

Increased wealth: The founders of the companies have an affinity towards IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership.

IPO Market in India
The IPO Market in India has been developing since the liberalization of the Indian economy. It has become one of the foremost methods of raising funds for various developmental projects of different companies. The IPO Market in India is on the boom as more and more companies are issuing equity shares in the capital market. With the introduction of the open market economy, in the 1990s, the IPO Market went through its share of policy changes, reforms and restructurings. One of the most important developments was the disassembling of the Controller of Capital Issues (CCI) and the introduction of the free pricing mechanism. This step helped in developing the IPO Market in India, as the companies were permitted to price the issues. The Free pricing mechanism permitted the companies to raise funds from the primary market at competitive price. The Central Government felt the need for a governed environment pertaining to the Capital market, as few corporate houses were using the abolition of the Controller of Capital Issues (CCI) in a negative manner. The Securities Exchange Board of India (SEBI) was established in the year 1992 to regulate the capital market. SEBI was given the authority of monitoring and regulating the activities of the bankers to an issue, portfolio managers, stockbrokers, and other intermediaries related to the stock markets. The effects of the changes are evident from the trend of the resources of the primary capital market which includes rights issues, public issues, private placements and overseas issues. The IPO Market in India experienced a boom in its activities in the year 1994. In the year 1995 the growth of the Indian IPO market was 32 %. The growth was halted with the South East Asian crisis. The markets picked up speed again with the introduction of the software stocks.

Scope of the Study:
The scope of the study, by and large is very vast. It is very difficult to satisfy all the areas of IPO process and valuation methods. Therefore, an attempt is made to cover as much as possible included in the study.

Statement of the Problem:
• • • Valuation of issue prices of Indian IPOs Valuation of Muthoot Finance Ltd. IPO using DCF Valuation The impact of its performance in secondary market

4. LITERATURE SURVEY Initial Public Offering
Introduction
Corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. An IPO is defined as an exercise when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. The exercise refers the issue of shares to the public by the promoters of the company. The shares are made available to the investors at the face value of the share or with a premium as per the perceived market value of the share by the promoters. Why Go Public? Going public (or participating in an "initial public offering" or IPO) is the process in which a business owned by one or several individuals is converted into a business owned by many. It involves the offering of part ownership of the company to the public through the sale of debt or more commonly, equity securities (stock). Going public raises cash and usually a lot of it. Being publicly traded also opens many financial doors:

Because of the increased scrutiny, public companies can usually get better rates when they issue debt. As long as there is market demand, a public company can always issue more stock. Thus, mergers and acquisitions are easier to do because stock can be issued as part of the deal. Trading in the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, which help to attract top talent. Being on a major stock exchange carries a considerable amount of prestige. In the past, only private companies with strong fundamentals could qualify for an IPO and it was not easy to be listed. The internet boom changed all this. Firms no longer needed strong financials and a solid history to go public. Instead, IPOs were done by smaller startups seeking to expand their businesses. There is nothing wrong with wanting to expand, but most of these firms had never made a profit and did not plan on being profitable any time soon. Founded on venture capital funding, they spent like Texans trying to generate enough excitement to make it to the market before burning through all their cash. In cases like this, companies might be suspected of doing an IPO just to make the founders rich. This is known as an exit strategy, implying that there is no desire to stick around and create value for shareholders. The IPO then becomes the end of the road rather than the beginning. Investors can apply for shares in an IPO in 4 different categories: 1. Retail Individual Investor (RII) In retail individual investor category, investors can not apply for more than Rs two lakh (Rs 2,00,000) in an IPO. Retail Individual investors have an

allocation of 35% of shares of the total issue size in Book Build IPO's. NRI's who apply with less than Rs 2,00,000 /- are also considered as RII category. 2. High Networth Individual (HNI) If retail investor applies more than Rs 2,00,000 /- of shares in an IPO, they are considered as HNI. 3. Non-institutional bidders Individual investors, NRI's, companies, trusts etc who bid for more than Rs 1 lakhs are known as Non-institutional bidders. They need not to register with SEBI like RII's. Non-institutional bidders have an allocation of 15% of shares of the total issue size in Book Build IPO's. 4. Qualified Institutional Bidders (QIB's) 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's have an allocation of 50% of shares of the total issue size in Book Build IPO's. In a book built issue allocation to Retail Individual Investors (RIIs), Non Institutional Investors (NIIs) and Qualified Institutional Buyers (QIBs) is in the ratio of 35:15: 50 respectively.

QIB's are prohibited by SEBI guidelines to withdraw their bids after the close of the IPOs. Retail and non-institutional bidders are permitted to withdraw their bids until the day of allotment.

Life Cycle of an IPO
The process flow of a 100% Book Building Initial Public Offer IPO. This process flow is just for easy understanding for retail IPO investors. The steps provided below are most general steps involve in the life cycle of an IPO. Real processing steps are more complicated and may be different. Please visit SEBI website, stock exchange website or consult an expert for most current information about IPO life cycle in Indian Stock market. 1. Issuer Company - IPO Process Initialization • • • Appoint lead manager as book runner. Appoint registrar of the issue. Appoint syndicate members. 2. Lead Manager's - Pre Issue Role - Part 1 • • • Prepare draft offer prospectus document for IPO. File draft offer prospectus with SEBI. Road shows for the IPO. 3. SEBI ± Prospectus Review • SEBI review draft offer prospectus.

•

Revert it back to Lead Manager if need clarification or changes

(Step 2). • SEBI approve the draft offer prospectus, the draft offer

prospectus is now become Offer Prospectus. 4. Lead Manager - Pre Issue Role - Part 2 • Submit the Offer Prospectus to Stock Exchanges, registrar of

the issue and get it approved. • Decide the issue date & issue price band with the help of Issuer

Company. • Modify Offer Prospectus with date and price band. Document is

now called Red Herring Prospectus. • Red Herring Prospectus & IPO Application Forms are printed

and posted to syndicate members; through which they are distributed to investors. 5. Investor - Bidding for the public issue • • Public Issue Open for investors bidding. Investors fill the application forms and place orders to the

syndicate members (syndicate member list is published on the application form). • Syndicate members provide the bidding information to BSE/NSE

electronically and bidding status gets updated on BSE/NSE websites. • Syndicate members send all the physically filled forms and

cheques to the registrar of the issue.

•

Investor can revise the bidding by filling a form and submitting it

to Syndicate member. • Syndicate members keep updating stock exchange with the

latest data. • Public Issue Closes for investors bidding.

6. Lead Manager - Price Fixing • Based on the bids received, lead managers evaluate the final

issue price. • Lead managers update the 'Red Herring Prospectus' with the

final issue price and send it to SEBI and Stock Exchanges. 7. Registrar - Processing IPO Applications • Registrar receives all application forms & cheques from

Syndicate members. • They feed applicant data & additional bidding information on

computer systems. • • • Send the cheques for clearance. Find all bogus application. Finalize the pattern for share allotment based on all valid bid

received. • • • Prepare 'Basis of Allotment'. Transfer shares in the demat account of investors. Refund the remaining money though ECS or Cheques.

8. Lead manager - Stock Listing • Once all allocated shares are transferred in investors dp

accounts, Lead Manager with the help of Stock Exchange decides Issue Listing Date. • Finally share of the issuer company gets listed in Stock Market.

The Underwriting Process
Getting a piece of a hot IPO is very difficult, if not impossible. To understand why, we need to know how an IPO is done, a process known as underwriting. When a company wants to go public, the first thing it does is hire an investment bank. A company could theoretically sell its shares on its own, but realistically, an investment bank is required - it is just the way Wall Street works. Underwriting is the process of raising money by either debt or equity (in this case we are referring to equity). You can think of underwriters as intermediaries between companies and the investing public. The company and the investment bank will first meet to negotiate the deal. Items usually discussed include the amount of money a company will raise, the type of securities to be issued and all the details in the underwriting agreement. The deal can be structured in a variety of ways. For example, in a firm commitment, the underwriter guarantees that a certain amount will be raised by buying the entire offer and then reselling to the public. In a best efforts agreement, however, the

underwriter sells securities for the company but does not guarantee the amount rose. In addition, investment banks are hesitant to shoulder all the risk of an offering. Instead, they form a syndicate of underwriters. One underwriter leads the syndicate and the others sell a part of the issue. Once all sides agree to a deal, the investment bank puts together a registration statement to be filed with the SEBI. This document contains information about the offering as well as company info such as financial statements, management background, any legal problems, where the money is to be used and insider holdings. The SEBI then requires a cooling off period, in which they investigate and make sure all material information has been disclosed. Once the SEBI approves the offering, a date (the effective date) is set when the stock will be offered to the public. During the cooling off period the underwriter puts together what is known as the red herring. This is an initial prospectus containing all the information about the company except for the offer price and the effective date, which are not known at that time. With the red herring in hand, the underwriter and company attempt to hype and build up interest for the issue. They go on a road show - also known as the "dog and pony show" - where the big institutional investors are courted. As the effective date approaches, the underwriter and company sit down and decide on the price. This is not an easy decision: it depends on the company, the success of the road show and, most importantly, current market conditions. Of course, it's in both parties' interest to get as much as possible. Finally, the securities are sold on the stock market and the money is collected from investors. As you can see, the road to an IPO is a long and complicated one.

You may have noticed that individual investors are not involved until the very end. This is because small investors aren't the target market. They do not have the cash and, therefore, hold little interest for the underwriters. If underwriters think an IPO will be successful, they will usually pad the pockets of their favorite institutional client with shares at the IPO price.

IPO - Advantages and Disadvantages
The decision to take a company public in the form of an initial public offering (IPO) should not be considered lightly. There are several advantages and disadvantages to being a public company, which should thoroughly be considered. The reader should understand that the process is very time consuming and complicated and companies should undertake this process only after serious consideration of the advantages and disadvantages and discussions with qualified advisors. Advantages of going public: Increased Capital A public offering will allow a company to raise capital to use for various corporate purposes such as working capital, acquisitions, research and development, marketing, and expanding plant and equipment. Liquidity Once shares of a company are traded on a public exchange, those shares have a market value and can be resold. This allows a company to attract and retain employees by offering stock incentive packages to those employees.

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Moreover, it also provides investors in the company the option to trade their shares thus enhancing investor confidence. Increased Prestige Public companies often are better known and more visible than private companies, this enables them to obtain a larger market for their goods or services. Public companies are able to have access to larger pools of capital as well as different types of capital. Valuation Public trading of a company's shares sets a value for the company that is set by the public market and not through more subjective standards set by a private valuator. This is helpful for a company that is looking for a merger or acquisition. It also allows the shareholders to know the value of the shares. Increased wealth The founders of the company often have the sense of increased wealth because of the IPO. Prior to the IPO, these shares were illiquid and had a more subjective price. These shares now have an ascertainable price and after any lockup period, these shares may be sold to the public, subject to limitations of federal and state securities laws. Disadvantages of going public: Time and Expense

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Conducting an IPO is time consuming and expensive. A successful IPO can take up to a year or more to complete and a company can expect to spend several hundreds of thousands of dollars on attorneys, accountants, and printers. In addition, the underwriter's fees can range from 3% to 10% of the value of the offering. Due to the time and expense of preparation of the IPO, many companies simply cannot afford the time or spare the expense of preparing the IPO. Decisions based upon Stock Price Management's decisions may be effected by the market price of the shares and the feeling that they must get market recognition for the company's stock. Regulatory Review The Company will be open to review by the SEBI to ensure that the company is making the appropriate filings with all relevant disclosures. Falling Stock Price If the shares of the company's stock fall, the company may lose market confidence, decreased valuation of the company may affect lines of credits, secondary offering pricing, the company's ability to maintain employees, and the personal wealth of insiders and investors. Vulnerability If a large portion of the company's shares are sold to the public, the company may become a target for a takeover, causing insiders to lose control. A

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takeover bid may be the result of shareholders being upset with management or corporate raiders looking for an opportunity. Defending a hostile bid can be both expensive and time consuming.

Parameters to judge an IPO
Good investing principles demand that you study the minutes of details prior to investing in an IPO. Here are some parameters that should evaluate: Promoters Is the company a family run business or is it professionally owned? Even with a family run business what are the credibility and professional qualifications of those managing the company? Do the top-level managers have enough experience (of at least 5 years) in the specific type of business? Industry Outlook The products or services of the company should have a good demand and scope for profit. Business Plans Check the progress made in terms of land acquisition, clearances from various departments, purchase of machinery, letter of credits etc. A higher initial investment from the promoters will lead to a higher faith in the organization. Financials

Why does the company require the money? Is the company floating more equity than required? What is the debt component? Keep a track on the profits, growth and margins of the previous years. A steady growth rate is the quality of a fundamentally sound company. Check the assumptions the promoters are making and whether these assumptions or expectations sound feasible. Risk Factors The offer documents will list our specific risk factors such as the company¶s liabilities, court cases or other litigations. Examine how these factors will affect the operations of the company. Key Names Every IPO will have lead managers and merchant bankers. You can figure out the track record of the merchant banker through the SEBI website. Pricing Compare the company’s PER with that of similar companies. With this you can find out the P/E Growth ratio and examine whether its earnings projections seem viable. Listing You should have access to the brokers of the stock exchanges where the company will be listing itself. About Public Issue Corporate may raise capital in the primary market by way of an initial public offer, rights issue or private placement. An Initial Public Offer (IPO) is the selling of

securities to the public in the primary market. This Initial Public Offering can be made through the fixed price method, book building method or a combination of both. There are two types of Public Issues:

Features

Fixed Price process

Book Building process Price at which securities will be

Price at which the securities are offered / allotted is not known in Pricing offered /allotted is known in advance to the investor. Only an advance to the investor. indicative price range is known.

Demand for the securities offered Demand is known only after the closure of the issue. Payment if made at the time of Payment subscription wherein refund is given after allocation.

Demand for the securities offered can be known every day as the book is built.

Payment only after allocation.

Significance of an IPO
Investing in IPO has its own set of advantages and disadvantages. Where on one hand, high element of risk is involved, if successful, it can even result in a higher rate of return. The rule is: Higher the risk, higher the returns. The company issues an IPO with its own set of management objectives and the investor looks for investment keeping in mind his own objectives. Both have a lot

of risk involved. But then investment also comes with an advantage for both the company and the investors. The significance of investing in IPO can be studied from 2 viewpoints - for the company and for the investors. This is discussed in detail as follows: Significance to the Company: When a privately held corporation needs additional capital, it can borrow cash or sell stock to raise needed funds. Or else, it may decide to “go public”. "Going Public" is the best choice for a growing business for the following reasons: ? The costs of an initial public offering are small as compared to the costs of borrowing large sums of money for ten years or more, ? The capital raised never has to be repaid. ? When a company sells its stock publicly, there is also the possibility for appreciation of the share price due to market factors not directly related to the company. ? It allows a company to tap a wide pool of investors to provide it with large volumes of capital for future growth. Significance to the Shareholders: The investors often see IPO as an easy way to make money. One of the most attractive features of an IPO is that the shares offered are usually priced very low and the company’s stock prices can increase significantly during the day the shares are offered. This is seen as a good opportunity by ‘speculative investors’ looking to

notch out some short-term profit. The ‘speculative investors’ are interested only in the short-term potential rather than long-term gains.

The Risk Factor
Investing in IPO is often seen as an easy way of investing, but it is highly risky and many investment advisers advise against it unless you are particularly experienced and knowledgeable. The risk factor can be attributed to the following reasons: Unpredictable: The Unpredictable nature of the IPO’s is one of the major reasons that investors advise against investing in IPO’s. Shares are initially offered at a low price, but they see significant changes in their prices during the day. It might rise significantly during the day, but then it may fall steeply the next day. No past track record of the Company: No past track record of the company adds further to the dilemma of the shareholders as to whether to invest in the IPO or not. With no past track record, it becomes a difficult choice for the investors to decide whether to invest in a particular IPO or not, as there is basis to decide whether the investment will be profitable or not. Potential of Stock Market: Returns from investing in IPO are not guaranteed. The Stock Market is highly volatile. Stock Market fluctuations widely affect not only the individuals and

household, but the economy as a whole. The volatility of the stock market makes it difficult to predict how the shares will perform over a period of time as the profit and risk potential of the IPO depends upon the state of the stock market at that particular time.

Risk Assessment
The possibility of buying stock in a promising start-up company and finding the next success story has intrigued many investors. But before taking the big step, it is essential to understand some of the challenges, basic risks and potential rewards associated with investing in an IPO. This has made Risk Assessment an important part of Investment Analysis. Higher the desired returns, higher would be the risk involved. Therefore, a thorough analysis of risk associated with the investment should be done before any consideration. For investing in an IPO, it is essential not only to know about the working of an IPO, but we also need to know about the company in which we are planning to invest. Hence, it is imperative to know: • • • • • • The fundamentals of the business The policies and the objectives of the business Their products and services Their competitors Their share in the current market The scope of their issue being successful

•

It would be highly risky to invest without having this basic knowledge about the company.

There are 3 kinds of risks involved in investing in IPO: Business risk: It is important to note whether the company has sound business and management policies, which are consistent with the standard norms. Researching business risk involves examining the business model of the company. Financial Risk: Is this company solvent with sufficient capital to suffer short-term business setbacks? The liquidity position of the company also needs to be considered. Researching financial risk involves examining the corporation's financial statements, capital structure, and other financial data. Market Risk: It would beneficial to check out the demand for the IPO in the market, i.e., the appeal of the IPO to other investors in the market. Hence, researching market risk involves examining the appeal of the corporation to current and future market conditions.

Analysing an IPO Investment
Potential Investors and their objectives Initial Public Offering is a cheap way of raising capital, but all the same it is not considered as the best way of investing for the investor. Before investing, the investor must do a proper analysis of the risks to be taken and the returns expected. He must be clear about the benefits he hope to derive from the investment. The investor must be clear about the objective he has for investing, whether it is longterm capital growth or short-term capital gains. The potential investors and their objectives could be categorized as: Income Investor: An ‘income investor’ is the one who is looking for steadily rising profits that will be distributed to shareholders regularly. For this, he needs to examine the company's potential for profits and its dividend policy. Growth Investor:

A ‘growth investor’ is the one who is looking for potential steady increase in profits that are reinvested for further expansion. For this he needs to evaluate the company's growth plan, earnings and potential for retained earnings. Speculator: A ‘speculator’ looks for short-term capital gains. For this he needs to look for potential of an early market breakthrough or discovery that will send the price up quickly with little care about a rapid decline.

IPO Investment Strategies
Investing in IPOs is much different than investing in seasoned stocks. This is because there is limited information and research on IPOs, prior to the offering. And immediately following the offering, research opinions emanating from the underwriters are invariably positive. There are some of the strategies that can be considered before investing in the IPO: Understand the working of an IPO: The first and foremost step is to understand the working of an IPO and the basics of an investment process. Other investment options could also be considered depending upon the objective of the investor. Gather Knowledge: It would be beneficial to gather as much knowledge as possible about the IPO market, the company offering it, the demand for it and any offer being planned by a competitor.

Investigate before Investing: The prospectus of the company can serve as a good option for finding all the details of the company. It gives out the objectives and principles of the management and will also cover the risks.

Know your broker: This is a crucial step as the broker would be the one who would majorly handle your money. IPO allocations are controlled by underwriters. The first step to getting IPO allocations is getting a broker who underwrites a lot of deals. Measure the risk involved: IPO investments have a high degree of risk involved. It is therefore, essential to measure the risks and take the decision accordingly. Invest at your own risk: Finally, after the homework is done, and the big step needs to be taken. All that can be suggested is to ‘invest at your own risk’. Do not take a risk greater than your capacity.

Pricing of an IPO

The pricing of an IPO is a very critical aspect and has a direct impact on the success or failure of the IPO issue. There are many factors that need to be

considered while pricing an IPO and an attempt should be made to reach an IPO price that is low enough to generate interest in the market and at the same time, it should be high enough to raise sufficient capital for the company. The process for determining an optimal price for the IPO involves the underwriters arranging share purchase commitments from leading institutional investors.

Process: Once the final prospectus is printed and distributed to investors, company management meets with their investment bank to choose the final offering price and size. The investment bank tries to fix an appropriate price for the IPO depending upon the demand expected and the capital requirements of the company. The pricing of an IPO is a delicate balancing act as the investment firms try to strike a balance between the company and the investors. The lead underwriter has the responsibility to ensure smooth trading of the company’s stock. The underwriter is legally allowed to support the price of a newly issued stock by either buying them in the market or by selling them short. IPO Pricing Differences: It is generally noted, that there is a large difference between the price at the time of issue of an Initial Public Offering (IPO) and the price when they start trading

in the secondary market. These pricing disparities occur mostly when an IPO is considered “hot”, or in other words, when it appeals to a large number of investors. An IPO is “hot” when the demand for it far exceeds the supply. This imbalance between demand and supply causes a dramatic rise in the price of each share in the first day itself, during the early hours of trading.

Underpricing and Overpricing of IPO’s: Underpricing: The pricing of an IPO at less than its market value is referred to as ‘Under pricing’. In other words, it is the difference between the offer price and the price of the first trade. Historically, IPO’s have always been ‘underpriced’. Underpriced IPO helps to generate additional interest in the stock when it first becomes publicly traded. This might result in significant gains for investors who have been allocated shares at the offering price. However, under pricing also results in loss of significant amount of capital that could have been raised had the shares been offered at the higher price. Overpricing:

The pricing of an IPO at more than its market value is referred to as ‘Overpricing’. Even “overpricing” of shares is not as healthy option. If the stock is offered at a higher price than what the market is willing to pay, then it is likely to become difficult for the underwriters to fulfill their commitment to sell shares. Furthermore, even if the underwriters are successful in selling all the issued shares and the stock falls in value on the first day itself of trading, then it is likely to lose its marketability and hence, even more of its value.

Principle Steps in an IPO
Approval of BOD: Approval of BOD is required for raising capital from the public. Appointment of lead managers: The lead manager is the merchant banker who orchestrates the issue in consultation of the company. Appointment of other intermediaries: • • • • • Co-managers and advisors Underwriters Bankers Brokers and principal brokers Registrars

Filing the prospectus with SEBI: The prospectus or the offer document communicates information about the company and the proposed security issue to the investing public. All the companies seeking to make a public issue have to file their offer document with SEBI. If SEBI or public does not communicate its observations within 21 days from the filing of the offer document, the company can proceed with its public issue.

Filing of the prospectus with the registrar of the companies: Once the prospectus have been approved by the concerned stock exchanges and the consent obtained from the bankers, auditors, registrar, underwriters and others, the prospectus signed by the directors, must be filed with the registrar of companies, with the required documents as per the companies act 1956. Printing and dispatch of prospectus: After the prospectus is filed with the registrar of companies, the company should print the prospectus. The quantity in which prospectus is printed should be sufficient to meet requirements. They should also forward the same to the stock exchanges and brokers such that they receive them at least 21 days before the first announcement is made in the newspapers. Filing of initial listing application:

Within 10 days of filing the prospectus, the initial listing application must be made to the concerned stock exchanges with the listing fees. Promotion of the issue: The promotional campaign typically commences with the filing of the prospectus with the registrar of the companies and ends with the release of the statutory announcement of the issue.

Statutory announcement: The issue must be made after seeking approval of the stock exchange. This must be published at least 10 days before the opening of the subscription list. Collections of applications: The Statutory announcement specifies when the subscription would open, when it would close, and the banks where the applications can be made. During the period the subscription is kept open, the bankers will collect the applications on behalf of the company. Processing of applications: Scrutinizing of the applications is done. Establishing the liability of the underwriters:

If the issue is undersubscribed, the liability of the underwriters has to be established. Allotment of shares: Proportionate system of allotment is to be followed. Listing of the issue: The detail listing application should be submitted to the concerned stock exchange along with the listing agreement and the listing fee. The allotment formalities should be completed within 30 days.

Book Building Process
Book Building is basically a capital issuance process used in Initial Public Company plans an IPO via the book-build Offer (IPO) which aids price and demand discovery. It is a process used for route marketing a public offer of equity shares Merchant Appoints a of a company. It is a mechanism where, during the period for which the book for the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The process Issues a draft prospectus (containing all mandatory aims at tapping both wholesale and retail investors. The offer/issue price is then Book – Building Process determined after the bid closing Draft prospectuscertain evaluation criteria. date based on filed
simultaneously with concerned authority (SEBI) company disclosures other than price) Banker as a book - runner

Book – runner appoints syndicate members and registered intermediaries to garner subscription Price discovery begins through the bidding process At close of bidding, book runner and company decide upon the allocation and allotments.

.

The Process
The Issuer who is planning an IPO nominates a lead merchant banker as a 'book runner'. The Issuer specifies the number of securities to be issued and the price band for orders. The Issuer also appoints syndicate members with whom orders can be placed by the investors. Investors place their order with a syndicate member who inputs the orders into the 'electronic book'. This process is called 'bidding' and is similar to open auction. A Book should remain open for a minimum of 5 days. Bids cannot be entered less than the floor price. Bids can be revised by the bidder before the issue closes.

On the close of the book building period the 'book runner evaluates the bids on the basis of the evaluation criteria which may include Price Aggression Investor quality Earliness of bids, etc. The book runner and the company concludes the final price at which it is willing to issue the stock and allocation of securities. Generally, the numbers of shares are fixed; the issue size gets frozen based on the price per share discovered through the book building process.

Allocation of securities is made to the successful bidders. Book Building is a good concept and represents a capital market which is in the process of maturing. Book-building is all about letting the company know the price at which you are willing to buy the stock and getting an allotment at a price that a majority of the investors are willing to pay. The price discovery is made depending on the demand for the stock. The price that you can suggest is subject to a certain minimum price level, called the floor price. For instance, the floor price fixed for the Maruti's initial public offering was Rs 115, which means that the price you are willing to pay should be at or above Rs 115.

In some cases, as in Biocon, the price band (minimum and maximum price) at which you can apply is specified. A price band of Rs 270 to Rs 315 means that you can apply at a floor price of Rs 270 and a ceiling of Rs 315. If you are not still very comfortable fixing a price, do not worry. You, as a retail investor, have the option of applying at the cut-off price. That is, you can just agree to pick up the shares at the final price fixed. This way, you do not run the risk of not getting an allotment because you have bid at a lower price. If you bid at the cut-off price and the price is revised upwards, then the managers to the offer may reduce the number of shares allotted to keep it within the payment already made. You can get the application forms from the nearest offices of the lead managers to the offer or from the corporate or the registered office of the company.

How is the price fixed? All the applications received till the last date is analyzed and a final offer price, known as the cut-off price is arrived at. The final price is the equilibrium price or the highest price at which all the shares on offer can be sold smoothly. If your price is less than the final price, you will not get allotment. If your price is higher than the final price, the amount in excess of the final price is refunded if you get allotment. If you do not get allotment, you should get your full refund of your money in 15 days after the final allotment is made. If you do not get your money or allotment in a month's time, you can demand interest at 15 per cent per annum on the money due.

How are shares allocated? As per regulations, at least 25 per cent of the shares on offer should be set aside for retail investors. Fifty per cent of the offer is for qualified institutional investors. Qualified Institutional Bidders (QIB) is specified under the regulation and allotment to this class is made at the discretion of the company based on certain criteria. QIBs can be mutual funds, foreign institutional investors, banks or insurance companies. If any of these categories is under-subscribed, say, the retail portion is not adequately subscribed, then that portion can be allocated among the other two categories at the discretion of the management. For instance, in an offer for two lakh shares, around 50,000 shares (or generally 25 per cent of the offer) are reserved for retail investors. But if the bids from this category are received are only for 40,000 shares, then 10,000 shares can be allocated either to the QIBs or non-institutional investors. The allotment of shares is made on a pro-rata basis. Consider this illustration: An offer is made for two lakh shares and is oversubscribed by three times, that is, bids are received for six lakh shares. The minimum allotment is 100 shares. 1,500 applicants have applied for 100 shares each; and 200 applicants have bid for 500 shares each. The shares would be allotted in the following manner: Shares are segregated into various categories depending on the number of shares applied for. In the above illustration, all investors who applied for 100 shares will fall in category A and those for 500 shares in category B and so on.

The total number of shares to be allotted in category A will be 50,000 (100*1500*1/3). That is, the number of shares applied for (100)* number of applications received (1500)* oversubscription ratio (1/3). Category B will be allotted 33,300 shares in a similar manner. Shares allotted to each applicant in category A should be 33 shares (100*1/3). That is, shares applied by each applicant in the category multiplied by the oversubscription ratio. As, the minimum allotment lot is 100 shares, it is rounded off to the nearest minimum lot. Therefore, 500 applicants will get 100 shares each in category A - total shares allotted to the category (50,000) divided by the minimum lot size (100). In category B, each applicant should be allotted 167 shares (500/3). But it is rounded off to 200 shares each. Therefore, 167 applicants out of 200 (33300/200) would get an allotment of 200 shares each in category B. The final allotment is made by drawing a lot from each category. If you are lucky you may get allotment in the final draw. The shares are listed and trading commences within seven working days of finalization of the basis of allotment. You can check the daily status of the bids received, the price bid for and the response from various categories in the Web sites of stock exchanges. This will give you an idea of the demand for the stock and a chance to change your mind. After seeing the response, if you feel you have bid at a higher or a lower price, you can always change the bid price and submit a revision form.

The traditional method of doing IPOs is the fixed price offering. Here, the issuer and the merchant banker agree on an "issue price" - e.g. Rs.100. Then one has the choice of filling in an application form at this price and subscribing to the issue. Extensive research has revealed that the fixed price offering is a poor way of doing IPOs. Fixed price offerings, all over the world, suffer from `IPO underpricing'. In India, on average, the fixed-price seems to be around 50% below the price at first listing; i.e. the issuer obtains 50% lower issue proceeds as compared to what might have been the case. This average masks a steady stream of dubious IPOs who get an issue price which is much higher than the price at first listing. Hence fixed price offerings are weak in two directions: dubious issues get overpriced and good issues get underpriced, with a prevalence of underpricing on average. What is needed is a way to engage in serious price discovery in setting the price at the IPO. No issuer knows the true price of his shares; no merchant banker knows the true price of the shares; it is only the market that knows this price. In that case, can we just ask the market to pick the price at the IPO? Imagine a process where an issuer only releases a prospectus, announces the number of shares that are up for sale, with no price indicated. People from all over India would bid to buy shares in prices and quantities that they think fit. This would yield a price. Such a procedure should innately obtain an issue price which is very close to the price at first listing - - the hallmark of a healthy IPO market. Recently, in India, there had been issue from Hughes Software Solutions which was a milestone in our growth from fixed price offerings to true price discovery IPOs. While the HSS issue has many positive and fascinating features, the design adopted was still riddled with flaws, and we can do much better.

Players: • • • • • • Co-managers and advisors Underwriters Lead managers Bankers Brokers and principal brokers Registrars & Stock exchanges.

Documents Required:

Draft Offer Document

Offer Document

RHP (Red Herring Prospectus)

‘Draft Offer document´ means the offer document in draft stage. The draft offer documents are filed with SEBI, at least 30 days prior to the filing of the Offer Document with ROC/SEs. SEBI may specifies changes, if any, in the Draft Offer Document and the Issuer or the Lead Merchant banker shall carry out such changes in the draft offer document before filing the Offer Document with ROC/SEs. The Draft Offer document is available on the SEBI website for public comments for a period of 21 days from the filing of the Draft Offer Document with SEBI. ‘Offer Document’ means Prospectus in case of a public issue or offer for sale and Letter of Offer in case of a right issue, which is filed with Registrar of Companies ROC) and Stock Exchanges. An offer document covers all the relevant information to help an investor to make his/her investment decision.

‘Red Herring Prospectus’ is a prospectus, which does not have details of either price or number of shares being offered, or the amount of issue. This means that in case price is not disclosed, the number of shares and the upper and lower price bands are disclosed. On the other hand, an issuer can state the issue size and the number of shares are determined later. An RHP for an FPO can be filed with the ROC without the price band and the issuer, in such a case will notify the floor price or a price band by way of an advertisement one day prior to the opening of the issue. In the case of book-built issues, it is a process of price discovery and the price cannot be determined until the bidding process is completed. Hence, such details are not shown in the Red Herring prospectus filed with ROC in terms of the provisions of the Companies Act. Only on completion of the bidding process, the details of the final price are included in the offer document. The offer document filed thereafter with ROC is called a prospectus.

5. OBJECTIVE OF THE STUDY

• • • • •

To know the process of Valuation of IPOs To understand the Benefits to investor from IPOs To know regulatory consideration with IPO Methods of IPO process To do detail study of IPO ratings, performance tracker and basis of allotment.

6. RESEARCH METHODOLOGY

The research is exploratory research. The data is collected from various sources like Internet, Newspaper, Magazines, and Personals. Primary source:
•

Survey through Bombay Stock Exchange.

Secondary sources: • • • Study from books and articles Analysis of IPOs of various sectors Search from Various investor sites.

7. ANALYSIS

IPO VALUATION & DATA INTERPRETATION
Initial Public Offering - 2011 This IPO report provides information about the IPO's came in to India stock market in year 2011. The report tells the amount raised by companies through public offerings in primary stock market in 2011. Summary of IPO market activities: Partial data Financial Year Total Issue Succeeded Total Issue Failed Total Money Raised 2011 21 1 Rs.3316.89 Cr.

BB = 100% Book Building Issue, FP = Fixed Price Issue Source: www.chittorgarh.com/ipo/ipo_list www.capitalmarket.com/ipodetails

Muthoot Finance Ltd.
Objects of the Issue: 1. To augment capital base to meet future capital requirement to provide for funding of loans to customers; 2. General corporate purposes.

Company Background: Muthoot Finance Ltd is a non-deposit taking NBFC in the business of lending against household used gold jewellery to individuals. Muthoot Finance’s operating history has evolved over a period of 70 years since Mr M George Muthoot founded a gold loan business in 1939. MFL received the NBFC licence from the RBI in 2001.

The NBFC has the largest branch network among gold loan providers in India with 2,611 branches and a strong presence in under-served rural and semi-urban markets in India with total Assets under Management of Rs 12,897 Cr as of November 2010. During 2010, the company received fund infusion amounting to Rs 2.5 bn from private equity players like Baring India Private Equity, Matrix Partners India, Kotak India Private Equity Fund and Wellcome Trust for a 6% stake in the company. Further, in 2011 Wellcome Trust picked up additional 1% stake from the promoters, taking the total stake of private equity investors to 7% in the company. The NBFC raised Rs 130 Cr from 11 Anchor investors at Rs 170/share. The anchor investors include Citigroup, Goldman Sachs, Credit Suisee amongst others. Company Financials: Muthoot Finance’s AUM increased at a CAGR of 74% from Rs 8 bn. in FY06 to Rs 74 bn. in FY10 driven by a rise in pledged gold and a significant spurt in gold prices. On the back of growth in AUM, interest income increased at a CAGR of 66% from Rs 1.4 bn. in FY06 to Rs 10.8 bn. in FY10. Profit after tax (PAT) improved from Rs 271 mn. to Rs 2,276 mn. in FY10. The adjusted EPS and adjusted book value of the company increased at a CAGR of 53% and 43% respectively over FY06-10. Gross NPA’s have been contained to less than 0.5% in the past three years. Muthoot Finance enjoys a strong capital to risk adjusted ratio (CRAR) of 15% which is in excess of the RBI’s requirement of 12%.The company frequently sells its portfolio under bilateral direct assignments which also helps it keep its capital ratio strong. In 2010, the company raised Rs 2.5 bn. from private equity players, which will help it shore up capital base and fund its growth.

Source: www.muthootfinance.com

Financials Gold AUM Gold Volume Pledged Interest Income Interest Expense NII Other Income Net Profit Adjusted EPS (Rs.) Adjusted Equity Shares Net Worth Adjusted Book Value RoE (%) RoA (%) Gross NPA (%) CRAR (%) NIM's (%)

FY - 2008 Rs.2179.00 Cr. 30.00 Tons Rs.357.90 Cr. Rs.179.80 Cr. Rs.178.10 Cr. Rs.10.70 Cr. Rs.63.60 Cr. Rs.2.60 Rs.24.60 Cr. Rs.213.10 Cr. Rs.8.70 Cr. 34.00% 3.00% 0.42% 12.60% 9.70%

FY - 2009 Rs.3300.10 Cr.

FY - 2010 Rs.7341.70 Cr.

FY - 2011 (8M) Rs.12897.70 Cr. 97.60 Tons Rs.1289.35 Cr. Rs.582.56 Cr. Rs.706.79 Cr. Rs.123.17 Cr. Rs.291.48 Cr. Rs.7.84 Rs.37.17 Cr. Rs.2032.25 Cr. Rs.54.67 Cr. 52.00% 2.90% 0.35 % 15.06% 10.40%

39.00 Tons 66.00 Tons Rs.606.20 Rs.1077.50 Cr. Cr. Rs.309.80 Rs.473.70 Cr. Cr. Rs.296.50 Rs.603.80 Cr. Cr. Rs.14.20 Cr. Rs.11.90 Cr. Rs.97.70 Rs.227.60 Cr. Cr. Rs.3.50 Rs.7.60 Rs.28.00 Cr. Rs.30.10 Cr. Rs.361.40 Rs.584.20 Cr. Cr. Rs.12.00 Cr. Rs.19.40 Cr. 34.00% 48.00% 3.00% 5.00% 0.48 % 0.46 % 16.30% 14.80% 10.60% 11.20%

Particulars Interest Income Interest Expense Net Interest Income Other Income Net Total Income Operating Expense Operating Profit Depreciation

Rs . in Cr. 64.82 78.01

2006 142.8 3

2007 223.5 9 99.90 123.6 9

2008 357.9 4 179.8 0 178.1 4

2009 606.2 4 309.7 7 296.4 7

2010 1077.4 5 473.73 603.72 11.93 615.65 255.21 360.44 14.89

2011 (8M) 1289.35 582.56 706.79 12.32 719.11 267.49 451.62 10.50

5.24 83.25 38.52 44.72 3.39

10.38 10.70 14.16 134.0 188.8 310.6 7 4 3 152.5 60.02 84.45 9 104.3 158.0 74.05 9 5 7.10 7.41 9.88

Profit before Tax Provision for Tax PAT Net Adjustments PAT as restated EPS*

41.34 14.21 27.13 0.24 26.89 0.70

66.96 22.98 43.98 0.12 43.86 1.20

96.98 33.38 63.60 0.53 63.07 1.70

148.1 7 50.45 97.72 (0.15) 97.87 2.60

345.55 117.98 227.57 (0.94) 228.52 6.10

441.12 149.63 291.48 0.00 291.48 11.80

Key Positives
Muthoot - Established Brand: MFL has an established track record in the niche Gold loan segment, and has a gold loan portfolio of Rs. 12,897 Cr as on November 30 2010. The Muthoot Group enjoys strong market knowledge and a good franchise in southern India on the back of significant experience of the promoters of the Group since 1939. An early entry in this business, not only in South India but also in other regions, has helped the company develop a strong brand image, wide distribution network and AUM. The growth of the company is also aided by the fact that gold loans are commonly accepted form of financing amongst households in southern India. Niche Business Model: MFL is the largest player in the niche business of gold financing, both in terms of AUM and distribution network. The gold loan asset class is characterised by small ticket size loans secured against gold ornaments. The average ticket size is of around Rs 30,000 for MFL. While the contractual tenure of the loan contract is 12 months, the loan tenure is typically around 3-4 months. MFL’s AUM has grown at a four-year CAGR of 74% to Rs 74 bn in FY10. The company has

grown its market share by 9% during FY07- FY10 backed by its strong presence in the South India Market. Robust Industry Outlook: According to the IMACs industry report, based on the assessment of the emerging dynamics and competitive landscape, the Gold Loans market is expected to grow at between 35% and 40% over the next three years. Moreover, as the market is currently under-penetrated, it is expected that the Gold Loans market will offer enough opportunities for portfolio expansion and retain attractive margins for all existing specialized NBFCs, banks and new entrants. The branch expansion and marketing initiatives of various specialized NBFCs are anticipated to give a strong boost to the acceptability of Gold Loans and lead to further growth in the Gold Loans market. Healthy Asset Quality: Muthoot Finance has maintained strong asset quality supported by its comfortable loan-to-value (LTV) ratio at origination, robust systems and processes, and the highly secured nature of the LAG business. Strong underwriting standards have resulted in very low gross non-performing assets (NPA) of 0.46% for the company. Sentiment attached to the household ornament also support low NPA. Diversified Sources of Funds: Muthoot Finance has access to a diversified resource profile. As of FY10, it had a total debt outstanding of Rs 52 bn. Its established track record helps to mobilise funds from retail investors by issuing nonconvertible debentures (NCD) through its branches offering interest rates of 1111.5%.

Stringent Internal Controls System: The internal audit team of the company consists of 500 members and is spread out in different locations. The company conducts regular audits of branches to check the efficacy of the gold assessment quality of the branches and other operational processes of the branches. MFL is exposed to operational risks, as its transactions mainly involve gold jewellery and cash. MFL maintains its gold ornaments in strong rooms that are insured against fire, theft and employees frauds.

Risks
Downturn in Gold prices: A significant rise in gold prices along with the increase in loan requirement by customers has boosted Muthoot Finance's AUM. Any sharp fall in gold prices could pose challenges. However, Muthoot Finance has a comfortable LTV ratio in line with other gold financing NBFCs ranging from 60-85%, which helps it to combat the downside in gold prices. Also, the shorter tenure of gold loans (usually ranging from three to six months) offers flexibility of resetting the LTVs. Business Concentration in the Southern India: Muthoot Finance derives 98% of revenues from the gold loan business. Also, it is expected to remain concentrated in South India, which accounts for 75% of AUM for the short to medium term despite aggressive growth plans in the northern and western states. Royalty Payment to Promoters: The company has a royalty clause which is not implemented yet, in favour of promoters for allowing the company to use the Muthoot

trademarks, which is fixed at 1% of the annual income, subject to a maximum of 3% of annual profit. Regulatory Hitches: The impact of the State Money Lenders Act for NBFCs, the decision on which is awaited from the Supreme Court, could not only adversely affect Muthoot Finance's lending rates but also increase its operational expenditure, given the requirements (under the act) of registering all establishments with state authorities and complying with state regulations. The decision of the Supreme Court regarding this issue remains a sensitive factor for the company.

Valuations
Muthoot Finance’s market cap is coming to Rs 5,847 Cr ± Rs 6,505 on a price band of Rs 160 ± Rs 175. The company is asking for a price to earnings multiple of 13.6-14.9 times its annualized FY11 EPS of Rs 11.7 which is at a discount to Manappurram General Finance despite the former having a higher market share of 20% while Manappurram just has a market share of 6.8% as on FY10. The price to book value is 2.9-3.04 times its post issue book value which is at marginal premium to Manappurram General Finance. At the upper price band of `175 and lower price band of `160, the issue is priced at around 4.95x and 4.53 times its 8MFY11 book value of `35.3. On its post issue book value of `54.68 the issue is priced at around 3.2x and 2.93x (at the higher band and lower band respectively). Manappuram General Finance & Leasing Limited (MGF), the only listed company in India which is in the similar business of gold financing with less than half of its size in terms of income is trading

at a P/B of 2.81x. We believe Muthoot Finance which has a better reach than its competitors in terms of branch network and higher return on networth compared to MGF, deserves a premium valuation. On the Price to earning methodology, the issue is priced at around 14.9x and 13.6x on the post issue annualized EPS of 11.76 for 8MFY11, which is ~20% cheap when compared to MGF which is trading at a P/E of 18.8x on its annualized 9MFY11 EPS of 6.76. Muthoot finance enjoys superior return ratios with ROAE at ~ 50.0% and ROAA at ~3.9% mainly driven by it superior credit rating (which enables it to borrow at competitive rates thereby leading to healthy 10%+ NIMs) coupled with its high leverage of ~9.0x. The current equity raising initiative by the company will improve its capital adequacy ratio in excess of 23% from 15.06% in November 2010, thereby helping it to maintain loan growth and support NIM going forward. We believe the company’s leadership position in the gold loan business (market share of ~20.0%), strong capital raising ability, superior NIMs and return ratios, established brand image and opportunity in the gold financing business are key value drivers for Muthoot Finance going forward. Est. Gold Loan Portfol io

FY 2010

Tot al Inco me

Net Inco me

MCap

Mkt . Sha re (% )

Annuali sed EPS ( Rs. ) 5.80

P/E

P/B V (x) 2.80 2.90 3.04

( Rs. in Cr. ) Manappurr am General Finance Muthoot Finance 478 120 2560 5292 5947 6505

(x) 22.40 13.60 14.90 *

6.80

616

229

7342

19.5 0

11.70

Muthoot Finance annualized EPS for 8M FY 2011 on post-issue equity works out to Rs 11.8. At the price band of Rs 160 to Rs 175 P/E works out to 13.6 to 14.9

times. Manappuram General Finance and Leasing Company (MAGFIL) another Gold loan company with less than half of its size in terms of income is currently trading at P/E of 22.4. Current book value of Muthoot Finance is just Rs 35. Post-issue Book Value works out to Rs 52.6 and Rs 54.7 at issue price of Rs 160 and Rs 175, respectively. P/BV at both the bands works out to be 3.0 and 3.2 times, respectively. MAGFIL is currently trading at a P/BV of 2.9.

Balance Sheet Valuation:

Net Worth (Rs. in Mn.) No. of Outstanding Shares Book Value per Share (Rs.)

9013.00 51.50 175.01

Discounted Cash Flow Valuation:

A valuation method used to estimate the attractiveness of an investment opportunity. Discounted cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one.

Calculated as:

In simple terms, discounted cash flow tries to work out the value of a company today, based on projections of how much money it's going to make in the future. DCF analysis says that a company is worth all of the cash that it could make available to investors in the future. It is described as "discounted" cash flow because cash in the future is worth less than cash today. Growth Rate: Muthoot Finance Ltd. is expected to grow at to have CAGR of 48 %, We take fixed growth rate of 48% for DCF valuation for coming 5 years. Reinvestment Rate:

If we relax the assumption that the only source of equity is retained earnings, the growth in net income can be different from the growth in earnings per share. Intuitively, note that a firm can grow net income significantly by issuing new equity to fund new projects while earnings per share stagnate. To derive the relationship between net income growth and fundamentals, we need a measure of how investment that goes beyond retained earnings. One way to obtain such a measure is to estimate directly how much equity the firm reinvests back into its businesses in the form of net capital expenditures and investments in working capital. Equity Reinvestment Rate = Growth Rate / ROE = 48/52 = 92.29 % Forecasting Free Cash Flows: Free cash flow is the cash that flows through a company in the course of a quarter or a year once all cash expenses have been taken out. Free cash flow represents the actual amount of cash that a company has left from its operations that could be used to pursue opportunities that enhance shareholder value - for example, developing new products, paying dividends to investors or doing share buybacks. EBIT (1-tax) nth year = EBIT (1-tax) n-1 year × (1 + growth rate) Base Year 7612 -

Particulars Expected Growth Rate EBIT (Rs. in Mn.) Equity Reinvestment Rate

2012 48.00 % 1126 6 92.29 %

2013 48.00 % 1667 3 92.29 %

2014 48.00 % 2467 7 92.29 %

2015 48.00 % 3652 1 92.29 %

2016 48.00 % 5405 1 92.29 %

A wide variety of methods can be used to determine discount rates, but in most cases, these calculations resemble art more than science. Still, it is better to be generally correct than precisely incorrect, so it is worth your while to use a rigorous method to estimate the discount rate. A good strategy is to apply the concepts of the weighted average cost of capital (WACC). The WACC is essentially a blend of the cost of equity and the after-tax cost of debt. Cost of Equity (Re): Unlike debt, which the company must pay at a set rate of interest, equity does not have a concrete price that the company must pay. But that doesn't mean that there is no cost of equity. Equity shareholders expect to obtain a certain return on their equity investment in a company. From the company's perspective, the equity holders' required rate of return is a cost, because if the company does not deliver this expected return, shareholders will simply sell their shares, causing the price to drop. Therefore, the cost of equity is basically what it costs the company to maintain a share price that is satisfactory (at least in theory) to investors. The most commonly accepted method for calculating cost of equity comes from the Nobel Prize-winning capital asset pricing model (CAPM), where: Cost of Equity = RF + ß (Rm - Rf) Rf - Risk-Free Rate - This is the amount obtained from investing in securities considered free from credit risk, such as government bonds from developed countries. The interest rate of government bonds is frequently used as a proxy for the risk-free rate.

ß - Beta - This measures how much a company's share price moves against the market as a whole. A beta of one, for instance, indicates that the company moves in line with the market. If the beta is in excess of one, the share is exaggerating the market's movements; less than one means the share is more stable. We take Beta of comparable firm i.e. beta of 1.33 (Rm - Rf) Equity Market Risk Premium - The equity market risk premium (EMRP) represents the returns investors expect, over and above the risk-free rate, to compensate them for taking extra risk by investing in the stock market. In other words, it is the difference between the risk-free rate and the market rate.

Cost of Debt (Rd): As companies benefit from the tax deductions available on interest paid, the net cost of the debt is actually the interest paid less the tax savings resulting from the tax-deductible interest payment. Therefore, the after-tax Cost of debt = Rd (1 - corporate tax rate) Weighted Average Cost Of Capital (WACC): The WACC is the weighted average of the cost of equity and the cost of debt based on the proportion of debt and equity in the company's capital structure. The proportion of debt is represented by D/V, a ratio comparing the company's debt to the company's total value (equity + debt). The proportion of equity is represented by E/V, a ratio comparing the company's equity to the company's total value (equity + debt). The WACC is represented by the following formula:

WACC E/V

=

Cost of Equity + Cost of Debt 0.68 30.00 % 0.32 Rf Beta Rm 5.00 1.33 8.00

Corporate Tax D/V

Cost of Debt = D / V (1 - Tax) 0.22%

Cost of Equity = Rd + [Rf + Beta (Rp)] 10.02%

WACC = Cost of Debt + Cost of Equity = 10%

Present Value: The present value of a single or multiple future payments (known as cash flows) is the nominal amounts of money to change hands at some future date, discounted to account for the time value of money, and other factors such as investment risk. A given amount of money is always more valuable sooner than later since this enables one to take advantage of investment opportunities. Present values are therefore smaller than corresponding future values. When future cash flow of the company is divided by the discount rate we get the present value of that predicted years cash flow. Present Value n = Predicted cash flow n / (1+ discount rate) n Where, n = year

2012 Particulars Present Value Discount Rate Free Cash Flow 790 1.1 869

2013 2014 2015 (Rs. in Mn.) 1063 1430 1923 1.21 1.33 1.46 1286 1903 2816

2016 2588 1.61 4168

Terminal Value: Perpetuity Growth Model: The Perpetuity Growth Model accounts for the value of free cash flows that continues into perpetuity in the future, growing at an assumed constant rate. Here, the projected free cash flow in the first year beyond the projection horizon (N+1) is used. We have assumed perpetuity growth rate for Muthoot Finance Ltd. as 6% Beyond 2016 Muthoot Finance Ltd. is expected to grow at 6% p.a i.e. at its perpetuity rate, hence net income for the year 2016 will be: Net income of 2016 × (1+ perpetuity growth rate) = 54051 × (1+0.06) = Rs. 57295 mn Reinvestment rate after 2016 (Terminal Point): Here, return on equity is rate at which company expect to get returns on its investments after terminal point i.e. 2012. Return on equity will drop to the stable period cost of capital of 9.5%.

Reinvestment rate (terminal point) Equity

= Perpetuity Growth rate / Return on = 6/9.5 = 63%

Free cash flow Therefore, Free cash flow 2017

= EBIT (1-tax) - [EBIT (1-tax) x Reinvestment Rate]

= 59295 - [59295 x 63%] = Rs. 21109 mn

Gordon Growth Model: There are several ways to estimate a terminal value of cash flows, but one well-worn method is to value the company as a perpetuity using the Gordon Growth Model. The model uses this formula:

=

Free cash flow of the year after the terminal year (Discount Rate - Perpetuity Growth Rate) The formula simplifies the practical problem of projecting cash flows far into

the future. Therefore, Terminal Value = 21109 × 100 12 = Rs 175904 mn Present value of Terminal Year = 175904 / (1.10)6

= Rs. 99293 mn Calculating Total Enterprise Value: Total Enterprise = Present value Of Terminal - Debt = 99293 - 90023 = Rs. 9270 mn Fair value No. of outstanding shares Fair value of per share = Rs 9270 mn = 51.5 mn = Rs. 180

Listing Day Trading Information:

Particulars Issue Price Open Low High Last Trade Volume

BSE Rs.175.00 Rs.180.00 Rs.161.50 Rs.198.00 Rs.176.25 22676312

NSE Rs.175.00 Rs.196.60 Rs.161.40 Rs.198.90 Rs.175.90 60613615

Muthoot Finance Ltd. - IPO Particulars Price Band Issue Price Listing Price 3 Days High Amount Rs. 160.00 to Rs.175.00 Rs.175.00 Rs.180.00 Rs.168.70

3 Days Low Close Price (13th July 2011) DCF Valuation Balance Sheet Valuation NSE & BSE Data: Previo us Close 166.35 162.75 163.30 166.35 162.60 163.30

Rs.158.00 Rs.166.20 Rs.180.00 Rs.175.00

Date 11th July NS E 12th July 13th July 11th July BS E 12th July 13th July

Open 166.0 0 161.4 0 167.0 0 165.5 5 160.5 5 163.1 0

High 168.58 164.85 167.00 168.70 164.00 167.00

Low 162.0 0 160.0 0 158.0 0 162.1 0 158.5 5 163.0 5

Close 162.75 163.30 166.20 162.60 163.30 166.20

Total Trading Qty. 136170 236220 139147 41092 66835 30192

It can be seen that per share value of the Muthoot Finance Ltd. comes to Rs. 180 and the listing price is Rs.180. Close Price as of 13th July 2011 is Rs.166.20. Hence it is buying opportunity of the investors for whom expecting long-run returns.

Muthoot Finance Ltd.- IPO News: • • Country's biggest gold-financing company by loan portfolio. Having 20 per cent market share in gold loan segment, this company leads the bandwagon followed by Manappuram General and Muthoot Fincorp. • The company enjoys 20% market share in Gold Loan compared to its nearest peer Manappuram General that has around 7% market share. Post IPO 80% holding of promoters makes it a worthy.

• • • • •

The Muthoot Finance Ltd. had performed very slowly. It had been subscribed by 6.6 times (oversubscribed 5.6 times). Retail Individuals category has been subscribed by only 8.42 times. Non-Institutional investor category had been subscribed by over 60.72 times. Qualified Institutional category had been subscribed by 24.92 times.

Muthoot Finance Ltd. - Performance:

8. CONCLUSIONS & RECOMMENDATIONS
Findings:
• According to my study the investment done in the securities by the investors is mainly done only by the image of the company but not on the basis of the fundamental analysis.

• EPS is the money that is left over after a company pays all of its debt so, higher the EPS the better it is. • A low P/E is generally considered good because it may mean that the stock price has not risen to reflect its earning power. A high P/E, on the other may reflect an overpriced stock or decreasing earnings.
• A Beta of 1 indicates that the Security’s price will move with the market. A

Beta of less than 1 means that security will be less volatile than the market. A Beta of greater than 1 indicates that the security price will be more volatile than the market.
• The investors often see IPO as an easy way to make money. One of the most

attractive features of an IPO is that the shares offered are usually priced very low and the company’s stock prices can increase significantly during the day the shares are offered. This is seen as a good opportunity by ‘speculative investors’ looking to notch out some short-term profit. The ‘speculative investors’ are interested only in the short-term potential rather than long-term gains. • According to my study most probably, listing price is more compare to allotment price.

Conclusions:
• An IPO is the first sale of stock by a company to the public. • Broadly speaking, companies are either private or public. Going public means a company is switching from private ownership to public ownership. • Going public raises cash and provides many benefits for a company.

• The dot-com boom lowered the bar for companies to do an IPO. Many startups went public without any profits and little more than a business plan. • Getting in on a hot IPO is very difficult, if not impossible. • The process of underwriting involves raising money from investors by issuing new securities. • Companies hire investment banks to underwrite an IPO. • The road to an IPO consists mainly of putting together the formal documents for the SEBI and selling the issue to institutional clients. • The only way for you to get shares in an IPO is to have a frequently traded account with one of the investment banks in the underwriting syndicate.

Suggestions:
• The investment in IPO can prove too risky because the investor does not know anything about the company because it is listed first time in the market so its performance cannot be measure. • On the other hand it can be said that the higher the risk higher the returns earned. So we can say that the though risky if investment is done then it can give higher returns as well.
•

For example- we can take the example of Reliance power. The Investors invested in huge amounts with the faith that they will get good returns but nothing happened so when the IPO got listed. So one should think and invest in IPO.

•

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.

•

If higher risk is taken, it is always rewarded with the higher returns. So higher the risk the more the returns rewarded for it. “We can fairly predict the future, but can’t make it happen as it is.”

Limitations:
• The study was limited to the information willingly shared by the authorities and clients of Hyderabad Stock Exchange Ltd. • Considerable information has been extracted from the financial statements and documents. • Most of the strategies discussed in this report use the tools and techniques of fundamental analysis, whose main objective is to find the worth of a company. • In quantitative analysis, a company is worth the sum of its discounted cash flows. In other words, it is worth all of its future profits added together. Some qualitative factors affecting the value of a company are its management, business model, industry, and brand name.
•

The time period for doing this project report containing 45 days only and collecting data for completing report are the limitations.

9. REFERENCES
Internet:
• • •

www.bseindia.com www.nseindia.com www.sebi.com

• • • • • •

www.chittorgarh.com www.questgroup.in www.muthootfinance.com www.moneycontrol.com www.wikipedia.com www.economictimes.indiatimes.com

Books:
•

Prasanna

Chandra,

3rd

Edition,

“Investment

Analysis

and

Portfolio

Management”, Tata McGraw-Hill.
•

Frank J. Fabozzi, Pamela Peterson Drake, “Capital Markets, Financial Management and Investment management”.

•

M Y Khan “Financial Management”.



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