The Pricing of IPOs & FPOs in Indian Capital Market

Indian capital market has always proved itself a prominent market for public issues. For the common man though the retail participation is very less as well as for Qualified Institutional Bidders (QIBs), Initial Public Offerings (IPOs) and Follow- on Public Offerings (FPOs) has always been a very profitable investment instrument. During the year 2010, 72 companies had been raised Rs.69192 crore from the primary market through IPOs and FPOs which is over three times higher than 21 in 2009. Out of 72 issues, 64 were IPOs that has raised Rs.31615 crore and remaining 08 were case of FPOs which has raised 31577 crore. The study “Pricing of IPOs & FPOs in Indian Capital Market” pays attention to the performance of the IPOs and FPOs in the secondary market. The pricing of the IPOs and FPOs in 2010 has been studied with the help of secondary data collected from NSE, BSE and other relevant data sources. The researchers assume that the investments in IPOs and FPOs are very safe, risk free, and make good returns. It was found from the research that returns out of IPOs and FPOs of some companies during the short term is very promising but some of have given less as its costs in issue price. In the recent past several large equity offerings including those from reputable business houses has failed to reach their price targets. Out of the 72 companies that have raised Rs. 69192 crore from Investors in India through IPOs and FPOs many are quoting below their issue price. The above research deals with these phenomena whether these issues are being offered at fair price or not, is investing in IPOs or FPOs wise decision or investor should wait till its best price in secondary market. Key words: Initial public offering (IPO), Follow-on Public Offering (FPO), Qualified Institutional Bidders (QIBs), Short-Term Returns, Performance Review, Pricing of IPOs and FPOs.