Analysis of Short-Term Performance of IPOs Listed on NSE

Abstract

Initial Public Offering (IPO) is the process of issuing shares to the public for the first time by issuing company to the public directly (McDougal et al., 2019). To raise the required capital for the business, most of the organizations go for public issues and IPO is an important source among them. But sometimes there will be a huge difference between the issue price and listing price like it happened in a recent LIC IPO, post listing on stock exchanges, and one-month performance, two-month performance, and three-month performance of IPOs. Therefore, this paper aims to study the short-term performances of IPO listed on the NSE. The data has been collected from NSE official website from 01-04-2021 to 31-03-2022. The Listing Day return, One month, Two Months, and Three months, six months, one-year average returns are calculated for analysis. This paper found that most of the IPOs are mispriced, and it was found there was a massive difference between the Issue price and the listing price. Thus, this paper suggests that before investing in any IPOs investors should evaluate the past performances of a company and should be cautious enough to decide on investments in IPOs. This paper is helpful for investors, stock broking houses, QIBs, etc., in making proper investment decisions.