A Study on Performance of IPO (Initial Public offering) with Special Reference to Selected Companies at BSE

Abstract

Debt and/or equity are two ways that corporations and government entities raise money. The primary market can be used by unlisted companies to issue shares through an initial public offering (IPO). These businesses have the chance to grow, diversify, and expand with stronger long-term business prospects. An investor who owns shares from an IPO may view it as a short-term speculative opportunity or as a long-term chance to generate big dividends and capital gains. In India, initial public offerings (IPOs) or public issues have grown in popularity as a means of obtaining capital. These initial public offerings (IPOs) have an erratic performance over time, and previous investors who invested in them have suffered significant losses. While IPOs provide noticeable returns on the day of listing, they often perform poorly over the long run. This essay evaluates how Indian companies' operational performance changes following their initial public offerings (IPOs). If a performance metric like "profit" is normalized by sales volumes (i.e., return on sales) rather than assets (i.e., return on assets), it is discovered that there is no worsening in the operating performance post-IPO. This paper discovers a steady return on sales, in contrast to a clear fall in return on assets observed in comparable other studies. The importance of selecting the appropriate variables for matching and normalization purposes is emphasized in the paper.