Performance Analysis of IPOs: Evidence from India

Abstract

Initial public offering (IPO) is a method to raise finance by private companies to meet their growing requirements. IPOs have become attractive and lucrative to the investors as they are under-priced and offer a good return in the future. Therefore the present study analyses 144 IPOs offered from 2014 to 2020 on Bombay Stock Exchange (BSE), India. Raw returns, market-adjusted excess return (MAER), annualized returns, and wealth relative tools are used for analysis. The study supports the empirical research in the Indian context that IPOs are underpriced. Further, the raw return has increased from 18.09% to 48.83% during 12 months’ time period indicating wealth generated amongst the shareholders. The wealth relative model has been employed to ascertain the performance of IPOs against the market. The results confirm that in all the years, IPOs have outperformed the markets, and they are under-priced too.