Hi everyone,

I'm new to this forum. I'm a student of master degree, actually i'm making a project on portfolio management. I'm studying IPOs firstly in that.Can someone please help me about how to go about studying the returns on IPO's issued in last 2-3 yrs? Also,tell me is it easy to calculate the fair price of an IPO and then compare it with market price?

Waiting for reply.

Thanks

Guddu.

There are a few sites which track returns generated by IPOs.

You can find the data of moneycontrol.com too.

Moneycontrol - IPO Search, Issues Open Now, IPO, Initial Public Offering, IPO FAQs

If you see the "Red Herring Prospectus" of any IPO, you will find a comparison made with other listed stocks on the basis of PE ratio, RONW and NAV (Book Value).

There are lot of other parameters on which stocks can be compared.

There is no single definition or formula for calculating the value or "fair price" of a stock.

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One small doubt.

Actually we find that the prices on two exchanges BSE & NSE different. Can you tell me which price I should take when i'm calculating the return on a IPO?

Sorry if my question sounds stupid.

Thanks.
guddu

There is a very small difference between the prices on NSE and BSE - usually less than 0.5%.

Your final values won't be affected much by the choice of the exchange.

Still as you have asked, I suggest you use prices from NSE.

NSE is the more liquid market and thus a more efficient market for price discovery.

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hi

I have to compare the performance of ipo's issued in 2007 to 2010. i have calculated how many ipo's are on positive return each year by using issue price & current price (as on 22 jan,2011).Now i can calculate the top performing ipo's of 2010.I have to compare the performance of ipo's issued from 2007 to till date but can not compare like this because market & economy conditions are very different each year eg recession in 2008 so less ipo's came in 2009. Please give me some idea how to do it.

Thank you.

You can compare the performance of IPOs in these 6 phases,

Phase 1 : Bear : March 30, 1992 to Oct 11, 1999

Phase 2 : Bull : Oct 11, 1999 to Feb 11, 2000

Phase 3 : Bear : Feb 11, 2000 to June 21, 2005

Phase 4 : Bull : June 21, 2005 to Jan 8, 2008

Phase 5 : Bear : Jan 8, 2008 to Mar 6, 2009

Phase 6 : Bull : Mar 6, 2009 to Nov 5, 2010

You will get a average bear market and bull market return considering 3 phases for each.

For IPOs between 2007-2010 you can put them in respective group Bear/Bull and compare their returns with the average return.

Also, you can categorize the companies between market cap,

0 - 500 Crore
501- 5000 Crore
5000+ Crore

Based on the market capitalization you can analyze the returns generated, and compare against the average of each category

Also you can further drill down based on sector analysis, fii investment pattern etc.