Factors Influencing IPOs Pricing in India

Commerce

Pricing of the IPOs is a tedious process a company comes across in the issue process. Investors also are not aware of the mechanism and basis of pricing. There were some mechanisms where the investment bankers and the lead managers adopt for the pricing of IPOs. Despite this, SEBI has prescribed some guidelines where companies have to disclose in the prospectus for the red herring about the basis of issue. Even the investors can have access to this, to understand about the pricing and performance of companies. In this regard, 148 IPOs over a period 12 years, from 2008 to 2019 has been studied by considering the factors as per SEBI guidelines that are impacting the IPOs issue price. Multiple regression models has been used for the study of factors and through the study the most impacting factors of issue price across the industries-based on the National Industrial classification over the period of study is also identified. On the whole the factors impacting IPOs price was P/E ratio, IPE, RONW, NAV post issue, stock dilution, issue amount and issue size across the industries during the period 2008 to 2019.

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