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  1. 1. INITIAL PUBLIC OFFERING (IPO) Richa Shah Neha Shukla Himani Sheth Darshan Joshi
  2. 2. TABLE OF CONTENTS A. Introduction B. Eligibility Criteria C. Process  Parties Involved  Structure  Pricing  Marketing Plan D. Case Study E. Conclusion F. Bibliography
  4. 4.  An initial public offering (IPO) or stock market launch is a type of public offering where shares of stock in a company are sold to the general public for the first time.  This is done by offering those shares to the public, which were held by the promoters or the private investors.  This is why doing an IPO is also referred to as "going public."  IPO’s are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.
  6. 6. IPO PROCESS Decision to Go for IPO Appointment of BRLM and Legal Counsel Due Diligence Drafting and Draft Red Herring Filing with SEBI & Stock Exchanges Funds Transferred to Issuer Listing ROC Filing & Final Prospectus Pricing & Allocation Book Building Pre- Marketing SEBI Clearance & ROC Filing Road shows
  7. 7. INTERMEDIARY STRUCTURE – PARTIES INVOLVED Book Running Lead Managers (BRLM) Book Runners Legal Counsel (Underwriters) Broker Or Syndicate Advertising Agency PrintersEscrow BankersRegistrars IPO Grading Agency Legal Counsels Issuer Company Self Certified Syndicate Banks (SCSB) Auditors
  9. 9. PRIMARY CRITERIA FOR IPO a) Net tangible assets of at least Rs. 3 crore in each of the preceding three full years b) Distributable profits for at least three out of the immediately preceding five years c) Net worth of at least Rs. 1 crore in each of the preceding three full years d) The issue size should not exceed 5 times the pre- issue net worth e) If there has been a change in the company’s name, at least 50% of the revenue for preceding one year should be from the new activity denoted by the new name a) Issue shall be through book building route, with at least 50% to be mandatory allotted to the Qualified Institutional Buyers (QIBs) b) The minimum post-issue face value capital shall be Rs. 10 crore or there shall be a compulsory market-making for at least 2 years a) The “project” is appraised and participated to the extent of 15% by FIs/Scheduled Commercial Banks of which at least 10% comes from the appraiser(s). b) The minimum post-issue face value capital shall be Rs. 10 crore or there shall be a compulsory market-making for at least 2 years. In addition to satisfying the aforesaid eligibility norms, the company shall also satisfy the criteria of having at least 1000 prospective allottees in its issue.
  10. 10. EXEMPTIONS TO CERTAIN CATEGORY ENTITIES FROM ELIGIBILITY NORMS  The following categories of entities are eligible for exemption from entry norms:-  A banking company including a local area bank set up under the Banking Regulation Act, 1949  A corresponding new bank set up under the Banking Companies Act, 1970  An infrastructure company  Whose project has been appraised by a Public Financial Institution (PFI)  Not less than 5% of the project is financed by any of the PFI  Rights Issue by a listed company
  11. 11. PRICING There are two ways in which the price is determined in the IPO. FIXED PRICE ISSUES  Offer Price :- Price at which the securities are offered and would be allotted is made known in advance to the investors  Demand :- Demand for the securities offered is known only after the closure of the issue  Payment:- 100 % advance payment is required to be made by the investors at the time of application.  Reservations:- 50 % of the shares offered are reserved for applications below Rs. 1 lakh and the balance for higher amount applications. BOOK BUILDING ISSUES  Offer Price:- A 20% price band is offered by the issuer within which investors are allowed to bid and the final price is determined by the issuer only after closure of the bidding.  Demand:- Demand for the securities offered, and at various prices, is available on a real time basis on the BSE website during the bidding period  Payment:- 10% advance payment is required to be made by QIB’s along with the application, while other categories of investors have to pay 100% advance along with the application  Reservations:- 50% of the shares offered are reserved for QIB’s, 35% of small investors and the balance of all other investors.
  12. 12. MARKETING PLAN FOR IPO Direct marketing to shareholders/ stakeholders Public Relation Plan Conference Plan i.e. Press & Broker Conferences, Analysis Media Plan Stationery distribution schedule (Form & Prospectus Corporate Ads
  14. 14. Introduction – Just Dial Just Dial has established itself as the undisputed leader of local search in India. It provides comprehensive and updated B2B and B2C services in India. The service is available on a number of platforms like phone, internet, mobile internet and SMS. In keeping with the latest technological trends, Just Dial has also launched its own mobile app for Android, IOS and blackberry. According to CRISIL research, the business plan for Just Dial is stable and reliable as it is a negative working capital and a debt-free business model. Also, being the first mover in the niche and by having superiority in technology, databases and having a business model that is hard to replicate exactly, Just Dial is likely to remain the market leader in local search for quite some time to come. Profit and Revenue:- According to CRISIL research report, Just Dial has maintained an astounding 39% Compounded Annual Growth Rate (CAGR) over the last four year. Starting off with Rs. 50,000 investment in 1997, Just Dial's revenue grew from Revenues grew from Rs 85 lakh in March 1997 to Rs 200 crore in March 2011. For the nine months of FY13, Just Dial recorded revenues of Rs 271.6 crore and net profits of Rs 47 crore.
  15. 15. IPO:- On March 20, 2013, Justdial had obtained approval from Securities and Exchange Board of India (SEBI) for its proposed Initial public offering (IPO). Just Dial sold shares worth Rs. 950 crore in the IPO which was the largest sale by a domestic internet company in India. The IPO opened on 20 May 2013 with existing stakeholders selling nearly 17.5 million shares in a price band of Rs.470-543. The public issue saw a sale of a 25.02% stake in Just Dial, valuing the company at between Rs.3,290 crore and Rs.3,800 crore. Unlike previous public offers, Just Dial adopted a scheme "safety net" for retail investors proposed by the capital market regulator SEBI in 2012 where the company promoters assure that they will buy back shares from the retail applicants at the IPO price, if its stock falls sharply during the first six months after listing. Citigroup Global Markets India Pvt. Ltd. And Morgan Stanley India Co. Pvt. Ltd. Managed the share sale for Just Dial IPO. Just Dial is also the biggest success story over the past year in terms of stock market listing. Its initial public offering received bids for nearly 12 times the shares on sale. Despite stock market volatility and most investors sitting on the sidelines, the company made an impressive debut in June 2013. From its offer price of Rs 530 a share, the stock almost doubled to hit a record high of Rs 1,046.05 on October 7, 2013. Though the stock is off its peak now, the price rise has catapulted the company into the top 200 companies in the BT 500 listing - it's ranked 180.
  16. 16. Share Price of Just Dial Stock since the Initial Public Offering 6th June 2013 July 2013 September 2013 November 2013 January 2014 February 2014 March 2014 3rd April 2014 605.1 686 767.05 1128.25 1547.65 1478.55 1630.35 1596.80
  17. 17. Just Dial plans post IPO:-  They believe that investment in brand building campaign will help us further strengthen our brand and lead to greater search volume from our users and greater number of paid advertisers.  Just Dial intends to further develop dedicated category portals to attract SMEs in particular businesses.  They are a local search player and there is no competition to talk about. We see huge opportunity in Online to offline.  Just Dial plans to expand our operations to other markets as opportunity rise by licensing the “Just Dial” brand and selling our rights and offering service arrangements to other parties to conduct these operations as we are doing in US and Canada.
  18. 18. CONCLUSION
  19. 19.  Going public raises cash and provides many benefits for a company.  IPO is one of the forms of raising the capital and which is the effective one though it has defects.  Getting in on a hot IPO is very difficult, if not impossible.  An IPO company is difficult to analyze because there isn't a lot of historical info.  Lock-up periods prevent insiders from selling their shares for a certain period of time. The end of the lockup period can put strong downward pressure on a stock.  Road shows and red herrings are marketing events meant to get as much attention as possible. But one should not get influenced by the hype
  21. 21.  Web Based  Invetopedia -  Bombay Stock Exchange -  Just Dial -  Wikipedia -
  22. 22. THANK YOU