An Empirical Analysis of Factors Influencing Listing Return of IPOs

Companies all over the world are turning to initial public offerings (IPOs) as a source of funds to help them expand by investing in new strategies with the money they earn. IPOs are valuable financial instruments because they deliver massive profits on the day of a company's initial public offering.Various factors such as listing day return, promoter group retention, price-to-earnings, earnings per share, return on net worth and net asset value are considered in this paper while evaluating an IPO. Sector wise performance in also considered to analyze the appreciation in price over and above issue price in secondary market over a period from 2017 to 2020. The study focuses on Correlation and regression analysis to determine the relationship between IPO returns and the benchmark index Nifty50.Since IPO’s are mainly considered as a means to earn quick gains, the result of this study would help aid the investors in taking more informed decisions. The findings would also help in determining whether IPO’s could be thought of as a long-term interment device or a mere chance of earning booming profits.