Factors affecting ipo valuation: An empirical evidence from India

Factors affecting ipo valuation: An empirical evidence from India

Author: 
Suraj Naik and Manas Mayur
Abstract: 

In this study, we examine the valuation of Initial Public offering (IPO) of 109 different companies during the three time periods - January 2014 to December 2014, January 2015 to December 2015 and January 2016 to December 2016. This period is designated as the period when India was regaining the political stability. Four fundamentals affecting the valuation of the IPO during this period were taken into consideration.Once we control four fundamentals (such as offer price, Operating Income or Profit before depreciation, interest, tax and amortization (PBDITA), Book Value per share, and insider retention) and allow for different valuation of these fundamentals across different time periods, average valuations of IPO’ during the period were not statistically different. The determinants considered by us do not majorly affect the valuation of the IPO. However, the IPO valuation was influenced by the approaching political stability in the country. Due to increasing political stability the number of IPO’ also increased.

Paper No: 
1389