A

Project in Finance Report

A Study on Analysis of IPO

BY

KUNAL PRABHAKAR BURSE

Submitted to

SAVITRIBAI PHULE PUNE

UNIVERSITY
In partial fulfillment of

Bachelors of Business Administration (BBA)

Academic Session 2022 – 2023

Under the Guidance of

Prof. SNEHAL J MIRAJKAR

Progressive Education Society’s

Modern College of arts, science and commerce (Autonomous)
Business Administration Campus. Shivajinagar ,Pune 411005

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 ACKNOWLEDGMENT

I would like to express my gratitude towards Prof. M.D. ALANDIKAR Sir (Vice- Principal,
Business Administration Campus of Modern College of Arts, Science and Commerce, Pune
05) and Prof. LAWLY DAS (HOD, BBA). Also, I would like to thank Prof. SNEHAL J
MIRAJKAR for her timely suggestions and guidance and for sharing her valuable knowledge
with us during completion of the project. Finally, I would like to express my gratitude towards
my beloved family, friends and seniors for their endless support, co-operation and
encouragement.

NAME: KUNAL PRABHAKAR BURSE

ENROLLNMENT NO: 2001870

PLACE: PUNE

DATE: 26/02/2023

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 Table of Content

Sr. No. Topic Page No

1 INTRODUCTION 4-6

2 RESEARCH METHODOLOGY 7–8

3 CONCEPTUAL FRAME WORK AND LITERATURE 9 – 18

REVIEW
4 COMPANY PROFILE AND DATA INTERPRETATION 19-45

5 FINDINGS AND SUGGESTIONS 46-48

6 CONCLUSION 49-50

7 BIBLIOGRAPHY 51-52

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 CHAPTER 1:
INTRODUCTION

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Introduction

History of Indian Stock Market

A stock exchange is “a body of individuals, whether incorporated or not, constituted for the
purpose of regulating or controlling the business of buying, selling or dealing in securities.”
“Securities refers to shares, bonds, scrip, stocks, debentures stock, and other marketable
securities of incorporated companies or similar, government securities, and rights or interest
in securities.” In India, the share market is a term used to refer to the two major stock
exchanges in the country— Bombay Stock Exchange (BSE), and the National Stock
Exchange of India (NSE). There are also 22 regional stock exchanges. The Indian stock
market traces its history back to the late 18th century when the trading floor was under the
shade of a sprawling banyan tree opposite the Town Hall in Mumbai. A few people would
meet under this tree to informally trade in cotton. This was mainly due to the fact that Mumbai
was a busy trading port and essential commodities were traded here often. The Companies
Act was introduced in 1850 following which investors started showing an interest in corporate
securities. The concept of limited liability also put in an appearance around this time. By 1875,
an organization known as ‘The Native Share and Stock Broker’s Association’ came into being.
This was the predecessor of the BSE . In 1894, the Ahmedabad Stock Exchange came into
being primarily with the objective of enabling dealing in the shares of textile mills in the city.
The Calcutta Stock Exchange was formed in 1908 with the intention of facilitating a market
for shares of plantations and jute mills It was in 1920 that the Madras Stock Exchange took
shape. In 1957, the BSE was the first stock exchange to be recognized by the Government
of India under the Securities Contracts Regulation Act. The SENSEX was launched in 1986
followed by the BSE National Index in 1989. The Securities and Exchange Board of India
(SEBI) was constituted in 1988 to monitor and regulate the securities industry and stock
exchanges. In 1992 it became an autonomous body with completely independent powers. In
1992, the NSE was formed as the first demutualised electronic exchange in the country with
the intention of ensuring transparency in the markets. NSE began operations in the Wholesale
Debt Market (WDM) segment in 1994, the equities segment in 1994, and the derivatives
segment in 2000. It was in 1995 that the BSE made the switch to an electronic system of
trading from the open-floor system. In 2015, SEBI was merged with the Forward Markets
Commission (FMC) with the aim of strengthening regulation of the commodities market,
facilitating domestic and foreign institutional participation, and launch of new products. Today,
the BSE is measured as the world’s 11th largest stock exchange and the market capitalization
is likely to be around $1.7 trillion. The market capitalization of the NSE is estimated to be over
$1.65 trillion. Over 5,000 companies are listed on the BSE and 1,500 figures on the NSE. In
terms of share trading volumes, still, both the exchanges are on parity. Nowadays people are
able to conduct online trading sitting in the comfort of their home. Facilities such as zero
brokerage demat and live updates are all available with the help of internet.

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Scope and Objective of Study

• To comprehend the performance of Initial Public Offerings (IPO) .

• To analyse the changes in shareholding pattern and key financials of company offering

IPO. • To analyse post IPO performance of companies offering IPO.

Limitation of Study

• Due to the un-availability of financial statements and ratios of Financial year 2017, Financial
year 2018, the financial data has been calculated based on financial year 2019, financial year
2020, financial year 2021 financial statements.

• My own in experience might have affected the study and analysis.

• The analysis is based on past performances & past performance cannot determine the
future results.

• The work is based on secondary data. The secondary data can be inaccurate as it is
published format.

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 CHAPTER 2:
RESEARCH
METHODOLOGY

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Research Methodology

OVERVIEW

Research methodology revolves around a step-by-step method for garnering, analysing, and
processing the collected data. Everything here is according to the research design. It is
associated with the process that researchers systematically follow to design a study by
ensuring validity and reliability while addressing the research goals. In the process,
researchers decide what data to collect, from whom this data should be collected via
sampling, how to collect it, and how to analyse that data. In order to accomplish the final
outcome in a study, a trajectory is required and that path is provided by the research
methodology. Research methodology embraced for this research study is described in the
following subsections: Research Design, population, data collection.

Research Design

The form of study used in this study is analytical study. As the major part of study is focused
upon financial variables, that is, Return on Equity(ROE), Return on Capital Employed(ROCE),
Earning Per Share(EPS) and many more, as they play a vital role in gauging financial
performance of initial public offer (IPO) of the selected companies.

Sample Size
Population refers to the complete group of people, events or things of interest that the
researcher wishes to explore and wants to make inferences based on sample statistics. The
population for the study is comprised of 5 IPO offering companies in FY2018, FY2020,
FY2010, FY2020, FY2020 namely, Lemon tree hotels limited, Chemcon speciality chemicals,
Jubilant foodworks limited, Rossari biotech limited, Mazagon dock shipbuilders limited.

Collection of Data
All the data collected is secondary data. The main sources of data for the study are company
Yearly financial statements (balance sheet, P&L statement). And IPO reviews from Investment
companies.

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 Chapter 3:
Conceptual
Framework & Review
Of literature

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Conceptual Framework & Review of Literature:

CONCEPT OF IPO:

An initial public offering (IPO) refers to the process of offering shares of a private
corporation to the public in a new stock issuance. An IPO allows a company to raise capital
from public investors. The transition from a private to a public company can be an important
time for private investors to fully realize gains from their investment as it typically includes
a share premium for current private investors. Meanwhile, it also allows public investors to
participate in the offering.

An initial public offering (IPO) refers to the process of offering shares of a private
corporation to the public in a new stock issuance.

Companies must meet requirements by exchanges and the Securities and Exchange
Commission (SEC) to hold an IPO.

IPOs provide companies with an opportunity to obtain capital by offering shares

through the primary market.
Companies hire investment banks to market, gauge demand, set the IPO price and
date, and more.

An IPO can be seen as an exit strategy for the company’s founders and early investors,
realizing the full profit from their private investment.

How an Initial Public Offering (IPO) Works

Before an IPO, a company is considered private. As a pre-IPO private company, the business
has grown with a relatively small number of shareholders including early investors like the
founders, family, and friends along with professional investors such as venture capitalists or
angel investors.

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An IPO is a big step for a company as it provides the company with access to raising a lot of
money. This gives the company a greater ability to grow and expand. The increased
transparency and share listing credibility can also be a factor in helping it obtain better terms
when seeking borrowed funds as well.

When a company reaches a stage in its growth process where it believes it is mature enough
for the rigors of SEC regulations along with the benefits and responsibilities to public
shareholders, it will begin to advertise its interest in going public.

Typically, this stage of growth will occur when a company has reached a private valuation of
approximately $1 billion, also known as unicorn status. However, private companies at various
valuations with strong fundamentals and proven profitability potential can also qualify for an
IPO, depending on the market competition and their ability to meet listing requirements.

IPO shares of a company are priced through underwriting due diligence. When a company
goes public, the previously owned private share ownership converts to public ownership, and
the existing private shareholders’ shares become worth the public trading price. Share
underwriting can also include special provisions for private to public share ownership.

Overall, the number of shares the company sells and the price for which shares sell are the
generating factors for the company’s new shareholders' equity value. Shareholders' equity still
represents shares owned by investors when it is both private and public, but with an IPO the
shareholders' equity increases significantly with cash from the primary issuance.

History of IPOs

The term initial public offering (IPO) has been a buzzword on Wall Street and among investors
for decades. The Dutch are credited with conducting the first modern IPO by offering shares
of the Dutch East India Company to the general public.

Since then, IPOs have been used as a way for companies to raise capital from public
investors through the issuance of public share ownership.

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Through the years, IPOs have been known for uptrends and downtrends in issuance.
Individual sectors also experience uptrends and downtrends in issuance due to innovation
and various other economic factors. Tech IPOs multiplied at the height of the dot-com boom
as startups without revenues rushed to list themselves on the stock market.

The 2008 financial crisis resulted in a year with the least number of IPOs. After the recession
following the 2008 financial crisis, IPOs ground to a halt, and for some years after, new listings
were rare.

More recently, much of the IPO buzz has moved to a focus on so-called unicorns— startup
companies that have reached private valuations of more than $1 billion. Investors and the
media heavily speculate on these companies and their decision to go public via an IPO or
stay private. The IPO Process:
An IPO comprehensively consists of two parts. The first is the pre-marketing phase of the
offering, while the second is the initial public offering itself. When a company is interested in
an IPO, it will advertise to underwriters by soliciting private bids or it can also make a public
statement to generate interest.

The underwriters lead the IPO process and are chosen by the company. A company may
choose one or several underwriters to manage different parts of the IPO process
collaboratively. The underwriters are involved in every aspect of the IPO due diligence,
document preparation, filing, marketing, and issuance.

Advantages and Disadvantages of an IPO:

The primary objective of an IPO is to raise capital for a business. It can also come with other
advantages, but also disadvantages.

Advantages
One of the key advantages is that the company gets access to investment from the entire
investing public to raise capital. This facilitates easier acquisition deals (share conversions)

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and increases the company’s exposure, prestige, and public image, which can help the
company’s sales and profits.

Increased transparency that comes with required quarterly reporting can usually help a
company receive more favorable credit borrowing terms than a private company.

Disadvantages
Companies may confront several disadvantages to going public and potentially choose
alternative strategies. Some of the major disadvantages include the fact that IPOs are
expensive, and the costs of maintaining a public company are ongoing and usually unrelated
to the other costs of doing business.

Fluctuations in a company's share price can be a distraction for management which may be
compensated and evaluated based on stock performance rather than real financial results. As
well, the company becomes required to disclose financial, accounting, tax, and other business
information. During these disclosures, it may have to publicly reveal secrets and business
methods that could help competitors.

Rigid leadership and governance by the board of directors can make it more difficult to retain
good managers willing to take risks. Remaining private is always an option. Instead of going
public, companies may also solicit bids for a buyout. Additionally, there can be some
alternatives that companies may explore.

Steps to an IPO:
1. Proposals

Underwriters present proposals and valuations discussing their services, the best type of
security to issue, offering price, amount of shares, and estimated time frame for the market
offering.

2. Underwriter

The company chooses its underwriters and formally agrees to underwrite terms through an
underwriting agreement.

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3. Team

IPO teams are formed comprising underwriters, lawyers, certified public accountants
(CPAs), and Securities and Exchange Commission (SEC) experts.

4. Documentation

Information regarding the company is compiled for required IPO documentation. The S-1
Registration Statement is the primary IPO filing document. It has two parts—the prospectus
and the privately held filing information.

The S-1 includes preliminary information about the expected date of the filing.2 It will be
revised often throughout the pre-IPO process. The included prospectus is also revised
continuously.

5. Marketing & Updates

Marketing materials are created for pre-marketing of the new stock issuance. Underwriters
and executives market the share issuance to estimate demand and establish a final offering
price. Underwriters can make revisions to their financial analysis throughout the marketing
process. This can include changing the IPO price or issuance date as they see fit.

Companies take the necessary steps to meet specific public share offering requirements.
Companies must adhere to both exchange listing requirements and SEC requirements for
public companies.

6. Board & Processes

Form a board of directors and ensure processes for reporting auditable financial and
accounting information every quarter.

7. Shares Issued

The company issues its shares on an IPO date. Capital from the primary issuance to
shareholders is received as cash and recorded as stockholders' equity on the balance sheet.
Subsequently, the balance sheet share value becomes dependent on the company’s
stockholders' equity per share valuation comprehensively.

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8. Post IPO

Some post-IPO provisions may be instituted. Underwriters may have a specified time frame
to buy an additional amount of shares after the initial public offering (IPO) date. Meanwhile,
certain investors may be subject to quiet periods

Types of IPOs

An initial public offering, or IPO, is a common way that a firm goes public and sells shares to
raise financing. There are two common types of IPOs: a fixed price and a book building
offering. A company can use either type separately or combined. By participating in an IPO,
an investor can buy shares before they are available to the general public in the stock market.

Fixed Price Offering

Under fixed price, the company going public determines a fixed price at which its shares are
offered to investors. The investors know the share price before the company goes public.
Demand from the markets is only known once the issue is closed. To partake in this IPO, the
investor must pay the full share price when making the application.

Book Building Offering

Under book building, the company going public offers a 20% price band on shares to investors.
Investors then bid on the shares before the final price is settled once the bidding has closed.
Investors must specify the number of shares they want to buy and how much they are willing
to pay. Unlike a fixed price offering, there is no fixed price per share. The lowest share price
is known as the floor price, while the highest share price is known as the cap price. The final
share price is determined using investor bids.

Participating in an IPO

When participating in an IPO, there are several details an investor should know, such as the
issue name, issue type, category, and price band, to name a few. The issue name is the firm
going public. The issue type is the type of IPO: fixed-price or book building. There are three
IPO categories: retail investors, non-institutional investors, and qualified institutional buyers.
The price band is the price range determined for book building issues. Not all retail brokers
offer IPOs to their clients, and so IPOs are usually allotted to qualified or institutional investors
first.

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IPOs also can tend to be riskier than established stocks since they do not yet have a track
record of performance or a history of publicly available financial statements that can be
analyzed.

When a firm decides to go public, it must hire an investment bank to take care of the IPO.
Although a company could go public on its own, it rarely happens. A firm can hire one or more
investment banks to handle its IPO. By hiring more than one bank, the risk is spread between
the banks, which place their bids for the IPO with the amount of money they anticipate
earning. This process is referred to as underwriting.

When the firm going public and the investment banks come to an agreement on the
underwriting, the banks prepare a registration statement that must be filed with the U.S.
Securities and Exchange Commission, or SEC. The statement contains important financial
information on the IPO, including financial statements, names of the board of directors, legal
issues and how the financing is to be used. Once the SEC reviews the paperwork, it
determines the date of the IPO.

SEBI GUIDLINE FOR IPO

From 1 April 2022, half the anchor investors in an IPO will be locked in for a period of 90 days,
while the remaining 50% will be locked in for 30 days. Considering the discretionary allocation
that anchor investors get, the process and manner in which different lock-ins will be made
applicable to them is yet to be seen. The intention may well be to have investors stay invested
longer in the company, but this intervention may not meet its objective if companies are unable
to ensure that anchor investor stay beyond a quarter post-IPO.

Sebi has prescribed a revised allocation method to non-institutional investors (i.e. those
investing more than ₹2 lakh in an IPO): one-third of the non-institutional investors’ portion is
to be reserved for applicants investing more than ₹2 lakh but up to ₹10 lakh and the rest for
such applicants investing more than ₹10 lakh. Further, allotment to non-institutional investors
shall be through a draw of lots, as is done for retail investors, to ensure transparency in the
allotment of IPO shares and allow for a sufficient allocation to ‘smaller’ non-institutional
investors.

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Apart from IPOs, preferential issue rules have seen a set of revisions too. These issues can
now be undertaken for considerations other than cash. The pricing of preferential issues has
undergone a substantial change. Keeping in mind the Indian stock market’s growth,

(i)for frequently-traded securities, we have a shorter period for determination of the floor price,
i.e. the higher of 90 or 10 trading days’ volume-weighted average price preceding the relevant
date, or any such stricter requirement prescribed by an issuer in its articles of association;
and

(ii)for infrequently-traded securities, it is to be based on an independent valuation.

In order to ensure that this is not flouted in cases where a preferential issue results in the
allotment of more than 5% of the issuer’s shares or a change in control and the pricing does
not include any control premium, Sebi has mandated that, in such cases, a valuation report
from an independent registered valuer would be required. Further, if a preferential allotment
results in a shift of control, a committee of independent directors shall be required to provide
a reasoned recommendation on all aspects of the preferential issuance, including its pricing—
which must be disclosed to the public.

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Review of Literature

The literature review on IPOs can be divided in the following main

heads.

a) Reason and timing of going public.

Going public marks, a watershed in the lite cycle of the firm. While increased equity can
support the firm's future plans of growth, the trade-off for the firm is that of increased public
scrutiny Brealv and Myers (2005) state that in the context of USA the firms may seek private
equity in their initial years and onlv later go for public issues. Pagano, Panetta and Zingales
(1998) in their study of Italian firms, find that firms going public are not seeking money for
growth but are rebalancing their accounts after high investment and growth. Lerner (1994)
found that there are times (windows of opportunity) when the markets could be extremely
optimistic about a particular industry and it may be a good time for the firms in that industry
to go public. The post IPO period sees a reduction in leverage as well as investment. They
state that going public is a conscious choice that some firms make while some others prefer
to remain private.
Thus going public is not a natural element in the lite cycle of a firm .

b) Valuation of IPOs.

Benveniste and »pinat (Iy89) find that under writers try to resolve the information asymmetry
problem between the firm and the investors by providing an incentive to the investors to reveal
their private information about the firm. Kim and Ritter (1999) in their study of 190 firms find
that under writers forecast the next year’s earnings numbers and multiply them with PE ratios
of comparable firms in the industry to get the approximate price of the IPO. However they
also found that PE ratios using historical earnings numbers do not give accurate results
whereas when forecasted earnings numbers are used then the valuation is much more
accurate. Purnanandam and Swaminathan (2002) say that IPOs are priced 50% higher than
industry Deers. Also they find that more the IPO is overpriced with respect to its peers. worse
is its long term pertormance.

c) The allocation mechanism

Are specified by the regulators in different countries. Loughran Ritter and Rydqvist (1994)
find 3 main categories across countries-Auctions, Fixed price olfers and Book Building.
Sherman (2005) finds that Book building is a superior mechanisn for selling IPOs rather
than auctions.

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 Chapter 4:
Company Profile
And Data
Interpretation.

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 COMPANY PROFILE:

1. LEMON TREE HOTELS

Lemon Tree Hotels is a hotel chain company, based in India. The company owns and operates
84 hotels, with 8300 rooms in 52 cities of India. It is India's largest hotel chain in the mid-
priced hotel sector, and the 3rd largest overall, in terms of controlling interest in owned and
leased rooms, as of 30 June 2017, according to the Horwath Report.

HISTORY

Lemon Tree Hotels was founded in 2002 by Patu Keswani. It opened its first hotel with 49
rooms in May 2004. As of July 31, 2017, the company have a portfolio of 19 owned hotels,
three owned hotels located on leased or licensed land, five leased hotels and 13 managed
hotels. It also has project design, management and development capabilities through its
Subsidiary, Grey Fox Project Management Company Private Limited ("Grey Fox").

Lemon Tree employed 3,070 personnel as of July 31, 2017 across its owned and leased or
licensed properties

As of 31 January 2018, it operated 4,697 rooms in 45 hotels (including managed hotels) across
28 cities in India. The company has created three brands in order to address these three hotel
segments:
1. 'Lemon Tree Premier' which is targeted primarily at the upper-midscale hotel segment
catering to business and leisure guests who seek to use hotels at strategic locations and are
willing to pay for premium service and hotel properties;
2. 'Lemon Tree Hotels' which is targeted primarily at the mid-scale hotel segment catering to
business and leisure guests and offers a comfortable, cost-effective and convenient
experience; 3. 'Red Fox by Lemon Tree Hotels' which is targeted primarily at the economy
hotel segment.

In 2019, the company acquired Berggruen Hotels Private Limited for an enterprise value of ₹
605 crores. At the time of acquisition, Berggruen Hotels owned 936 rooms and managed 975
rooms under the 'Keys' brand in 21 cities across India. By offering convenient locations, quality
and value across the mid-priced hotel sector, it has created a competitive advantage in chosen
markets, which, according to the Horwath Report, have traditionally been undeserved in terms
of presence of chain affiliated hotels and are generally served by independent hotels with
fragmented and localized ownership.
LTHL's service standards have resulted in higher than average occupancy rates and guest
satisfaction. In the fiscal year 2017, its owned and leased hotels had an average occupancy

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rate of 76.8% and 75.3% for the nine months ended December 31, 2017. In the fiscal year
2016, owned and leased hotels had an average occupancy rate of 75.1%, while the average
occupancy rate across all participating hotels in India was 62.1% for the same period,
according to the Horwath Report.
Lemon Tree Hotels went public in early 2018 and was listed on the National Stock Exchange
of India on 9 April 2018.

Positives:
1) Emerged as the leading mid-priced hotel chain in a short span of 14 years. 2) Positive
hotel industry dynamics with mid-priced room demand expected to grow 11% CAGR ahead
of supply till 2022.
3) Differentiated business model in terms of property development ( 65% owned properties),
employee selection specially the inclusion of opportunity deprived Indians, including
differently abled individuals.
4) Well-diversified geographical location of hotel properties
5) Additions of new hotel properties will help in Sustaining robust revenue growth in future.

Negatives:
1) LTHL has seen turnaround recently in M9FY2018 after making losses over the past several
years at peaked 75%+ occupancy level which leaves little room for further improvement in
occupancy.
2) It will continue to incur substantial capex in building up hotel properties for next few years
which would lead to more leverage (IPO is only OFS and no new fresh equity is issued). 3)
Indian hotel industry is becoming extremely competitive with the advent of likes of OYO
rooms and Air BnB which limits company’s pricing power.
4) low return ratios and promoter’s stake holding.

COMPANY PROMOTERS:
The Promoters of the Company are Mr. Patanjali Govind Keswani and SMSPL. The Promoters
hold, in the aggregate, 184,784,311 Equity Shares which constitutes 23.49% of the
Company's pre-Offer paid-up Equity Share capital.

SMSPL was incorporated on November 5, 2004 and is primarily engaged in the business of
designing, managing, supervising and executing hotel projects. Mr. Patanjali Govind Keswani
is the natural person in control of SMSPL.

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OPERATIONS

The company operates under 7 brands: Aurika Hotels and Resorts (upscale), Lemon Tree
Premier (upper mid-scale), Lemon Tree Hotels (mid-scale) & Red Fox by Lemon Tree Hotels
(economy), Keys Prima (upper mid-scale), Keys Select (mid-scale) and Keys Lite (economy).

In India, its hotels are located in major destinations such as Ahmedabad, Aligarh, Alwar,
Amritsar, Aurangabad, Baddi, Bandhavgarh, Bengaluru, Bhiwadi, Bhubaneswar, Calcutta,
Chandigarh, Chennai, Coimbatore, Corbett, Dehradun, Delhi, Gangtok, Ghaziabad, Goa,
Gurgaon, Hyderabad, Indore, Jaipur, Jhansi, Jammu, Kerala, Kolkata, Lucknow, Ludhiana,
Manali, Manesar, Noida, Patna, Pune, Siliguri, Srinagar, Tiruchirappalli, Udaipur, Vijayawada,
Visakhapatnam and Vadodara.

OBJECTS OF THE ISSUE:

The objects of the Offer are to

1. Achieve the benefits of listing the Equity Shares on the Stock
Exchanges 2. Sale of up to 195,797,000 Equity Shares by the Selling
Shareholders.

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23
Listing day gains: 10%

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LEMON TREE HOTELS IPO SUBSCRIPTION STATUS (Bidding Detail):

The Lemon Tree Hotels IPO is subscribed 1.19 times on Mar 28, 2018 5:00:00 PM. The public
issue subscribed 0.12 times in the retail category, 3.88 times in the QIB category, and 0.12
times in the NII category.

KEY FINANCIALS:

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2. JUBILANT FOOD WORKS

Jubilant FoodWorks Limited is an Indian food service company based in Noida, Uttar
Pradesh which holds the Franchise for Domino's Pizza in India, Nepal, Sri Lanka,
Bangladesh and Bhutan, and also for Dunkin' Donuts in India. The company also
operates two homegrown restaurant brands called Ekdum! and popiyes Kitchen.
Jubilant FoodWorks is a part of the Jubilant Bhartia Group, owned by Shyam Sunder
Bhartia (husband of Shobhana Bhartia) and Hari Bhartia.

HISTORY:

On the recommendation of a friend who owned other foreign pizza licences, Sham
Sunder Bhartia and Hari Bhartia of the Jubilant Bhartia Group entered into a master
franchise partnership with Domino's Pizza. Domino's Pizza India Private Ltd. was
incorporated on 16 March 1995, and began operations in 1996. The company opened
India's first Domino's Pizza outlet in New Delhi in 1996. The company changed its
name to Jubilant FoodWorks Ltd in 2009. It was headed by Ajay Kaul since 2005.
Pratik Rashmikant Pota became the CEO from April 2017. Pota announced his
resignation in March 2022 and will step down in June.

On 24 February 2011, Jubilant FoodWorks signed a master franchise agreement with

American coffeehouse chain Dunkin' Donuts to operate the brand in India. Jubilant
FoodWorks opened India's first Dunkin' Donuts outlet in Connaught Place, New Delhi
in April 2012. Jubilant FoodWorks was named "Emerging Food Group of the Year" by
The Economic Times in 2012. The company launched its first homegrown brand called
Hong's Kitchen, offering fast casual Chinese dining, with the first restaurant opening at
Eros Mall in Gurugram on 13 March 2019. On 24 March 2021, Jubilant FoodWorks
announced that it had entered into a master franchise and development agreement
with Restaurant Brands International to operate Popeyes restaurants in India,
Bangladesh, Nepal and Bhutan. The company opened India's first Popeyes outlet at
Koramangala, Bangalore on 20 January 2022.

Jubilant FoodWorks suffered a security breach in April 2021 and hackers reportedly
obtained 13 terabytes of data including 180 million order details, customer names,
phone numbers, email IDs, addresses, payment details, and at least 1 million credit
cards.[18] In July 2021, Jubilant pledged to supply free pizza for life to Saikhom
Mirabai Chanu, who won the silver medal at the 2020 Tokyo Olympics in Women's 49
kg weightlifting. Following her medal win, Chanu had told the media, "First of all, I will
go and have a pizza. It has been a long time since I ate it. I will eat a lot today.

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ACQUISITIONS:
On 1 January 2021, Jubilant FoodWorks purchased a 10.76% stake in Barbeque Nation
Hospitality Limited for ₹92 crore (US$12 million). On 19 February 2021, the company
announced that it would acquire complete ownership of Netherlands-based Tides Food
Systems Cooperative UA for £24.80 million through its subsidiary Jubilant Foodworks
Netherlands BV. The acquisition marks Jubilant FoodWorks entry into the Eurasian market.
Fides held a 32.81% stake in DP Eurasia NV, which is the master franchisee for Domino's
Pizza in Turkey, Russia, Azerbaijan and Georgia. Jubilant Foodworks announced that it had
acquired an additional 6.98% stake in DP Eurasia (or 10,146,964 ordinary shares at a price
of 95 pence per share), taking its total stake in the company to 39.79%. Jubilant announced
the completion of the merger of Fides Food Systems Coeratief UA with Jubilant Foodworks
Netherlands BV on 2 March 2022, and stated that it now owned 41.32% of DP Eurasia NV.

Domino's Pizza

India
The first Domino's Pizza in India opened in New Delhi in 1996. India surpassed the United
Kingdom to become Domino's second-largest market in December 2014, behind the United
States. Domino's Pizza operates 1,495 stores across 322 Indian cities as on 31 December
2021.

Domino's began accepting online orders in 2011, and online orders accounted for
approximately 18-20% of total sales as of December 2013. On 19 March 2014, the 700th
Domino's Pizza outlet was opened at HUDA City Centre metro station in Sector-29, Gurgaon,
Haryana. The company opened 47 new restaurants between January–March 2014 and 150
outlets in the 2013–2014 financial year. Domino's opened its 1000th outlet at Unity One Mall,
Janakpuri, Delhi in January 2016.

In May 2016, the Centre for Science and Environment (CSE) reported that Domino's pizza
bread was laced with toxins and carcinogens such as potassium bromate and potassium
iodate. Potassium bromate is a category 2B carcinogen, meaning it can cause cancer.
Potassium bromate was banned in India in June 2016. In 2017, a customer in Delhi claimed
to have found live bugs in Domino's Pizza seasoning sachets. A video of the same went viral.
This prompted Domino's to

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stop giving seasoning sachets for some time. When they restarted, they changed the
packing from transparent to opaque.

Bangladesh
Domino's Pizza outlets in Bangladesh are owned and operated by Jubilant Golden Harvest
Ltd., a joint venture between Jubilant FoodWorks and the Golden Harvest Group. The joint
venture was established in early 2019 with Jubilant holding a 51% stake, and Bangladeshi
company Golden Harvest Group holding the remaining 49%. The first Domino's Pizza outlet
opened in Dhaka in February 2019. In September 2021, Jubilant FoodWorks exercised a call
option to acquire an additional 39% stake in the joint venture taking its ownership to 90%.

There are currently 8 Domino's Pizza outlets in Bangladesh.

Sri Lanka
Jubilant FoodWorks Lanka Pvt. Limited, a subsidiary of Jubilant FoodWorks, operates
Domino's Pizza outlets in Sri Lanka. The first Domino's outlet opened in Colombo in February
2011. There were 23 Domino's Pizza outlets in Sri Lanka as of December 2017.

Nepal
There are currently no Domino's Pizza outlets in Nepal.

Dunkin' Donuts
On 24 February 2011, Jubilant FoodWorks signed a master franchise agreement with
American coffeehouse chain Dunkin' Donuts to operate the brand in India. Jubilant
FoodWorks opened India's first Dunkin' Donuts outlet in Connaught Place, New Delhi in April
2012. Apart from donuts, Munchkins, and coffee, the chain also serves vegetarian and non-
vegetarian hot and cold food. Jubilant FoodWorks operates 29 Dunkin' Donuts outlets across
8 Indian cities as on 31 December 2021.

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Popeyes
On 24 March 2021, Jubilant FoodWorks announced that it had entered into a master franchise
and development agreement with Restaurant Brands International to operate Popeyes
restaurants in India, Bangladesh, Nepal and Bhutan. The company opened India's first
Popeyes outlet at Koramangala, Bangalore on 20 January 2022.

Other brands

Hong's Kitchen
Jubilant FoodWorks launched its first homegrown brand called Hong's Kitchen, offering fast
casual Chinese dining, with the first restaurant opening in Gurugram on 13 March 2019.

Ekdum!
Jubilant FoodWorks launched its second homegrown brand called Ekdum!, offering a variety
of biryanis from across India in addition to kebabs, curries, breads, desserts and beverages.
The first three Ekdum! restaurants were opened in Gurgaon, Haryana in December 2020.

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Listing day gains: 10.4%

34
Jubilant Foodworks IPO Subscription Status (Bidding Detail)
The Jubilant Foodworks IPO is subscribed 31.11 times on Jan 20, 2010 5:00:00 PM. The
public issue subscribed 3.79 times in the retail category, 59.39 times in the QIB category,
and 51.95 time is NII CATEGORY.

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3. ROSSARI BIOTECH:
Rossari Biotech was started in 2003 as a partnership firm titled Rossari Labtech and was
incorporated into a company in 2009 and was renamed as Rossari Biotech. They are engaged
in chemical manufacturing with a focus on specialty chemicals industry.
Bedside the above, they are also involved in production of specialty enzymes and chemicals
in India that is used in the pharmaceuticals, paper, construction, textiles, nutrition and Animal
Health.
The company has two R&D facilities, one at Silvassa manufacturing facility and the second
in Mumbai.
Rossari Biotech operates in 18 countries including India, Bangladesh, Vietnam, and
Mauritius. It has more than 194 distributors across India and 27 distributors spread in other
17 countries.

As per the F&S Report published on 30th Sept 2019, it is the largest textile specialty chemical
manufacturer in India. The business of the company can be classified into three main
categories which are textile specialty chemicals; animal health & nutrition products; and home,
personal care & performance chemicals. The company has 1,948 different products range
under these three categories. Most of the products of the company are manufactured in-
house. The company is also setting up a manufacturing unit at Dahej in Gujarat with an
installed capacity of 132,500 MTPA.

Product Segment:
Home, personal care and performance chemicals :

Rossari is the leading manufacturer of acrylic polymers in India (Source: F&S Report) and
currently manufacture over 300 products for the customers in the soaps and detergent, paints,
inks and coatings, ceramics and tiles, water treatment chemicals and pulp and paper
industries. Company also manufacture institutional cleaning chemical formulations for
hospitality, facility management, airports, corporates, food service, commercial laundry, malls,
multiplexes, educational sector, places of worship etc. Company are in advanced stages of
expanding their home, personal care and performance product portfolio to water treatment
formulations, specialty formulation for breweries as well as dairies. Company primarily
operates in a business
to-business model. Major customers are RSPL (Ghadi detergent), IFB Industries, HUL,
Panasonic India, CICO Technologies and Millennium Papers.

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Textile specialty chemicals:

Company provide specialty chemicals for the entire value-chain of the textile industry starting
from fiber, yarn to fabric, wet processing and garment processing and as on May 31, 2020,
manufactures and sales approximately 1,543 products for the customers in this product
category. Company focus on providing eco-friendly sustainable chemical solutions to the
customers which either replaces the highly polluting chemicals being used by the customers
or reduces the impact of environmental pollution by suitably modifying the overall industrial
process. Major Customers are Arvind, Raymond, Ashnoor Textile and Bhaskar Industries.

Animal health and nutrition:

Company have also diversified into animal health and nutrition and currently
supply poultry feed supplements and additives, pet grooming and pet treats
including for weaning, infants and adult pets and currently manufactures over
100 products for the customers in this category. Major customers are Hitech
Hatch

Positives:

(1) It is the largest textile specialty chemical manufacturer in India.

(2) It has experienced promoters along with strong management team.
(3) Company also has proven track record of robust financial performance. (4) Surge in
home, personal care and performance chemicals (sanitizers, cleaning products) demand
due to covid-19.
(5) Doubling of capacity to 252,500 MTPA by F.Y.21 end from 120,000 MTPA as on F.Y.20
end. Post the increase in capacity, Company will have to incur just maintenance capital
expenditure for the next 3-4 years.
(6) Only 10% of sales are dependent on imported raw material, of which less than 5%
comes from China. Fresh, Gokul Poultry Industries and Sneha Farms.

Investment concerns:

(1) Slowdown in demand especially from textile industry.

(2)Revenue is dependent on top 5 customers which contributed 43.9% of revenue for
F.Y.19-20. (3) Delay in addition of new capacity or lower utilization ratio of new capacity to
be added than expectation.
(4) Company is not able to maintain its ROE, ROCE, working capital days and EBIDTA
margins.

37
Key Management Personnel:

Mr. Edward Menezes, is the Executive Chairman of the Company. He was a founder of the
Company and has been a member of the Board since incorporation of the Company. He holds
a bachelor’s degree in science (chemistry major) from K. J. Somaiya College of Science,
University of Bombay and a bachelor’s degree of science (technology) in textile chemistry from
University Department of Chemical Technology (UDCT), University of Bombay. He has over
25 years of experience in the specialty chemicals industry.

Mr. Sunil Chari is the Managing Director of the Company. He was also a founder of the
Company and has been a member of our Board since incorporation of the Company. He holds
a bachelor’s degree in arts from the Kakatiya University. He also holds a diploma in technical
and applied chemistry from Victoria Jubilee Technical Institute (VJTI). He has over 20 years
of experience in the specialty chemicals industry.

Objects of the Issue:

The net proceeds of the Fresh Issue, i.e. Gross proceeds of the Fresh Issue less the Offer
Expenses apportioned to the Company ("Net Proceeds") are proposed to be utilized in the
following manner:
1. Repayment/prepayment of certain indebtedness availed by the Company (including
accrued interest);
2. Funding working capital requirements; and
3. General corporate purposes

Rossari Biotech IPO Lot Size:

The Rossari Biotech IPO market lot size is 35 shares. A retail-individual investor can apply
for up to 13 lots (455 shares or ₹193,375).

38
Rossari Biotech IPO Tentative Timetable:

The Rossari Biotech IPO open date is Jul 13, 2020, and the close date is Jul 15, 2020. The
issue may list on Jul 23, 2020.

Rossari Biotech IPO Details:

Rossari Biotech IPO Subscription Status (Bidding Detail):

The Rossari Biotech IPO is subscribed 79.37 times on Jul 15, 2020 5:00:02 PM. The public
issue subscribed 7.23 times in the retail category, 85.26 times in the QIB category, and 239.83
times in the NII category.
39
Listing day gains: 57.5%

PEER COMPARISON:

40
Business Update: Covid-19:

Revenue during the last 10 days during Mar’20 was lost on account of the lockdown.
However, from Apr’20 onwards the plant utilization picked up to 50% -55% and is expected to
reach 75%-80% in Jul-20.

The Company is experiencing robust recovery from Jun’20 onwards. Revenue during
Jun’20 is expected to surpass the average monthly revenue of F.Y.20.

Manufacturing facility was operational during the lockdown period albeit with lower
capacity due to logistics, labor and demand constraints.

Demand in the Home, Personal Care and Performance Chemicals witnessed a surge in
demand given the focus on hygiene products like sanitizers, disinfectants, hand washes and
other cleaning products.

Commencement of phase-1 of Dahej plant in Jul’20 of the planned expansion of capacity

by 132,500 MTPA and plant to be fully operational by end of the fiscal year.

41
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 Chapter 5:
Findings
Suggestions &
Conclusions

46
Findings & Suggestions

Findings:

The pro-rata system of allotment favors investors who bid for relatively large numbers
of shares. Perhaps, the process should be changed such that those applying up to
1,000 shares are allotted in full and beyond this number on pro-rata basis.

Book-building is preferred because the allotment of shares is generally done at a price

determined by the lead merchant banker and issuer within the price band. Since QIBs
are the dominant players and bid at somewhat higher prices within the band, the issuer
and merchant banker fix the price at the higher end such that retail investors have to
accept it. Thus, investors chipping in 35 per cent of the capital have little role in price
discovery. As a matter of fact, the IPO demand curve is skewed by differing demands
at different prices by various bidders. This indicates the need to use multiple pricing
for allotment.

There is considerable amount of difficulties for an investor today in the IPO market
starting from sourcing the application to filling it and submitting it along with cheques.
When we have one of the world's best trading and settlement infrastructure available
why can't we use that infrastructure rather than insisting on a parallel market for IPOs?
This will be a good time to provide a direction to the IPO market as well to attract new
investors into the market.

The grading process will not take into account price valuation, a key parameter in any
stock investment decision. Said Prime Database MD Prithvi Haldea, The market does
not work on fundamentals. A good company is a bad investment at a high price. The
small investors, for whom the grading exercise is basically meant, would despite
disclaimers expect a high graded IPO to quote above the offer price. The whole
purpose of grading an IPO would be defeated if it cannot help an investor decide what
stock to choose and at what price.

47
Suggestions:

Keys to a Successful IPO: At the end to make its IPO effective, some important
considerations that should be kept are:
Obviously, having a successful company to offer to the public marketplace is essential.
Beyond that, it is important to recognize this in not a place for do-it-yourself. While the road
stow represents the formal coming out of the firm, its success will partially depend on the
groups selected for the audience, and this, in turn, depends upon the lead investment
banker/underwriter in the IPO. Choosing the right underwriter is probably second in
importance to choosing the right time to go public.

The essential elements to lock for in the ideal lead underwriter are as follows:

1. The underwriter is focused on your industry: The IPO marketplace is a crowded

marketplace and the significant sums you are spending for professional advice to go public
need to be targeted to a firm with real expertise in your industry. Partial evidence of
appropriate expertise would be having an analyst devoted to your industry.

2. The market relies heavily on analyst projections and recommendations: Specifically, the
underwriting firm's analyst in your industry must: Have the capacity to cover your company
with sufficient attention. Understand your company, customers, and competition. Indicate
sincere commitment to covering your company.

3. Due to the importance of a successful road show, the underwriter must have the ability And
contacts to identify the right investor groups for your presentation and get them committed to
attend. References from previous IPO successes are essential.

4. There must be sufficient evidence of being able to build a quality "book" of Potential
orders for your stock.

5. There should be a history regarding the ability to identify the right offer price and size.

6. Finally, but rarely understood by many companies, there must be significant Aftermarket
support in terms of maintaining and supporting trading in the stock, providing subsequent
research reports on the company, and continuing institutional exposure to the company.

48
 Chapter 6:
Conclusions

49
Conclusion:

Through this research, I came to know that the IPO market is booming market in Indian history.
People now become aware about the IPO than other options of the investment like fixed
deposits, mutual funds, shares, gold and silver and other options of investment.

In this research report, I came to know that how the mechanism of IPO works in the
industry. IPO is a broader concept than any other investment options of the investment.

The Project report starts with defining the various public issues with the need for the company
to take out an IPO. It goes on further to explain the advantages of an IPO. It analyses in detail
the Indian IPO Scenario. It explains the evolution of the IPO in India and explains how the
scene has changed dramatically after liberalization esp. after the introduction of book building
process.

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 Chapter 7:
Bibliography

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Bibliography:

BOOKS:

1. Khan M. Y .and Jain. P.K (2005). Financial management. Pearson publication .

WEBSITES:
www.chittorgarh.com
www.moneycontrol.com
www.canitallline.com
www.nscindia.com
www.sebi.gov.in
www.capitalmarket.com
www.wikipedia.com
www.intimesepctrum.com
www.thehindubusinessline.com
www.angelone.com

NEWSPAPERS:
Economic Times
cialexpress.com
www.myins.com

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