MEDI-CAPS INSTITUTE OF TECHNOLOGY AND MANAGEMENT

MINOR PROJECT ON

Initial Public Offerings with reference to Coal India Ltd. & Reliance Power

SUBMITTED TO: Ms. Rashmi Somani

SUBMITTED BY: Rohit Singh Seepie Jain MBA - 3rd sem Section - X

BONA FIDE CERTIFICATE

This is to certify that project report titled Initial Public Offering with reference to Reliance power and Coal India Ltd. Submitted by Rohit Singh and Seepie Jain in partial fulfillment of requirements MBA in finance, embodies the work done by them under my supervision.

Signature of Guide

Signature of Director

Acknowledgement
No man is indispensable but there are certain mortal without whom the quality work suffers their guidance becomes important in acquiring quality results. We are immense grateful to our subject teacher MS. Rashmi Somani who has given us this opportunity to prepare this project and provided her invaluable guidance. Last but not the least there were so many who shared valuable information that helped in successful completion of this project.

Rohit Singh Seepie Jain MBA- 3rd sem Section- X

DECLARATION
We hereby declare that this project report titled submitted by us in partial fulfillment for the award of MASTER OF BUSINESS ADMINISTRATON is a result of the authentic work taken by us. We have not submitted the same to any other university for any other graduate or post graduate course whatsoever.

ABSTRACT
To study Initial Public Offerings with reference to Reliance Power Ltd. and Coal India Ltd.

CONTENTS
ABSTRACT .....5 CONTENTS .6 LIST OF TABLES8 LIST OF FIGURES..9 1). INTRODUCTION OF INVESTMENT10 1. TYPES OF INVESTMENT 1.1 FINANCIAL INSTRUMENTS 1.1.1 EQUITIES 1.1.2 MUTUAL FUNDS 1.1.3 DEBT INSTUMENTS11 1.1.3.1 BONDS 1.1.3.2 DEBENTURES 1.4 DEPOSITS 1.5 CASH EQUIVALENTS 1.2 NON-FINANCIAL INSTRUMENTS 1.2.1 REAL ESTATE 1.2.2 GOLD 1.2.3 OTHER COMMODITIES 2). FINANCIAL MARKET.12 2.1 TYPES OF FINANCIAL MARKET 2.1.1 MONEY MARKET 2.1.2 FOREX MARKET ..13 2.1.3 CAPITAL MARKET 2.1.3.1 PRIMARY MARKET 2.1.3.2 SECONDARY MARKET 14 3). INITIAL PUBLIC OFFER 16 3.1 INTRODUCTION 3.2 REASON FOR LISTING 3.3 ADVANTAGES OF IPO 17 3.4 INTERMEDIARIES IN PRIMARY MARKET 3.4.1 LEAD MANAGER 3.4.2 UNDER WRITERS ..18 3.4.3 BANKERS TO AN ISSUE ...19 3.4.4 BROKERS TO THE ISSUE 3.4.5 REGISTRAR TO AN ISSUE 3.4.6 SHARE TRANSFER AGENT 3.5 PROCEDURE .20 3.6 PRICING .21 3.7 ISSUE PRICE 3.8 IPO IN CONTEXT OF INDIAN MARKET 6

4). RELIANCE POWER LTD. 23 4.1 INTRODUCTION 4.2 CHAIRMAN PROFILE 24 4.3 RELIANCE POWER IPO .25 4.4 OVERVIEW 4.5 IPO ANALYSIS 26 4.6 HIGHLIGHTS 4.7 PROJECT GOING ON ALL OVER INDIA .27 5). COAL INDIA LTD. .31 5.1 INTRODUCTION .32 5.2 REVIVING OF ABANDONED MINES ..33 5.3 CHAIRMAN PROFILE 34 5.4 COAL INDIA LTD. IPO ...35 5.5 OBJECTS OF THE OFFER 5.6 IPO ANALYSIS 5.7 COAL INDIA LTD. GRADING RATIONALE 36 6). LITERATURE REVIEW ..37 6.1 OBJECTIVE OF STUDY 6.2 RESEARCH METHODOLOGY 6.3 TOOLS OF ANALYSIS 6.4 DATA COLLECTION 6.5 LIMITATIONS 6.6 DATA INTERPRETATION ..38 6.7 OBSERVATION AND FINDINGS ...44 CONCLUSION ..46 SUGGESTION ..47 BIBLIOGRAPHY 48

LIST OF TABLES
TABLE 1 DIFFERENCE BETWEEN PRIMARY AND SECONDARY MARKET .15 TABLE 2 MAXIMUM NO. OF LEAD MANAGERS ...18 TABLE 3 IPO LAUNCHED DURING OCT 2010 22 JAN 2011 TABLE 4 SIGNIFICANT SHORTAGE OF FINANCIAL .28 YEAR 2008-09

LIST OF FIGURES
FIGURE 1 FIGURE 2 FIGURE 3 FIGURE 4 TYPES OF FINANCIAL MARKET ..12 TYPES OF CAPITAL MARKET ...13 ANIL D. AMBANI .24 SIGNIFICANT POWER PROJECTS SPREAD 27 ALL OVER INDIA FIGURE 5 FUEL USED BY VARIOUS PROJECTS OF 29 RELIANCE POWER FIGURE 6 FUEL DIVERSIFICATION ...30 FIGURE 7 PARTHA S. BHATTACHARYA...34 FFIGURE 8 PERFORMANCE OF RELIANCE 38 POWER SHARE PRICE FIGURE 9 PRICE MOVEMENT BAR CHART-RELIANCE POWER .39 FIGURE 10 ADX CHART - RELIANCE POWER .40 FIGURE 11 MACD CHART- RELIANCE POWER...41 FIGURE 12 BOLLINGER BANDS - RELIANCE POWER ...42 FIGURE 13 SHARE PRICE PERFORMANCE - COAL INDIA.43

1. INTRODUCTION OF INVESTMENT
The money one earns is partly spent and the rest saved for meeting future expenses. Instead of keeping the saving idle one may like to use saving in order to get return on it in the future. This is called investment. Investing is not about putting all your money into the "Next big thing," hoping to make a killing. Investing isn't gambling or speculation; it's about taking reasonable risks to reap steady rewards. Why should you invest? Simply put, you should invest so that your money grows and shields you against rising inflation. The rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time. Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation or maybe have some fun in your life and do things you had always dreamed of doing with a little extra cash in your pocket. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary. When to Invest? The sooner one starts investing the better. By investing into the market right away you allow your investments more time to grow, whereby the concept of compounding interest swells your income by accumulating your earnings and dividends. Considering the unpredictability of the markets, research and history indicates these three golden rules for all investors 1. Invest early 2. Invest regularly 3. Invest for long term and not short- term

1.

TYPES OF INVESTMENT

1.1 Financial Instruments

1.1.1 Equities Equities are a type of security that represents the ownership in a company. Equities are traded (bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term investment option as the returns on equities over a long time horizon are generally higher than most other investment avenues. However, along with the possibility of greater returns comes greater risk. 1.1.2 Mutual funds Mutual funds are financial intermediaries which collect the savings of investors and invest them in a large and well diversified portfolio of securities such as money market instruments, corporate and government bonds and equity shares of joint stock companies. 10

Mutual funds are conceived as institution for providing small investors with avenues of investment in capital market. Since small investors generally do not have adequate time knowledge experience and resources for directly accessing the capital market, they have to rely on an intermediary which undertakes informed investment decisions and provides the consequential benefits of professional expertise. A mutual fund allows a group of people to pool their money together and have it professionally managed, in keeping with a predetermined investment objective. This investment avenue is popular because of its costefficiency, risk-diversification, professional management and sound regulation. 1.1.3 Debt instruments Debt instruments represents a contract whereby one party lends money to another on predetermined terms with regards to rate and periodicity of interest, repayment of principal amount by the borrower to the lender. 1.1.3.1 Bonds: Bonds are fixed income instruments which are issued for the purpose of raising capital. The Central or State government and public sector organizations sell bonds. The bond is generally a promise to repay the principal amount with a fixed rate of interest on a specified date, called the maturity period. 1.1.3.2 Debentures: The term debenture is used for instruments issued by private corporate sector. Both private entities, such as companies, financial institutions, and the central or state government and other government institutions use this instrument as a means of garnering funds. Bonds issued by the Government carry the lowest level of risk but could deliver fair returns. 1.4 Deposits Investing in bank or post-office deposits is a very common way of securing surplus funds. These instruments are at the low end of the risk-return spectrum. 1.5 Cash equivalents These are relatively safe and highly liquid investment options. Treasury bills and money market funds are cash equivalents.

1.2 Non-financial Instruments

1.2.1 Real estate With the ever-increasing cost of land, real estate has come up as a profitable investment proposition. 1.2.2 Gold The 'yellow metal' is a preferred investment option, particularly when markets are volatile. Today, beyond physical gold, a number of products which derive their value from the price of gold are available for investment. These include gold futures and gold exchange traded funds. 1.2.3 Other Commodities Other than gold other commodities are also traded. Some of them are silver, crude oil, agricultural commodities and other base metals

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2. FINANCIAL MARKET

In economics, typically, the term market means the aggregate of possible buyers and sellers of a thing and the transactions between them. Financial markets are an important component of a financial system in an economy. Financial system aims at establishing regular, smooth, efficient and cost effective link between savers and investors so it helps encouraging both saving and investment. Financial systems facilitate expansion of financial market over space and time and promote efficient allocation of financial resources for socially desirable and economically productive purpose.

2.1 TYPES OF FINANCIAL MARKET

The financial markets can be divided into three parts:Money market Capital market Forex market

FINANCIAL MARKET FINANCIAL MARKET

CAPITAL MARKET CAPITAL MARKET

MONEY MARKET MONEY MARKET

FOREX MARKET FOREX MARKET

Figure 1 Types of financial market 2.1.1 MONEY MARKET:Money market is the market for short term financial assets which are near substitutes for money. Money market instruments are liquid and can be turned over quickly at low transaction cost and without loss. The money market is a wholesale market. The volumes are very large and generally transactions are settled on daily bases. There are large numbers of participants in the money market: commercial banks, mutual funds, investment institutions, financial institutions and finally RBI. Money market performs the crucial role of providing an equilibrating mechanism to even out short term liquidity and in the process, facilitating the conduct of monetary policy. Short -term surpluses and deficits are even out. The money market is the major mechanism through which the reserve bank of India influences liquidity and the general level of interest rates. 12

2.1.2 FOREX MARKET:Every sovereign nation has its own currency. Theoretically the monetary unit of a country can be exchanged with any other currency of any other country. Most of the international financial transactions involve an exchange of one currency for another. The ratios in which they are exchange or prices in terms of each other are known as exchange rate. Countries when they trade with each other require money flows. Foreign exchange market provides the mechanism for exchanging different monetary units for each other. Sometimes, nationals of one country may prefer to hold financial assets in a foreign or dominated in a foreign because Domestic currency may be subject to variable and high inflation, rendering it a poor store of value; Foreign currency balance may reduce risks; Foreign currency assets help hedge anticipated foreign currency liabilities. The efficiency of the international financial system and its degree of integration with individual sovereign financial system depends to a large extent on how cheaply and quickly, foreign exchange transaction can be effected. 2.1.3 CAPITAL MARKET:The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.

CAPITAL MARKET CAPITAL MARKET

PRIMARY MARKET PRIMARY MARKET

SECONDARY SECONDARY MARKET MARKET

Figure 2 Types of Capital Market 2.1.3.1 Primary market:The primary is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue to meet their requirements of investment and/or discharge some obligation. This is the market for new long- term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called New Issue Market (NIM). It facilitates direct conversion of savings into corporate investment or diversion of resources from the rest of the system to the corporate sector. Primary market deals in only new securities which acquire for the first time i.e. which were not available previously. They are offered to the investors for the first time.

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Features of primary market In a primary issue, the securities are issued by the company directly to investors. The company receives the money and issues new security certificates to the investors. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. The primary market performs the crucial function of facilitating capital formation in the economy. The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as going public. 2.1.3.2 Secondary Market:The capital market includes the secondary market where existing issues are traded. These secondary market also referred to as stock markets predominantly deal in the stock or equity shares. They enable shareholders to sell their holdings readily thereby ensuring liquidity. Any trading of a share subsequent to its primary offering , is the secondary transaction. The initial buyer (in the primary market) may reoffer the securities to an interested buyer at a price which is mutually satisfactory. An active secondary market in fact promotes the growth of the primary market and aids capital formation. For the general investors, the secondary market provides an efficient platform for trading of securities. The two major stock exchanges in India are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).

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Table 1 Difference between Primary Market and Secondary Market S.NO 1. 2. 3. 4. 5. PRIMARY MARKET Market for new securities. No fixed geographical location. Results in raising fresh resources for the corporate sector. All companies enter primary market. SECONDARY MARKET Market for existing securities. Located at a fixed place. Facilitate transfer of securities from one corporate investor to another. Securities of only listed companies can be traded at stock exchanges.

No tangible form or administrative Have a definite administrative setup and a setup. Recognized only by the service it tangible form. renders. Subjected to outside control by SEBI, stock exchange and the companies act. Subjected to control both from within and outside.

6.

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3. INITIAL PUBLIC OFFER

3.1 INTRODUCTION
Initial public offering (IPO), also referred to simply as a "public offering" or "flotation," is when a company issues common stock or shares to the public for the first time. They 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. In an IPO the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market. An IPO can be a risky investment. For the individual investor, it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value. However, in order to make money, calculated risks need to be taken. When a company lists its shares on a public exchange, it will almost invariably look to issue additional new shares in order to raise extra capital at the same time. The money paid by investors for the newly-issued shares goes directly to the company (in contrast to a later trade of shares on the exchange, where the money passes between investors). An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth. The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company and the right to a capital distribution in case of dissolution. The existing shareholders will see their shareholdings diluted as a proportion of the company's shares. However, they hope that the capital investment will make their shareholdings more valuable in absolute terms. In addition, once a company is listed, it will be able to issue further shares via a rights issue, thereby again providing itself with capital for expansion without incurring any debt. This regular ability to raise large amounts of capital from the general market, rather than having to seek and negotiate with individual investors, is a key incentive for many companies seeking to list.

3.2 REASONS FOR LISTING

When a company lists its shares on a public exchange, it will almost invariably look to issue additional new shares in order to raise extra capital at the same time. The money paid by investors for the newly-issued shares goes directly to the company (in contrast to a later trade of shares on the exchange, where the money passes between investors). An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth. The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company and the right to a capital distribution in case of dissolution. The existing shareholders will see their shareholdings diluted as a proportion of the company's shares. However, they hope that the capital investment will make their shareholdings more valuable in absolute terms. In addition, once a company is listed, it will be able to issue further shares via a rights issue, thereby again providing itself with capital for expansion without incurring any debt. 16

This regular ability to raise large amounts of capital from the general market, rather than having to seek and negotiate with individual investors, is a key incentive for many companies seeking to list.

3.3 ADVANTAGES OF IPO

The companies are launching more and more IPOs to raise funds which are utilized for undertaking various projects including expansion plans. All types of companies with the idea of enhancing growth launch IPOs to generate funds to cater the requirements of capital for expansion, acquiring of capital instruments, undertaking new projects. The increase in the capital:-An IPO allows a company to raise funds for utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing. Liquidity:-The shares once traded have an assigned market value and can be resold. This is extremely helpful as the company provides the employees with stock incentive packages and the investors are provided with the option of trading their shares for a price. Valuation:-The public trading of the shares determines a value for the company and sets a standard. This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the share holders of the company with the present value of the shares. Increased wealth:-The founders of the companies have an affinity towards IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership. Low price:-Public issues provide an opportunity for picking up share at relatively low price. Newly formed companies usually offer their share for subscription at par value, whereas existing companies price their new issues at level which are sometimes as much as 20 to 30 % lower than the market price of their existing shares.

3.4

INTERMEDIARIES IN PRIMARY MARKET

3.4.1 Lead Manager/ Merchant Banker In the pre-issue process, the Lead Manager (LM) takes up the due diligence of companys operations, management, business plans, legal etc. Other activities of the LM include drafting and design of Offer documents, Prospectus, statutory advertisements and memorandum containing salient features of the Prospectus. The BRLMs (book running lead managers) shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, ROC and SEBI including finalization of Prospectus and ROC filing. Appointment of other intermediaries viz., Registrar(s), Printers, Advertising Agency and Bankers to the Offer is also included in the pre-issue processes.

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The LM also draws up the various marketing strategies for the issue. The post issue activities including management of escrow accounts, coordinate non-institutional allocation, intimation of allocation and dispatch of refunds to bidders etc are performed by the LM. The post Offer activities for the Offer will involve essential follow-up steps, which include the finalization of trading and dealing of instruments and dispatch of certificates and demat of delivery of shares, with the various agencies connected with the work such as the Registrar(s) to the Offer and Bankers to the Offer and the bank handling refund business. The merchant banker shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with the Company. Table 2 Maximum number of lead manager The maximum number of lead manager to an issue depends on the size of the issue as detailed below: S. No 1 2 3 4 5 Size Of Issue Below Rs 50 crore From Rs 50 crore to below Rs 100 crore From Rs 100 crore to below Rs 200 crore From Rs 200 crore to below Rs 400 crore Rs 400 crore and above Maximum Number Of Lead Managers Two Three Four Five More than five with SEBI approval

3.4.2 Underwriters Sound origination services represent the first essential step, but, by itself, do not guarantee that issue will be successful, i.e., will get fully subscribe. In case the issue is not well received in the market, the plan of the company/ promoters receive a set back and all expenses incurred in origination get wasted. To insure success of an issue the company/ promoters get the issue underwritten. Underwriter guarantees that he would buy the portion of issue not subscribe by the public. Such service is called underwriting and is always rendered for a commission. Underwriting guarantees success of the issue and benefits of the issuing company. An underwriter to the issue could be a banker, broker, merchant or a financial institution.

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3.4.3 Bankers to an issue Bankers to an issue help functioning in primary market by engaging in activities of acceptance of applications for shares/ debentures along with application money from investors in respect of issue of securities and also refund of application money to the applicants whom securities could not be allotted. They perform this function for and on behalf of the company. 3.4.4 Broker to an Issue Brokers arrange procurement of subscription to the issue from the prospective investor. They keep regular contact with the investing public and render great help in broad basing the issue. The appointment of the broker is not compulsory. There is also no restriction on the number of brokers to be appointed by a company. Members of stock exchanges cannot act as managers or brokers to an issue nor can they make any preliminary arrangements for floatation of an issue unless: Stock exchange of which they are members gives its approval The issuing company abides by the prescribed listing requirements and also undertakes to get its securities listed on a recognized stock exchange. 3.4.5 Registrar to an issue: Registrar to an issue is also an intermediary market and performs the following function: a. Collect application from investors and keep a proper record of applications and moneys received from investors. b. Assist issuing companies in determining the basis of allotment of securities as per stock exchange guidelines and in consultation with stock exchange. c. Assist in finalizing allotment of securities and processing and dispatching allotment letters d. Assist in processing and dispatching refund order, share and debenture certificate and other documents related to the capital issue e. They can also function as Depository Participants. 3.4.6 Share Transfer Agent: Share transfer agent performs the following functions: a. Maintain records of holder of securities of the company for and on behalf of the company b. Handle all matters related to transfer and redemption of securities of the company. c. They also function as Depository Participants.

3.5 PROCEDURE
IPOs generally involve one or more investment banks as "underwriters." The company offering its shares, called the "issuer," enters a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares. The sale (that is, the allocation and pricing) of shares in an IPO may take several forms. Common methods include: 19

Best efforts contract Firm commitment contract All-or-none contract Bought deal Dutch auction Self distribution of stock In the business of initial public offering, the underwriting contract is the contract between the underwriter and the issuer of the common stock. The following types of underwriting contracts are most common In the firm commitment contract the underwriter guarantees the sale of the issued stock at the agreed-upon price. For the issuer, it is the safest but the most expensive type of the contracts, since the underwriter takes the risk of sale In the best efforts contract the underwriter agrees to sell as many shares as possible at the agreed-upon price. Under the all-or-none contract the underwriter agrees either to sell the entire offering or to cancel the deal. Stand-by underwriting, also known as strict underwriting or old-fashioned underwriting is a form of stock insurance: the issuer contracts the underwriter for the latter to purchase the shares the issuer failed to sell under stockholders subscription and applications A large IPO is usually underwritten by a "syndicate" of investment banks led by one or more major investment banks (lead underwriter). Upon selling the shares, the underwriters keep a commission based on a percentage of the value of the shares sold. Usually, the lead underwriters, i.e. the underwriters selling the largest proportions of the IPO, take the highest commissionsup to 8% in some cases. Multinational IPOs may have as many as three syndicates to deal with differing legal requirements in both the issuer's domestic market and other regions. For example, an issuer based in the E.U. may be represented by the main selling syndicate in its domestic market, Europe, in addition to separate syndicates or Selling groups for US/Canada and for Asia. Usually, the lead underwriter in the main selling group is also the lead bank in the other selling groups. Because of the wide array of legal requirements, IPOs typically involve one or more law firms with major practices in securities law, such as the Magic Circle firms of London and the white shoe firms of New York City Usually, the offering will include the issuance of new shares, intended to raise new capital, as well the secondary sale of existing shares. However, certain regulatory restrictions and restrictions imposed by the lead underwriter are often placed on the sale of existing shares. Public offerings are primarily sold to institutional investors, but some shares are also allocated to the underwriters' retail investors. A broker selling shares of a public offering to his clients is paid through a sales credit instead of a commission. The client pays no commission to purchase the shares of a public offering; the purchase price simply includes the built-in sales credit. The issuer usually allows the underwriters an option to increase the size of the offering by up to 15% under certain circumstance known as the green shoe or over allotment option. The first sale of stocks by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market

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3.6 PRICING
Historically, IPOs both globally and in the United States have been under priced. The effect of "initial under pricing" an IPO is to generate additional interest in the stock when it first becomes publicly traded. Through flipping, this can lead to significant gains for investors who have been allocated shares of the IPO at the offering price. However, under pricing an IPO results in "money left on the table"lost capital that could have been raised for the company had the stock been offered at a higher price. One great example of all these factors at play was seen with theglobe.com IPO which helped fuel the IPO mania of the late 90's internet era. Underwritten by Bear Stearns on November 13, 1998 the stock had been priced at $9 per share, and famously jumped 1000% at the opening of trading all the way up to $97, before deflating and closing at $63 after large sell offs from institutions flipping the stock . Although the company did rise about $30 million from the offering it is estimated that with the level of demand for the offering and the volume of trading that took place the company might have left upwards of $200 million on the table. The danger of overpricing is also an important consideration. If a stock is offered to the public at a higher price than the market will pay, the underwriters may have trouble meeting their commitments to sell shares. Even if they sell all of the issued shares, if the stock falls in value on the first day of trading, it may lose its marketability and hence even more of its value. Investment banks, therefore, take many factors into consideration when pricing an IPO, and attempt to reach an offering price that is low enough to stimulate interest in the stock, but high enough to raise an adequate amount of capital for the company. The process of determining an optimal price usually involves the underwriters ("syndicate") arranging share purchase commitments from leading institutional investors.

3.7 ISSUE PRICE

A company that is planning an IPO appoints lead managers to help it decide on an appropriate price at which the shares should be issued. There are two ways in which the price of an IPO can be determined: either the company, with the help of its lead managers, fixes a price or the price is arrived at through the process of book building. Note: Not all IPOs are eligible for delivery settlement through the DTC system, which would then either require the physical delivery of the stock certificates to the clearing agent bank's custodian, or a delivery versus payment (DVP) arrangement with the selling group brokerage firm. This information is not sufficient.

3.8 INTRODUCTION OF IPO IN CONTEXT OF INDIAN MARKET

The Indian primary market has come a long way particularly in the last decade after deregulation of the Indian economy in 1991-92. Both the primary and secondary markets have had their fair share of reforms, structural cum policy changes time to time. The most commendable being the dismantling of the Controller of Capital Issues (CCI) and introduction of the free pricing mechanism. This changed the whole facet of Initial Public offering.

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TABLE 3 RECENT IPO LAUNCHED DURING OCT 2010- JAN 2011

Issuer Company Omkar Speciality Chemicals Ltd IPO Tata Steel Limited FPO Midvalley Entertainment Ltd IPO C Mahendra Exports Ltd IPO Shekhawati Poly-Yarn Ltd IPO Punjab & Sind Bank IPO

Issue Open Issue Close Offer Price (Rs.) Jan 24, 2011 Jan 27, 2011 95/- to 98/-

Issue Issue Size Type (Crore Rs.) IPO-BB 76.95 - 79.38 3,477.00 60.00 165.00 36.00 470.82 120.00 675.00

Jan 19, 2011 Jan 21, 2011 594/- to 610/- FPO-BB Jan 10, 2011 Jan 12, 2011 64/- to 70/IPO-BB

Dec 31, 2010 Jan 06, 2011 95/- to 110/- IPO-BB Dec 27, 2010 Dec 29, 201030/IPO-FP

Dec 13, 2010 Dec 16, 2010113/- to 120/- IPO-BB

One97 Communications IPO-BB Ltd IPO A2Z Maintenance & Dec 08, 2010 Dec 10, 2010400/- to 410/- IPO-BB Engineering Services Ltd IPO Ravikumar Distilleries Ltd Dec 08, 2010 Dec 10, 201056/- to 64/- IPO-BB IPO Shipping Corporation of Nov 30, 2010 Dec 03, 2010135/- to 140/- FPO-BB India Ltd FPO MOIL Limited IPO Nov 26, 2010 Dec 01, 2010340/- to 375/- IPO-BB Claris Lifesciences Limited (CLL) IPO RPP Infra Projects Ltd IPO Power Grid Corporation of India Ltd FPO Gravita India Limited IPO Coal India Limited IPO Gyscoal Alloys Ltd IPO Prestige Estates Projects Ltd IPO BS Transcomm Ltd IPO Nov 24, 2010 Dec 02, 2010228/- to 235/- IPO-BB Nov 18, 2010Nov 22, 201068/- to 75/Nov 09, 2010Nov 12, 201085/- to 90/IPO-BB FPO-BB

73.60 1,164.73 1,237.51 300.00 48.75 7,442.34 45.00 15,199.44 54.67 1,200.00 190.45

Nov 01, 2010Nov 03, 2010120/- to 125/- IPO-BB Oct 18, 2010 Oct 21, 2010 225/- to 245/- IPO-BB Oct 13, 2010 Oct 15, 2010 65/- to 71/IPO-BB

Oct 12, 2010 Oct 14, 2010 172/- to 183/- IPO-BB Oct 06, 2010 Oct 13, 2010 248/- to 257/- IPO-BB

4. RELAIANCE POWER
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4.1 INTRODUCTUION
Reliance Power Limited is under the Anil Ambani Group and it is involved in the business of developing large and medium size power projects. Reliance Power Limited has plans developing around thirteen large and medium sized power projects. The projects that are being developed by Reliance Power Limited are located in southern India, western India, north- eastern India and northern India. The total installed power generation capacity of all the thirteen power projects would be around 28,200 MW. Reliance Power Limited (Reliance Power), part of RADAG has been set up to develop, construct and operate power projects domestically and internationally. It aims to develop 13 power projects with an aggregated generation capacity of 28,200 MW. Reliance Power will have a diversified project portfolio in terms of geography, fuel mix and technology. Nine of the proposed thirteen projects are coal-fired or gas-based and two of those have fuel security; the rest are yet to be finalized. In our view, for such huge capacity, fuel linkage is of paramount importance Long term PPAs for 8,560MW has been signed, constituting just 32% of the aggregated generating capacity. Of these, Sasan project (based on domestically procured coal) and Krishnapatnam project (based on imported coal) have been signed at a tariff of Rs1.19kw/h and 2.33kw/h per unit respectively, the differential attributable to the high cost of imported coal. A large number of PPAs are yet to be signed, reflecting some ambiguity on profitability. We believe equipment sourcing will be critical for Reliance Power being able to commission projects on schedule. Other key factors, apart from capital costs, are timely deliveries of equipment and maintenance costs. We believe the Group can draw synergies from the expertise of Reliance Energy . in EPC in executing projects of Reliance Power. Our concerns include lack of fuel linkages except for 2 projects, coal prices and gas and equipment availability. Also in view of the gap between the aggregate project outlay of Rs1, 12,129Cr and post-IPO net worth of 13,707Cr, we believe Reliance Power may have to opt for further equity dilution going forward, in order to maintain a manageable debtequity ratio going forward.

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While the high promoter holding of around 90% post-listing is a positive, it may be viewed negatively from the point of view of minority shareholders, since the latter will enter the company @ Rs450 per share vis--vis promoters average cost of Rs16.92 per share. Given the long gestation period of projects, which are likely to get commissioned from FY10 onwards, we have considered non-earnings related valuation parameters. The valuation of the IPO in terms of price/book (7.4x FY08E) appears expensive vis--vis NTPC (2.8x) and Tata Power (4.5x). The issue appears expensive, also on the basis of asset valuation (estimated valuation of generating capacity) in FY13. It is only on the basis of FY17 estimates, that the issue looks attractive. However, we believe the aggression and track record of the promoter group in shareholder wealth creation in all its businesses including telecommunications, power distribution, financial services and entertainment is likely to have a positive rub-off effect on this IPO as well.

4.2 CHAIRMAN'S PROFILE

FIGURE 3 Anil D. Ambani

Regarded as one of the foremost corporate leaders of contemporary India, Shri Anil D Ambani, 48, is the chairman of all listed companies of the Reliance ADA Group, namely, Reliance Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources limited. He is also Chairman of the Board of Governors of Dhirubhai Ambani Institute of Information and Communication Technology, Gandhi Nagar, Gujarat. Till recently, he also held the post of Vice Chairman and Managing Director of Reliance Industries Limited (RIL), Indias largest private sector enterprise. Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was centrally involved in every aspect of the companys management over the next 22 years. He is credited with having pioneered a number of path-breaking financial innovations in the Indian capital markets. He spearheaded the countrys first forays into the overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. Starting in 1991, he directed Reliance Industries in its efforts to raise over US$ 2 billion. He also steered the 100-year Yankee bond issue for the company in January 1997. 24

4.3 RELIANCE POWER IPO

Reliance Power Ltd has announced that the Board of Directors of the Company at its meeting held on February 24, 2008, has approved a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group (comprising of Reliance Energy Ltd. and the ADA Group), in the ratio of 3 shares for every 5 shares held, subject to necessary approvals. The proposed bonus offering will result in reduction of the cost of Reliance Power shares below the IPO price as follows: Rs 269 per share for retail investors, 40% lower than the IPO price of Rs 430. Rs 281 per share for other investors, 37% lower than the IPO price of Rs 450. In a related development, Mr. Anil D Ambani, Chairman, Reliance ADA Group, on February 24, 2008 simultaneously announced a voluntary contribution of 2.6% of his shareholding in Reliance Power to Reliance Energy Ltd., to protect the Company from any dilution of its existing 45% stake in Reliance Power, as a result of the bonus proposal. Accordingly, Reliance Energys stake in Reliance Power will be maintained at the existing level of 45%, and the revised shareholding pattern of Reliance Power will be as follows: Previous Anil D Ambani Reliance Energy 45% 45% Existing 40% 45%

Public shareholders 10% 15% The reduction of Mr. Ambanis shareholding in Reliance Power by 5% from 45% to 40%, represents a contribution of nearly Rs 5,000 crore (US$ 1.2 billion) by him, in favor of nearly 6 million investors in Reliance Energy and Reliance Power. Commenting on the move, Mr. Ambani said, I have been personally concerned by the notional losses arising to millions of long term investors in Reliance Power, as a result of a dramatic adverse change in sentiment in global and domestic capital markets, subsequent to the pricing of our IPO.

4.4 AN OVERVIEW OF RELIANCE POWER IPO Reliance Power IPO has been issued by Reliance Power Limited. Reliance Power IPO was issued on 15th January, 2008 and closed on 18th January, 2008. Reliance Power Limited Company is planning to generate capital worth Rs. 11, 700 crores through the IPO. This makes it the largest IPO in the country as on 17th January, 2008. The price band of the equity shares of Reliance Power IPO has been fixed at Rs. 405- 450 per equity share. The total size of Reliance Power IPO is around 26 crores equity shares. Reliance Power IPO will be listed on the National Stock Exchange (NSE) and also on the Bombay Stock Exchange (BSE). The lead bankers of Reliance Power IPO are Enam Securities, Kotak 25

Mahindra Capital Co, ABN Amro Rothschild, ICICI Securities, JP Morgan Chase & Co and UBS AG 4.5 RELIANCE POWER IPO ANALYSIS Reliance Power Ltd. IPO details: Price Band: Rs. 405 - 450 per share Issue opened between: January 15 - 18, 2008 Book Running Lead Managers: Kotak, UBS, Enam, I-Sec and others To List on: NSE and BSE Market Cap post-listing: Rs. 1017 billion or $25.7 billion (based on the cap price)

4.6 HIGHLIGHTS
Reliance Power Limited (Reliance Power), part of RADAG has been set up to develop, construct and operate power projects domestically and internationally. It aims to develop 13 power projects with an aggregated generation capacity of 28,200 MW.

4.7 PROJECT GOING ON ALL OVER INDIA

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FIGURE 4 Significant power projects spread all over India

TABLE 4 27

Reliance Power will have a diversified project portfolio in terms of geography, fuel mix and technology. Nine of the proposed thirteen projects are coal-fired or gas-based and two of those have fuel security; the rest are yet to be finalized. In our view, for such huge capacity, fuel linkage is of paramount importance (see status of projects on Long term PPAs for 8,560MW have been signed, constituting just 32% of the aggregate generating capacity. Of these, Sasan project (based on domestically procured coal) and Krishnapatnam project (based on imported coal) have been signed at a tariff of Rs1.19kw/h and 2.33kw/h per unit respectively, the differential attributable to the high cost of imported coal. A large number of PPAs are yet to be signed, reflecting some ambiguity on profitability. We believe equipment sourcing will be critical for Reliance Power being able to commission projects on schedule. Other key factors, apart from capital costs, are timely deliveries of equipment and maintenance costs. We believe the Group can draw synergies from the expertise of Reliance Energy in EPC in executing projects of Reliance Power. Our concerns include lack of fuel linkages except for 2 projects, coal prices and gas and equipment availability. Also in view of the gap between the aggregate project outlay of Rs1, 12,129Cr and post-IPO net worth of 13,707Cr, we believe Reliance Power may have to opt for further equity dilution going forward, in order to maintain a manageable debt-equity ratio going forward. While the high promoter holding of around 90% post-listing is a positive, it may be viewed negatively from the point of view of minority shareholders, since the latter will enter the 28

company @ Rs450 per share vis--vis promoters average cost of Rs16.92 per share. Given the long gestation period of projects, which are likely to get commissioned from FY10 onwards, we have considered non-earnings related valuation parameters. The valuation of the IPO in terms of price/book (7.4x FY08E) appears expensive vis--vis NTPC (2.8x) and Tata Power (4.5x). The issue appears expensive, also on the basis of asset valuation (estimated valuation of generating capacity) in FY13. It is only on the basis of FY17 estimates, that the issue looks attractive. However, we believe the aggression and track record of the promoter group in shareholder wealth creation in all its businesses including telecommunications, power distribution, financial services and entertainment is likely to have a positive rub-off effect on this IPO as well.

FIGURE 5 Fuel used by various projects of reliance power

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FIGURE 6 FUEL DIVERSIFICATION

5. COAL INDIA LTD.

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Type

State-owned enterprise Public (BSE: 533278, NSE: COALINDIA) Coal & Lignite 1973

Industry Founded

Headquarters Kolkata, West Bengal, India Partha S. Bhattacharyya (Chairman & MD) Coal 45,797 crore (US$10.12 billion)[1] (2008-09) 2,079 crore (US$459.46 million) (2008-09) 397,138 (March 31, 2010)

Key people

Products

Revenue

Net income

Employees

5.1 INTRODUCTION
Coal India Limited (CIL) (BSE: 533278, NSE: COALINDIA) is an Indian statecontrolled coal company headquartered in Kolkata, West Bengal, India and the world's largest coal miner with revenue exceeding Rs 45,797 Cr or $10.3 billion U.S. (FY200831

09).[2][3] It was formerly owned entirely by the Union Government of India, under the administrative control of the Ministry of Coal. It is involved in coal mining and production industry. In 2010, CIL's initial public offering (IPO) got subscribed 15.28 times, collecting a record over Rs 2,40,000 crore (Rs 2,400 billion) the highest IPO subscription so far.[4] On the first day of its listing on the Sensex, its stock closed 40% higher than IPO price.[5] Coal India Limited was formed in 1973 as a holding company with five subsidiaries:

Bharat Coking Coal Limited (BCCL) (Dhanbad, Jharkhand) Central Coalfields Limited (CCL) (Ranchi, Jharkhand) Western Coalfields Limited (WCL) www.westerncoal.gov.in(nagpur region) Eastern Coalfields Limited (ECL) (Asansol, West Bengal) Central Mine Planning and Design Institute Limited (CMPDIL)(Ranchi, Jharkhand) Indian Institute of Coal Management (IICM)(Ranchi, Jharkhand)

Several years later, three more subsidiaries were added:

Mahanadi Coalfields Limited (MCL)(Sambalpur) South Eastern Coalfields Limited (SECL)(Bilaspur) North Eastern Coalfields Limited (NECL)(directly under control of coal india limited) Northern Coalfields Limited, Singrauli (NCL,Singrauli)

The coal production operations of the company are primarily carried out Through seven wholly-owned Subsidiaries in India. In addition, another wholly owned subsidiary , CMPDIL, carries out exploration activities for all the subsidiaries and provides technical and consultancy services for companys operations as well as to third-party clients for coal exploration, mining, processing and related activities. The company also has a wholly-owned subsidiary in Mozambique, Coal India Africana Limitada ("CIAL"), to pursue coal mining opportunities in Mozambique and have acquired prospecting licenses for two coal blocks in Mozambique. The company has been conferred the Navratna status by the GoI, providing certain operational and financial autonomy. In addition, six of the wholly owned Subsidiaries of the company, including CMPDIL, have also been accorded the Mini Ratna status by the GoI. The company is the largest coal producing company in the world based on raw coal production of 431.26 MT during FY10. The company is also the largest coal reserve holder in the world. The company has 471 mines in 21 major coalfields across 8 states in India,

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including 163 open cast mines, 273 underground mines and 35 mixed mines (which include both open cast and underground mines).The company produces non-coking coal and coking coal of various grades for diverse applications. Non-coking coal represents a substantial majority of the raw coal production. The majority of the coal production is come from open cast mines. ). They produce non-coking coal and coking coal of various grades for diverse applications. XOXO Some of the raw coal produced by the company is used for the production of beneficiated coal. At present, the company has 17 coal beneficiation facilities with an aggregate capacity of 39.40 MTPA. The company sells substantially all of the raw coal production in the Indian market to a diversified set of customers including large thermal power generation companies, steel producers, cement producers and other industrial companies in the public and private sector. Majority of the coal production is used in the thermal power sector in India. NTPC, a public sector power generation company and utility, is the top customer of the company.

5.2 REVIVING OF ABANDONED MINES Coal India Ltd (CIL), will extract coal from 18 abandoned underground mines owned by three of its subsidiaries in partnership with private players. Underground mining would be revived in 6 abandoned mines of Eastern Coalfields, 8 mines of Bharat Coking Coal, and 4 mines of Central Coalfields. These 18 mines have an approximate reserve of 1.647 billion tonnes of coal. CIL contributes around 85% of coal production in India. It is the largest company in the world in terms of coal production. It employs nearly 425,000 persons and is the largest corporate employer in the country. It is one of the largest companies in the country, with turnover being around Rs. 386.31 billion in 2007-08. It is one of the largest tax payer (Corporate Tax 35.75 billion (US$790.08 million)) in 2007-08 and has paid Dividend of 17.054 billion (US$376.89 million) to the Govt. of India in 2007-08.

5.3 CHAIRMANS PROFILE

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FIGURE 7 PARTHA S. BHATTACHARYA Mr. Partha S. Bhattacharyya, aged 59 years, is the Chairman and Managing Director of our Company. Mr. Bhattacharyya holds a post graduate degree in physics from Jadavpur University, Kolkata, and a diploma in finance from ICFAI University, Hyderabad. He is also a Fellow of the Institute of Cost and Works Accountants of India and the World Academy of Productivity Science. Mr. Bhattacharyya joined our Company as a management trainee in 1977 and since then has handled various assignments in our Company and in our Subsidiaries. Prior to joining our Company as the Chairman and Managing Director, Mr. Bhattacharyya was the Chairman and Managing Director of BCCL, where he played a crucial role in the turnaround of the company, which had been reporting losses since its inception. As the Chairman and Managing Director of BCCL, Mr. Bhattacharyya is also credited with the introduction of e-marketing of coal, which was later adopted by our other Subsidiaries. For his achievements as chairman and managing director of BCCL, Mr. Bhattacharyya has been bestowed the Chief Executive of the year 2005 award by the Indian Institute of Materials Management, Pune and has also been felicitated by the Citizens Forum of Dhanbad. Upon joining our Company as Chairman and Managing Director, Mr. Bhattacharyya has initiated action on strategic areas such as thrust on underground mining, coal beneficiation and land reclamation. He has also spearheaded the introduction of integrity pact in high value procurements with the objective of bringing transparency, equity, fairness and speedy decision making by our Company.

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5.4 COAL INDIA LTD. IPO

Coal India Ltd. IPO provides an opportunity to invest in worlds largest coal reserve and coal producing company. The company is planning to ramp-up its production capacities to meet increasing demand of coal across various industries in India. The company is also increasing capacities of beneficiated coal, a value added activity. These capacities ramp- up are expected to increase top line of the company. On the profitability front, the company is taking various steps like increasing revenue contribution from beneficiated coal, increasing production of high grade non-coking coal and increasing sales through e-auction. Going forward, these measures are likely to improve margins of the company. In India, the power sector is the largest consumer of coal; therefore the planned increase in power generation capacities in the country provides ample opportunities to the company. Coal India Ltd. is well positioned to tap the opportunity as it dispatch nearly 80% of its production to power sector. Investors with long term horizon can subscribe the largest IPO in the history of the Indian markets.

5.5 OBJECTS OF THE OFFER

The objects of the Offer are to carry out the divestment of 631,636,440 Equity Shares by the Selling Shareholder and to achieve the benefits of listing the Equity Shares on the Stock Exchanges. The Company will not receive any proceeds from the Offer and all proceeds shall go to the Selling Shareholder.

5.6 IPO DETAILS

The Offer Sector Transaction Offer Size IPO Dates Price Band Bid Lot IPO Grading Exchanges BRLM Limited; Deutsche Equities Enam Securities Private Limited; Kotak Mahindra Capital Company Limited; Morgan Stanley India Registrar Category No. of Shares 35 Company Private Limited Link Intime India Private Limited Coal India Limited Mining & Mineral Products 100% Book Building 631,636,440 equity shares of Rs 10 each 10% of the fully diluted post offer paid-up capital Oct 18th 2010 Oct 20th 2010 (for QIB) Sept 18th 2010 Oct 21st 2010 (for Retail / HNI) Rs (*) to Rs (*) (*) equity shares and in multiples of (*) CRISIL; ICRA & CARE 5/5 Strong Fundamentals BSE; NSE Citigroup Global Capital Markets India Private (India) Private Limited; DSP Merrill Lynch Limited;

Investment Summary
Employee Reservation 63,163,644 Net Issue to Public 5,684,727,796 QIB's 284,236,398 Non Institutional 85,270,919 Retail 198,965,479 XOXS

Shareholding Pattern (%)

(*) Assuming that the offer is fully subscribed. (*) (*) Public Offer 6 31,636,440 (*) (*) Employee Reservation 6 3,163,644 (*) (*) Net Issue 5 68,472,796 (*) (*) QIBs 2 84,236,398 (*) (*) Non Institutional 8 5,270,919 (*) (*) Retail 1 98,965,479 (*) (*)

Promoters
The President of India acting through the MoC (Ministry of Coal, Government of India).

5.7 COAL INDIA LTD. IPO GRADING RATIONALE

Its not often that an IPO gets graded 5 out of 5, but its not very hard to see why Coal India got graded that based on their near monopolistic position, and their huge size. Here are some points from the ICRA grading report about the Coal India IPO.

Coal India is the largest coal company in the world with access to vast reserves. Highly favorable demand supply situation in the domestic coal industry. Coal Indias near monopolistic position in this industry. Continuous labor productivity due to the use of technology, and high share of production from open cast mines. Deregulated coal pricing regime gives them the power to price their coal along with other factors like favorable demand supply, and cost competitiveness

Coal Reserves MT

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6. LITERATURE REVIEW
6.1 OBJECTIVES OF STUDY
The objectives of study are as follows:Primary objective Understand the effect of Reliance Power IPO and Coal India Ltd. IPO on Indian share market. Secondary objective - Factors responsible for the fall in price of Reliance Power equity. - Perception of a retail investor towards Reliance Power before listing of IPO. - To study performance of Coal India Ltd. IPO in the share market.

6.2 RESEARCH METHODOLOGY

The research is exploratory research. The data is collected from various sources like internet, newspapers, magazines, staff of Reliance Money and Coal India Ltd. and many broking house personnel.

6.3 TOOL OF ANALYSIS

The data collected is shown through graphs and pie charts. Software used are SPSS & MS Office Word.

6.4 DATA COLLECTION

Source of data is secondary.

6.5 LIMITATIONS
Time constraint Resources were limited.

6.4 DATA INTERPRETATION

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FIGURE 8

Performance of Reliance Power share price

From the above graph we can interpret that the share price of reliance power is most of the time above the BES Sensex 30 index

The reliance power equity in other ways we can say is driving the whole Indian equity market Suggestion: BUY; Target price Rs. 142 Open High Low Last Price 138.00 141.90 133.05 135.05

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Fig 9: Price movement bar chart - Reliance Power The price of Reliance Power is currently moving in a trend (figure 1), but on a close look it can be identified that the price is not following the trend line perfectly as lot of deviations exist. One point to note is that the overall movement is upward i.e. the major trend is Bullish with minor Bullish & Bearish trends. Any decision of whether to buy or sell the stock cannot be made just by looking at this chart, as the trend is not pretty clear; and thus other tools are used as described below.

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Fig 10: ADX chart - Reliance Power As shown in figure 2, the ADX value of Reliance Power is high enough (=47.96), therefore assuring the presence of the trending phase. Thus, the trend follower tools can be used.

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Fig. 11: MACD chart - Reliance Power Currently, the MACD line (figure 3) is also above the EMA(9) line, therefore further supporting the trend lines (of figure 1) that the Bullish phase is present. It should be noted that the gap between the MACD and EMA(9) line is very small, and thus indicating that Bulls are getting weak. Therefore, there are chances that Bears might get a lead in the coming sessions.

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Fig 12: Bollinger Bands - Reliance Power In order to further confirm the presence of Bullish phase, Bollinger Bands are drawn with SMA(20) as the base line (shown in figure 4). As can be seen, the price is moving close to the upper band therefore approving the Bullish phase. But this also increases the chances of a trend reversal in the coming sessions. Trend might reverse if the price goes below the SMA(20) line and is not able to cross it again; thus care has to be taken after investing. It is advised to the readers to buy the stock with a target price of Rs. 142. It should be kept in mind that the current trend is already weakening; therefore care should be taken after investing.

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Coal India Ltd. IPO

FIGURE 13 Share price performance of Coal India Ltd.

From the above graph we can interpret that the share price of coal india ltd.is most of the time above the BSE Sensex 288 index The reliance power equity in other ways we can say is driving the whole Indian equity market Suggestion: BUY; Target price Rs. 358 Open High Low Last Price 310.80 357.60 287.45 317.15

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6.7 OBSEVRATION & FINDINGS

A). RELIANCE IPO An IPO can be a risky investment. For the individual investor, it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. In case of Reliance Power the shares were oversubscribed 73 times i.e. for 1 share there were 73 applications. Share market doesnt responded as the applicants. On Monday 20th January 2008 the first day of trading of R power. R power shares along with BSE SENSEX goes done by 17 % of issued price of Rs.450 to Rs.372.50. BSE goes down by 832 points in sympathy of it Now that was a disaster for retail investors this is they havent dreamed of. A lot happened between January 15, when Reliance Power first offered its shares for sale, and its listing. For a start, any hopes that India might go unscathed following the U.S. Sub - prime crisis have long been abandoned. It used to be said that the two Ambani brothers [Anil and Mukesh, chairman of Reliance Industries, India's largest company] are keeping the stock markets going. It is found that the common man have faith in Reliance but the situation were hostile.

This faith is not ambiguous because it is based on Reliances past performance of its equity funds like Reliance vision , diversified power sector , natural gas & growth funds which are prevailing in market from past 10 to 12 years & doing well in market. 44

 The performance of Reliance Industries in the market is known to every investor from past decades. Due to which thousands of retail investor who are not investing jumped into the market in recent years moreover they are eager not to be left out of the profit from Sensex's rapid growth.

Reliance Power was following the trends of major IPOs of other Asian countries like Chinas Petro China which is one of the most valuable company on paper since its shares rose to 163 % in November 2008. Petro Chinas share fall by 50 % following the same trend the Indian Companies slated 15 IPO for 2008 will now be postponed.

B). COAL INDIA LTD. IPO

The initial public offer (IPO) of India's largest coal producing company Coal India (CIL) has seen huge response from investors and has received bids for more than USD 53 billion worth of equity shares as against issue size of USD 3.5 billion on last day. The issue has been subscribed more than 15.28 times, including major contribution from qualified institutional buyers (QIBs) followed by noninstitutional investors (NIIs) and retail investors. Institutional investors have gone all out for Coal India with the IPO getting highest-ever demands received by an Indian issue. QIB generated demand for CIL was at Rs 1,73,398 crore with 100% margin while Rs 1,88,923 crore with 10% margin in case of Reliance Power IPO, which launched in 2008. In case of Reliance Power, QIBs' portion had subscribed 30.68 times.

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 Demand was strongest from financial institutions which bid for 24.7 times the shares on offer, the banker said. Small investors bid for more than 100 percent of the shares allocated to them, and that figure is expected to rise.

CONCLUSIONS
The study is on Reliance Power IPO and Coal India Ltd. IPO in Indian context Some of the major facts which we have found are as follows: Brand image of Reliance industry specially the image of Anil Dhiru bhai Ambani Group Company Reliance Power. The Reliance is trusted brand. Indian Retail investors have faith in the name of Reliance. The affect on share market of Reliance Power IPO is positive but the situations of world markets were hostile and due to which an adverse growth of Reliance Power equity was witnessed. The reputation of Reliance is so good that sentiments of investors are euphoric initially towards any offering made by the company. The projects of Reliance Power are gigantic in nature and the investment return will need time to pay back to its investors. Presently Reliance is one of the largest portfolios of power generation under development in India. Reliance is Capitalizing on the growth of the Indian Power Sector. The largest coal producer and reserve holder in the world. Well positioned to capitalize on the high demand for coal in India. Track record of growth and cost efficient operations. Strong track record of financial performance. Strong capabilities for exploration, mine planning, research and development. Experienced senior management team and large pool of skilled employees. Continue to increase production and capitalize on the significant demand-supply gap for coal in India. Improve realizations through increased sales of beneficiated coal and higher quality coal, and the use of E-auction pricing mechanisms. Enhance their profitability and maintain their competitiveness by improving operating and cost efficiencies. Continue to increase their reserve base in India. 46

SUGGESTIONS
Company should take in account the world market scenario before making any offering to public.

The customer should also be rational while investing in IPOs.

Proper allocation of fund should be done by the investor to ascertain what quantum of fund is sufficient for investment.

A proper study of the global financial arena should be done & constraint which will hinder the growth of our investment should be well think of before investing.

For the development of the whole economy companies should rethink their strategies.

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BIBLIOGRAPHY
Books How to Make Money in Stocks By William J. O'neil Practical Speculation by Victor Niederhoffer and Laurel Kenner Kothari , C.R Research methodology

Magazines Business Week Business World Business today

Websites www.relianceinsider.com www.reliancemoney.com www.moneycontrol.com www.coalindia.in www.nseindia.com www.bseindia.in

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