Small movies are staying clear of next week’s blockbuster Bollywood release, Jhoom Barabar Jhoom. But on the stock market, the close to Rs9,625 crore public issue of Delhi-based real estate developer DLF has no such luck. While several smaller firms have stayed away from opening on the same day as DLF, Delhi-based retailer Vishal Retail Ltd will hit the capital market on the same day, 11 June, with its Rs100 crore public float.
“Jhoom Barabar is too big a release for any other film to compete with,” says movie critic Taran Adarsh. “People avoid releasing their films along with very big films to improve their chances.” So Jhoom Barabar Jhoom, which comes from the Yash Raj stable, will enjoy a clear two-week run before three big films release on 29 June.
Usually, small companies do the same when faced with mega equity issues. Reports suggest that at least two companies will not do public offerings in June despite getting the regulatory nod, to ensure they do not clash with the DLF and ICICI Bank issues. These two offerings are likely to suck out over Rs20,000 crore liquidity from the market, leaving little appetite for other offerings.
But market analysts say Vishal Retail’s issue could sail through because of its own strength. “Vishal Retail has a very different business model, which gives a lot of strength to its IPO,” says a retail analyst with a domestic brokerage who did not want to be named.
The two-decade-old company started by R.C. Aggarwal has 50 stores, of which 40 are in tier-III cities, including Jammu, Ranchi, Dhanbad and Cuttack. “We want to tap the aspirations of people in small towns who want to shop in a modern retail environment,’ said Aggarwal, Vishal Retail’s chairman and managing director.
“Both the issues should do well because they are not in competing spaces,” says Amitabh Chakraborty, president, equity, at Religare Securities.
In fact, Vishal could reap some unexpected benefits from being with DLF, analysts say. “Smaller IPOs can benefit from the tailwind,” says Ananda Bhoumik, senior director at credit rating agency Fitch Ratings. “The smaller issue could have a more attractive valuation than large IPOs, which typically are priced quite high,” he says.
Nandkumar Ranganathan, head of investment banking at DBC Cholamandalam, says, “As a lead manager, I woud ideally not want an issue to clash with a big issue. But investors chances of getting allotment in a mega issue, such as DLF, are not much. So they could hedge by applying for the smaller IPOs as well.”
Even in Bollywood, smaller movies have taken on big-banner films successfully, says Adarsh, the movie critic, citing the examples of recent hits Bheja Fry and Traffic Signal.