Buoyant on demographics, lifestyle companies seek capital market boost

Buoyant on demographics, lifestyle companies seek capital market boost

New Delhi: An array of high-growth and lifestyle companies are tapping the capital market like never before and going forward this trend is likely to pick up steam thanks to the demographic profile and strong consumption theme in India, say experts.

From salons to wellness centre operators to handset makers to telecom value-added service providers are testing or have recently tapped the capital markets with their IPOs.

Commenting on the trend, CNI Research CMD Kishor P Oswal said, “Capital market too require some new theme and this sector is fitting in the theme perfectly."

Ashika Stock Broking’s research head (Equities) Paras Bothra said, “The consumption theme in India is going to get stronger with ever increasing per capita income, which in turn will boost discretionary spending."

The prospects of these companies look bright because with increasing purchasing power, people are seeking better living standard and better lifestyle.

From basic amenities like food and clothing, extra buoyant purchasing power is changing the spending pattern and people are spending more into medical facilities, education, lifestyle and so on, they said.

Some issues that are in pipeline include Jawed Habib Hair & Beauty, which is aiming to raise Rs60 crore, Birla Pacific Medspa (Rs65 crore), Telephone directory- cum-online search provider JustDial (Rs700 crore), Micromax, (Rs680 crore).

Some other players who also wants to tap the capital market in near future are telecom value-added service provider One97 Communications and low-cost carrier IndiGo.

Though there are concerns about how these companies would be able to give value to their shareholders, as most of their services cannot be mechanised experts believe a lot depends on the management.

“Companies which can create a better brand value and perception in the minds of the customer with better value added services will succeed eventually since discretionary spend is going to increase further," Bothra said.

Oswal said, “It is true that there is no mechanisation in the industry as this is purely service industry but the valuations I believe will come from brand encashment through franchisee sale. The fat bottom line due to low operational cost could be a star attraction for the shareholders."

India’s market for ‘wellness´ services stands at $2.2 billion, this industry is likely to grow at an annual rate of 30-35%.

According to a joint report of FICCI and Ernst and Young “this growth is expected on the back of favourable market demographics, consumerism, globalisation, changing lifestyles, increasing availability across categories and regions and rising awareness among people."

Moreover, 2010 had seen Jubilant Foodworks, a franchisee for Domino’s Pizza, and gym-operator Tawalkars making robust beginning on the bourses.