Theoretically investors in DLF gain more than Vishal

DLF and Vishal Retail both made their issues successful and received required amount for their future plans and other purposes. Vishal Retail had got huge response from all category of investors whether it was retail, HNIs or QIBs. The issue was subscribed 81 times while DLF received mild response and was subscribed 3.4 times.

Vishal Retail listed at Rs 452 and touched a high of Rs 784.40, with a gain of 191% over its issue price of Rs 270 per share and DLF listed at Rs 582 and touched a high of Rs 583.95 on the NSE.

DLF closed at Rs 569.80, up 8.53% over its offer price on July 5 and Vishal Retail at Rs 758, up 180.74% on July 4.

Both promoters became wealthier with their respective issues but what about retail investors or those who had invested in these issues for listing gains? But between Vishal and DLF, lets see which issue has been more profitable for the retail investor.

As a theoretical example. If a person has invested Rs 1,00,000 in the Vishal Retail, he would have effectively applied for 370.37 shares. But because of oversubscription of 50.40 times in retail segment, the person would get only 7.34 shares in allotment. The profit for the Day 1 was around Rs 488 per share (Difference between close price and issue price), so in total the investor makes a profit of Rs 3581.92 (Rs 488 * 7.34 shares).

In case of DLF, if a person invested Rs 1,00,000 he would have applied for 190.47 shares he would get full allotment i.e. 190.47 shares as the retail’s portion was subscribed by 0.9752 times only. The profit from this is Rs 44.8 per share, so total profit comes to Rs 8533.056 (Rs 44.8 * 190.47 shares) on an investment of Rs 1,00,000.

Company	Investment (Rs)	Application of shares	Allotment of shares	Gain per share (Rs)	Total profit (Rs)
DLF	1,00,000	190.47	190.47	44.80	8,533.06
Vishal Retail	1,00,000	370.37	7.34	488	3,581.92

After this comparison, a retail investor, who had invested Rs 1 lakh, earned more money in DLF than Vishal Retail. It means a person received more than 100% profit in DLF as compared to profit made in Vishal Retail on the listing day.

Note: This is just a theoretical example। It is assumed that the number of shares applied or alloted are in fractions and not the minimum quantity as fixed by the company. So actually, there might be some difference in quantity of shares alloted to individuals. This is just to bring out the fact that though it may appear that a retail investor in Vishal Retail would have made a windfall has actually performed worse than an investor who applied for DLF.

Source : Moneycontrol