Vedant Fashions IPO: The owner of the ethnic wear brand Manyavar and Mohey, Vedant Fashions Ltd opened its initial public offering (IPO) for subscription on Friday. On the first day of the bidding process of Manyavar IPO. the issue was subscribed by only 14 per cent. The company has set a price band of Rs. 824 – Rs. 866 and is expected to fetch Rs. 3,149 crore at the upper end of the price band. Vedant Fashions IPO is entirely an offer for sale (OFS) by existing shareholders and promoters.
Vedant Fashions IPO: Subscription Status
The IPO received bids for 35,32,872 shares against 2,54,55,388 shares on offer, according to data available with NSE. The category for Retail Individual Investors (RIIs) received 22 per cent subscription, while Qualified Institutional Buyers (QIBs) quota was subscribed 6 per cent. Non-institutional investors also got 6 per cent subscription.
Vedant Fashions IPO: About the Company
Incorporated in 2002, Vedant Fashions offers Indian wedding and celebrations wear for men, women and kids, operating business through omni-channel network of 546 exclusive brand outlets (EBOs), 825 multi-brand outlets (MBOs) and 145 large-format stores (LFS) and through online platforms. It is the largest company in India in men’s Indian wedding and celebration and follows a franchisee-owned-company-operated (FOCO) model. It has a multi-brand product portfolio catering to all possible occasions that includes Manyavar (men’s brand), Twamev, Manthan, Mohey, and Mebaz.
Vedant Fashions IPO: GMP
According to market observers, trend reversal in the secondary market and tepid response by bidders has affected Vedant Fashions share price in the grey market. They said that shares of Vedant Fashions are available at a premium of Rs 13 in grey market today, which was around Rs 42 ahead of the subscription opening. Market experts said that GMP is nothing but an estimated idea about the listing premium one can expect from a particular public issue. As Manyavar IPO GMP today is Rs 13, it means grey market is expecting that Vedant Fashions shares would list around Rs 879 ( Rs 866 + Rs 13), which is almost at par with the price band of the public issue of Rs 824 to Rs 866 per share. However, secondary market experts maintained that GMP is not an ideal indicator of expected listing gain from an IPO. They advised investors to look at the financials of the company as they indicate concrete idea about the financial status and business model of the company.
Vedant Fashions IPO: Financials
Financial performance over the reported fiscals has been satisfactory despite significantly loss to business during 2020 due to pandemic induced lockdown.
“Over FY16-20, it reported ~16 per cent/27 per cent/27 per cent revenue/EBITDA PAT CAGRs. FY20 gross was at 72.6%. RoCE/RoE stood at 30.5 per cent/24.3 per cent in FY20. Since FY18, it has been net cash,” said Anand Rathi Research in its note.
Vedant Fashions IPO: Key Strengths
On the key strengths of the company, Axis Securities said: ” Market leader in the Indian celebration wear market with a diverse portfolio of brands catering to the
aspirations of the entire family.” It also said that Vedant fashions has a large and growing Indian wedding and celebration wear market driven by an increased spending on such
wear.
Vedant Fashions IPO: Listing Date
The company’s shares are expected to list on stock exchanges NSE and BSE on February 16, 2022.
Vedant Fashions IPO: Should you Subscribe?
Angel One, which has a ‘neutral’ rating on the issue, said the company has high operating margin, asset light business, strong brands and wide range of products but these positives are captured in the valuations commanded by the company. But that doesn’t mean it cannot create value in the long term, believe analysts at Canara Bank Securities. The company has an asset light EBO (exclusion brand outlets) model that lets them focus on vendor and inventory management by understanding consumer preferences through the collected secondary sales data.
“Vedant Fashions with its pan India presence and strong reach across channels will help the company grow at faster rate and gain market share. It has a strong balance sheet with no debt and it has an asset-light model. Considering these positives, we recommend to “subscribe for long-term gains”, said KR Choksey.
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