Vedant Fashions Limited IPO: Another company in the ethnic wear segment has got the Securities and Exchange Board of India’s (SEBI’s) nod to go ahead with its IPO. The company is Vedant Fashions Limited. So in this article, let’s discuss whether the company’s IPO will be able to fashionably walk across the street or not?
About the company
Vedant Fashions Limited is the largest company in India in the men’s Indian wedding and celebration wear segment in terms of revenues and PAT for FY20. According to CRISIL, the company’s ‘Manyavar’ brand is a category leader in the branded Indian wedding and celebration wear market with a pan India presence. The company is focused on spreading India’s vibrant culture, traditions, and heritage through its aspirational and value for money brands at diverse range of price points. The company also owns brands such as ‘Twamev’ and ‘Manthan.’ The company entered women wear market with the brand ‘Mohey’ in 2015. In 2018, the company also acquired a regional brand to mark its presence in the states of Andhra Pradesh and Telangana.
The company had a network of 300 franchisees as of September 30, 2021. The company is headquartered in Kolkata and was founded by Mr. Ravi Modi. As of September 30, 2021, the company boasted a retail footprint of 1.2 million sq. ft. that covered 535 EBOs spanning 212 cities and towns in India, and 11 EBOs overseas across the US, Canada, and UAE.
Vedant Fashions Limited IPO details
The Vedant Fashions Limited IPO details are as follows:
- The company’s IPO will open on February 4, 2022 and will close for subscription on February 8, 2022.
- The face value of company’s equity share is ₹1.
- The company will list on both the Bombay Stock Exchange and the National Stock Exchange.
- 363 lakh shares are being offered by the selling shareholders in the IPO.
- The pre-issue shareholding of the promoters in the company is 92.40%.
- The company is yet to come up with a price band for its IPO.
|IPO Open Date||Feb 4, 2022|
|IPO Close Date||Feb 8, 2022|
|IPO Size||36,364,838 Equity Shares|
|Offer for Sale||₹ –|
|Face Value||₹ 1 Per Equity Share|
|Price Band||₹- to ₹- Per Equity Share|
|Listing Platforms||BSE and NSE|
|Market Lot (Min Amount)||–|
|Lead Manager||Axis Capital Limited, Edelweiss Financial Services Ltd, ICICI Securities Limited, IIFL Securities Ltd and Kotak Mahindra Capital Company Limited|
|Registrar||KFintech Private Limited|
|DHRP Prospectus||Click Here|
Objectives of the IPO
The following are the company’s objectives to come up with an IPO:
- The selling shareholders will be entitled to receive the entire proceeds of the offer after deducting the offer expenses and taxes.
- The company will not receive any proceeds from the offer.
- The company expects that the proposed listing of its equity shares will enhance its visibility and brand image.
The following are the key strengths of the company:
- The company is a market leader in the Indian celebration wear market with a diverse portfolio of brands catering to the aspirations of the entire family.
- Increased spending on wedding celebrations by Indian households boasts well for the company.
- The company has an experienced and professional founder-led leadership team.
- The company has a technology based strong supply chain and inventory replenishment system driven by system-wide data analytics, strong processes and longstanding vendor relationships.
- The company has an Omni-channel network of online and offline channels.
The following are the key risks that the company may face in its business:
- As the company operates physical stores in the form of franchisees and EBOs, its business is prone to further lockdowns that might be imposed due to the Covid-19 pandemic.
- As the company’s business is concentrated on the Indian wedding and celebration wear, it is vulnerable to seasonality in demand.
- A significant portion of the company’s sales comes through franchisee-owned EBOs. The company’s inability to enhance its relationships with them could be negative for both.
- The company’s warehouse and factory is located in a single geographical region around Kolkata.
- The IPO is an entire offer for sale and no money will go to the company.
- The company has modest presence on online platforms.
Fundamentals of the company
The following are the business fundamentals of the company:
- The company’s revenue from operations declined from ₹800 crores in FY19 to ₹564 crores in FY21. For the period ended September 30, 2021, the company’s revenue from operations stood at ₹359 crores.
- The company’s profit after tax also declined from ₹176 crores in FY19 to ₹132 crores in FY21. For the period ended September 30, 2021, the company’s profit after tax stood at ₹98 crores.
- The company is debt free.
- The company’s earnings per share stood at ₹4.01 for the period ended September 30, 2021.
- The company’s net asset value per equity share stood at ₹35.45 for the period ended September 30, 2021.
- The company’s return on net worth was 11.46% for the six months ended September 2021.
The company’s total assets increased from ₹1591 crores in FY20 to ₹1625 crores in FY21.
According to the company’s prospectus, there are no listed companies in India that engage in a business similar to that of the company. Hence it is not possible to provide an industry comparison in this regards.
The company is yet to come up with the price range for its shares. But investors should take a decision to invest in the IPO only after judging the valuations. And investors who wish to subscribe to the company’s IPO only for listing gains should be wary of the ongoing decline in the market and the effects of the upcoming Union Budget that can set the tone of the market going forward.
Also check the Vedant Fashions Limited IPO Grey Market Premium (GMP), based on which you can predict the listing price