Vedant Fashions IPO: Vedant Fashions Ltd, the category leader in the men’s wedding wear known for its flagship brand Manyavar, is coming out with an IPO to offer; promoters too will be participating in the offer for sale and will hold nearly 85 per cent stake after the IPO. The Manyavar IPO will open its maiden public offering for subscription today and the offer will close on February 8. Manyavar IPO would be the third IPO in 2022 after AGS Transact Technologies and Adani Wilmar.
Vedant Fashions IPO: Price Band
The IPO is entirely an offer-for-sale of 3,63,64,838 equity shares by investors Rhine Holdings, Kedaara Capital Alternative Investment Fund-Kedaara Capital AIF 1, and promoter Ravi Modi Family Trust. Hence, the offer money will go to selling shareholders. The price band for the offer has been fixed at Rs 824-866 per equity share.
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
As per market observers, Vedant Fashions shares are commanding a premium (GMP) to Rs 43 in the grey market. GMP is an unofficial estimated figure in regard to listing gain from the IPO. As Vedant Fashions IPO GMP today is Rs 43, it simply means that grey market is expecting that Vedant Fashions shares will list around Rs 909 (Rs 866 + Rs 43), which is around 10 per cent higher from its price band of Rs 824 to Rs 866 per equity share.
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 FY19-FY21, operating revenue averaged a negative-16 per cent slump in the annual growth rate. “Though with the EBIDTA margin of over 40 percent, the company remained able to report a profit of Rs 132 crore in FY21, showing strong operational efficiencies. Operating cash flow margin remained at a healthy level of average 33.5 per cent over FY19-FY21. Return on Equity is expected to improve to 23 per cent in FY22 on an annualised basis, thus returning to a historical trend of around 21 per cent over FY19-20,” said Choice Broking.
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?
Choice Broking assigned ‘subscribe with caution’ rating to the issue. “At the higher price band of Rs 866, the demanded valuation of Rs 21,017 crore is derived at P/S (price to sales) of 37.2x on FY21 and 29.2x on FY22 annualised sales. Based on quick estimates, the issue is priced at P/S of 21.2x and P/E of 44.7x on FY24E. Thereby, we view the issue is aggressively priced leaving no margin of safety for investors. Thereby it warrants caution on the valuation front,” it reasoned.
Meanwhile, ICICI Deirect assigned an “Unrated” rating to the Manyavar IPO. “VFL has registered 15 per cent revenue and 31 per cent PAT CAGR in FY17-20. With the company’s strong brand franchise, it looks to tap the large and growing Indian wedding and celebration wear market driven by increased spending. At the upper end of the price band, it is valued at 22.5x, 36.3x EV/sales for FY20, FY21, respectively, and 89x, 158x P/E for FY20, FY21, respectively.”
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