Vedant Fashions IPO continued to see lukewarm response from investors on Tuesday’s last day of bidding. The offer to sell of Manyavar includes the sale of up to 1.74 crore shares by Rhine Holdings Ltd; up to 7.23 lakh shares by Kedaara Capital Alternative Investment Fund-Kedaara Capital AIF I; and up to 1.81 crore shares by Ravi Modi Family Trust. The promoters of Vedant Fashions are Ravi Modi, Shilpi Modi and Ravi Modi Family Trust.
Vedant Fashions IPO: Subscription Status
It garnered bids for 52.53 lakh shares against a bid of 2.54 crore shares. Qualified institutional investors have bid on 11 percent shares of the reserved portion. Their allocated quota must be at least 90 percent subscribed to sail through the issuance. A portion reserved for private investors and non-institutional investors was subscribed at 31 percent and 9 percent respectively.
Vedant Fashions IPO: Award Band
The company is selling its shares in the range of Rs 824-866 each in the initial public offering, open to subscription until Tuesday, February 8.
Vedant Fashions IPO: about the company
Founded in 2002, Vedant Fashions serves the Indian party wear market with a diverse portfolio of brands. It provides a one-stop destination with a wide variety of product offerings for any festive occasion. Vedant Fashions caters to the Indian party wear market with a diverse portfolio of brands including ‘Manyavar’, ‘Mohey’, ‘Mebaz’, ‘Manthan’ and ‘Twamev’.
Vedant Fashions IPO: GMP
Shares of Vedant Fashions are available today at a premium of Rs 13 in the gray market, which was around Rs 42 before the subscription opening. Market experts said GMP is nothing but an estimated idea of the quote premium one can expect from a particular public offering. Since Manyavar IPO GMP today is Rs 13, it means that the gray market expects the shares of Vedant Fashions to trade at around Rs 879 (Rs 866 + Rs 13), which is almost equal to the public offering price range of Rs 824 to Rs 824. Rs 866 per share. However, secondary market experts argued that GMP is not an ideal indicator of expected earnings on the exchange from an IPO. They advised investors to look at the company’s financial data as it gives a concrete idea about the company’s financial status and business model.
Vedant Fashions IPO: Should You Subscribe?
Brokers have mixed review on the Manyavar IPO matter. Critics have pointed to expensive valuations, leaving little room for upside. Those who support the issue are positive about the market presence, segment leadership and strong supply chain.
Vedant Fashions is one of the top companies in the Indian wedding and party wear segment. The company’s financial results suffered a setback, which could be due to COVID 19, Swastika Investmart said in its pre-IPO note.
“At the higher price range of Rs 866, the requested valuation of Rs 21,017 crore is derived from P/S (price-to-sale) of 37.2x on FY21E and 29.2x on FY22E annualized sales. There are no listed colleagues with the same company profile,” says Choice Broking.
“Based on quick estimates, the price of the issue is 21.2x P/E and P/E of 44.7x in FY24E. As a result, we believe the issue is aggressively priced, leaving no margin of safety for investors. As a result, caution is advised on the valuation front. In addition, a high level of receivables (50 percent on average of FY19-FY21 sales) could erode operating cash flow margin going forward,” the broker said. Given all parameters, it has assigned the issue a “subscribe cautiously” rating.
“The flagship brand Manyavar is the category leader in the menswear brand wedding wear segment and the company has created good scale through its exclusive franchise stores (EBOs), but valuation is high and we remain cautious,” Piyush Nagda, Head of Investment Products, Prabhudas added Lilladher .
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