Vedant Fashions IPO: Vedant Fashions Ltd, the category leader in men’s wedding wear, known for its flagship brand Manyavar, is launching an IPO; Promoters will also participate in the sale offer and will own almost 85 percent of the shares after the IPO. The Manyavar IPO will open its first public tender offer today and the offer will close on February 8. The Manyavar IPO would be the third IPO in 2022 after AGS Transact Technologies and Adani Wilmar.
Vedant Fashions IPO: Award Band
The IPO is an entirely sale offering of 3,63,64,838 shares by investors Rhine Holdings, Kedaara Capital Alternative Investment Fund-Kedaara Capital AIF 1 and promoter Ravi Modi Family Trust. The bid money therefore goes to the selling shareholders. The price range for the offer has been set at Rs 824-866 per share share.
Vedant Fashions IPO: about the company
Founded in 2002, Vedant Fashions provides Indian wedding and party wear for men, women and children, operating through an omnichannel network of 546 exclusive branded outlets (EBOs), 825 multi-brand outlets (MBOs) and 145 large format stores (LFS) and through online platform. It is the largest Indian wedding and celebration company in India and follows a franchise-operated (FOCO) model. It has a multi-brand product portfolio for all occasions, including Manyavar (men’s brand), Twamev, Manthan, Mohey and Mebaz.
Vedant Fashions IPO: GMP
According to market observers, the shares of Vedant Fashions have a premium (GMP) of up to Rs 43 in the gray market. GMP is an unofficial estimated figure related to the listing gain of the IPO. Since the IPO GMP of Vedant Fashions today is Rs 43, it simply means that the gray market expects the shares of Vedant Fashions to trade around Rs 909 (Rs 866 + Rs 43), which is about 10 percent higher than the price range of Vedant Fashions. Rs 824 to Rs 866 per share share.
Vedant Fashions IPO: Financials
Financial performance relative to reported fiscal numbers has been satisfactory, despite significant business loss in 2020 due to a pandemic-induced lockdown. Over FY19-FY21, operating revenues declined 16 percent on average at the annual rate of growth. “Although with an EBIDTA margin of over 40 percent, the company was able to report a profit of Rs 132 crore in FY21, demonstrating strong operational efficiency. Operating cash flow margin remained at a healthy level averaging 33.5 percent over FY19-FY21. Return on equity is expected to improve to 23 percent year-over-year in FY22, returning to a historical trend of approximately 21 percent over FY19-20,” Choice Broking said.
Vedant Fashions IPO: listing date
The company’s shares are expected to be listed on the NSE and BSE stock exchanges on February 16, 2022.
Vedant Fashions IPO: Should You Subscribe?
Choice Broking has rated the issue as ‘subscribe with caution’. “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 FY21 and 29.2x on FY22 year on year. Based on quick estimates, the price of the issue is 21.2x P/E and 44.7x P/E in FY24E. As a result, we believe the issue is aggressively priced, leaving no margin of safety for investors. As a result, caution is warranted in the area of valuation,” he reasoned.
Meanwhile, ICICI Deirect has assigned an “Unrated” rating to the Manyavar IPO. “VFL recorded 15 percent sales and 31 percent PAT CAGR in FY17-20. The wedding and party wear market driven by higher spending. At the high end of the price range, it is valued at 22.5x, 36.3x EV/sales for respectively FY20, FY21, and 89x, 158x P/W for FY20, FY21, respectively.”
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