Vedant Fashions IPO continued to see tepid response from investors on the final day of bidding on Tuesday. The Manyavar IPO offer-for-sale comprises 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 equity shares against an offer size of 2.54 crore equity shares. Qualified institutional investors have put in bids for 11 per cent shares of the reserved portion. Their allotted quota has to get subscribed at least 90 per cent to sail through the issue. A part set aside for retail investors and non-institutional investors were subscribed 31 per cent and 9 per cent, respectively.
Vedant Fashions IPO: Price Band
The company is selling his shares in the range of Rs 824-866 apiece in the maiden public offering, which can be subscribed till Tuesday, February 8.
Vedant Fashions IPO: About the Company
Incorporated in 2002, Vedant Fashions caters to the Indian celebration wear market with a diverse portfolio of brands. It offers a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion. Vedant Fashions caters to the Indian celebration 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 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: Should you Subscribe?
Brokerages have a mixed review on the Manyavar IPO issue. Critics have flagged over the pricey valuations, leaving little room for the upside. Those who are backing the issue are positive on its market presence, segment leadership and strong supply chain.
Vedant Fashions is among the top companies in the Indian wedding and celebration wear segment. The company’s financials suffered a setback, which could be due to COVID 19, said Swastika Investmart in its pre-IPO note.
“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 FY21E and 29.2x on FY22E annualised sales. There are no listed peers having the same profile of business,” said Choice Broking.
“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. Furthermore, high level of receivables (average 50 percent of sales over FY19-FY21) can erode the operative cash flow margin going forward,” the brokerage house said. Considering all the parameters, it has assigned ‘subscribe with caution’ rating to the issue.
“Its flagship brand Manyavar is category leader in mens branded wedding clothing segment and the company has created good scale through its franchise-owned exclusive stores (EBOs) but valuation is high and we remain cautious,” Piyush Nagda, head – investment products, Prabhudas Lilladher added.
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