Vedant Fashions IPO - Information Note

Vedant Fashions IPO

IPO
by 5paisa Research Team Last Updated: 2022-01-31T14:37:10+05:30

Vedant Fashions Ltd is a very niche player and also the largest player by revenues in the Indian celebration wear market. In India, the celebration wear market is seen as part of the normal retail textiles market, but operates on a different set of social and economic dynamics. Its portfolio of brands comprises of Manyavar, Mohey, Mebaz, Manthan and Twamev. Mebaz, incidentally, was a brand that Vedant Fashions acquired from Meena Bazaar International. It offers an answer for every possible festive occasion.

The company essentially operates through the franchisee-owned exclusive brand outlets (EBOs). In addition, its front end also comprises of multi brand outlets (MBOs), large format stores (LFS) as well as online sales. It has successfully managed its omni-channel platform catering to its niche audience seamlessly via multiple channels for effective reach. Its physical retail footprint is through 535 EBOs located in 212 cities and spread across an area of 1.20 million SFT.

Key terms of the IPO issue of Vedant Fashions Ltd
 

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

04-Feb-2022

Face value of share

Rs.1 per share

Issue Closes on

08-Feb-2022

IPO Price Band

Rs.824 - Rs.866

Basis of Allotment date

11-Feb-2022

Market Lot

17 shares

Refund Initiation date

14-Feb-2022

Retail Investment limit

13 Lots (221 shares)

Credit to Demat

15-Feb-2022

Retail limit - Value

Rs.191,386

IPO Listing date

16-Feb-2022

Fresh Issue Size

Nil

Pre issue promoter stake

92.40%

Offer for Sale Size

Rs.3,149.19 crore

Post issue promoters

84.91%

Total IPO Size

Rs.3,149.19 crore

Indicative valuation

Rs.21,017 crore

Listing on

BSE, NSE

HNI Quota

15%

QIB Quota

50%

Retail Quota

35%

Data Source: IPO Filings

Here are some of the key aspects of the Vedant Fashions Ltd business model

a) It has a virtual leadership in the Indian celebration wear market, which is not only large but growing at a rapid pace currently.

b) Vedant Fashions follows an omni-channel approach which seamlessly integrates the physical front stores and the online digital interface of the company.

c) The company has a totally integrated process flow that seamlessly integrates its supply chains, its actual production and the front end markets.
 

Check - Vedant Fashions IPO - 7 Things to Know


Here is a quick summary of how retail investors can invest in the IPO of Vedant Fashions Ltd at different slabs in the IPO.
 

Market Lots

No. of Shares

Upper Band Price

IPO Investment Amount

1

17

₹ 866

₹ 14,722

2

34

₹ 866

₹ 29,444

3

51

₹ 866

₹ 44,166

4

68

₹ 866

₹ 58,888

5

85

₹ 866

₹ 73,610

6

102

₹ 866

₹ 88,332

7

119

₹ 866

₹ 1,03,054

8

136

₹ 866

₹ 1,17,776

9

153

₹ 866

₹ 1,32,498

10

170

₹ 866

₹ 1,47,220

11

187

₹ 866

₹ 1,61,942

12

204

₹ 866

₹ 1,76,664

13

221

₹ 866

₹ 1,91,386

 

As you can see from the above table, retail investors applying in the retail quota can make a minimum application in the IPO for 1 lot worth Rs.14,722 and a maximum application of 13 lots worth Rs.191,386 crore.


How is the Vedant Fashions Ltd IPO structured?


The IPO of Vedant Fashions Ltd is entirely an offer for sale, with no fresh issue component.

1) The entire Rs.3,149.19 crore Vedant Fashions IPO will be in the form of an offer for sale. Being an OFS, there will be no fresh funds coming in. Apart from promoters of the Ravi Modi family; Rhine Holdings and Kedaara Capital will also participate in the OFS.

2) The offer for sale will comprise issue of 3,63,64,838 shares and at the upper price band of Rs.866, the IPO is worth Rs.3149.19 crore. Since it is an offer for sale, there is no change in the overall capital size or outstanding number of shares.

3) Post the offer for sale, the promoters viz. Ravi Modi family, will see their combined stake come down from 92.40% to 84.91%. Public shareholding overall will go up to 15.09% post the IPO.

 

Key Financial parameters of Vedant Fashions Ltd
 

Financial Parameters

Fiscal 2020-21

Fiscal 2019-20

Fiscal 2018-19

Sales Revenues

Rs.625.02 cr

Rs.947.98 cr

Rs.819.80 cr

Operating Expenses

Rs.443.10 cr

Rs.636.14 cr

Rs.548.86 cr

Net Profit / (Loss)

Rs.132.90 cr

Rs.236.64 cr

Rs.176.43 cr

Expense Ratio

70.89%

67.10%

66.95%

Net Profit Margins (NPM)

21.26%

24.96%

21.52%

Return on Equity

12.19%

22.21%

20.00%

 

Data Source: Company RHP

While Vedant Fashions did see volatility in sales due to the onset of the pandemic last year, the net margins were maintained above the 20% mark by tweaking the expense ratio to a more stable level. However, this also meant that the ROE has fallen sharply in the latest year and the real test will be for the ROE to bounce back to FY20 levels in FY22 and FY23.

Investment Perspective for Vedant Fashions Ltd IPO

Here is what investors must consider before investing in the Vedant Fashions Ltd IPO


a) Vedant Fashions has a dominant position in celebration wear and owns the total value chain from sourcing inputs to managing dealer networks, giving them better control.

b) Its combination of franchisee model and the EBO front end enables Vedant Fashions to grow the brand and store value at a much lower capital cost that is ROE enhancing.

c) There will be no dilution of equity since it is an offer for sale and the intent of the IPO is just to list the company and make available the equity as currency for inorganic growth.

d) At a post-issue market cap of Rs.21,017 crore and normalized FY20 net profits of Rs.240 crore, you have historic P/E of 85X. That is still expensive if you project 50% profit growth for next year. Amidst a good niche and a solid business model, valuations are definitely on the higher side of comfort. Vedant would fit in for aggressive investors with a higher risk appetite.

Also Read:-

Upcoming IPOs in 2022

Upcoming IPOs in January 2022

Start Investing in 5 mins*

Get Benefits worth 2100* | Rs. 20 Flat Per Order | 0% Brokerage

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

SENSEX
56,598.28
-509.24 (-0.89%)
16,858.60
16,858.60
-148.80 (-0.87%)
37,759.85
37,759.85
-599.30 (-1.56%)

Open Free Demat Account

& get benefits worth 2100*

 
Resend OTP
Please Enter OTP
  • Have Promo code?
  • Use code ACT2100
Enter Promo code

By proceeding, you agree to the T&C.

SENSEX
56,598.28
-509.24 (-0.89%)
16,858.60
16,858.60
-148.80 (-0.87%)
37,759.85
37,759.85
-599.30 (-1.56%)

Start Investing Now!

Open Free Demat Account in 5 mins

Enter Valid Mobile Number