Manyavar owner Vedant Fashions to launch IPO. Check details here

by 5paisa Research Team 13/09/2021

Kolkata-based ethnic wear company Vedant Fashions Pvt Ltd, the owner of the Manyavar brand, has filed its draft red herring prospectus (DRHP) with capital markets regulator SEBI to launch an initial public offering (IPO).

According to the DRHP, the issue comprises only an offer for sale by existing shareholders. The Ravi Modi Family Trust, controlled by the promoter Ravi Modi, is selling 1.8 crore shares while private equity investor Kedaara Capital Alternative Investment Fund and its affiliate Rhine Holdings Ltd are also selling 1.8 crore shares. The Ravi Modi Family Trust owns a 74.67% stake in the company while Kedaara holds about 7.5%.

The apparel company, which also owns other popular brands such as Mohey, Mebaz and Manthan, isn’t issuing any new shares and so won’t raise any capital for its own requirements.

Vedant’s Manyavar brand is a segment leader in the branded Indian wedding wear market. The company expects that the IPO and the public market listing will further enhance its brand image.

IIFL Securities, Axis Capital, Edelweiss Financial Services, ICICI Securities, and Kotak Mahindra Capital are the merchant banks arranging the issue. 

Vedant Fashions’ business and financials

According to a CRISIL report, Vedant is the largest company in India in the men’s Indian wedding and celebration wear segment in terms of revenue, operating profit before depreciation, interest and tax, and profit after tax for the financial year 2019-20. 

As of 30 June 2021, the company had a retail footprint of 1.1 million sq. ft covering 525 exclusive brand outlets (EBOs), including 55 shop-in-shops, across 207 cities and towns in India. It also had 12 EBOs across the US, Canada, and the UAE. The company aims to double its national footprint over the next few years.

The company operates an asset-light model in respect of its plant, property and equipment. This enables it to achieve a high return on capital employed, with a substantial majority of its sales being generated through its franchisee-owned EBOs. As a result, it doesn’t need to invest in developing manufacturing facilities or a distribution system.

The franchise-owned EBOs accounted for 90-92% of its sales in 2020-21 and the two previous years. Multi-brand outlets, large format stores and online platforms, including its website and mobile app, accounted for the remaining revenue.

For 2020-21, the company’s revenue from operations fell to Rs 564.82 crore from Rs. 915.55 crore the year before. Net profit dropped to Rs 132.9 crore from Rs 236.63 crore. This is not surprising, though, considering that the company—like all other retailers—had to close its stores for several weeks due to Covid-19 lockdowns.

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