Vedant Fashions Subscribed 2.57 Times on the Last Day of IPO

Investors were underwhelmed by Vedant Fashions‘ public offering, which was just 2.57 times subscribed on the last day of bidding on Tuesday. It received bids for 6.53 crore equity shares, out of a total of 2.54 crore equity shares on sale. Qualified institutional investors have placed bids totaling 7.49 times the amount reserved. To get past the problem, they need at least 90% of their allowed quota subscribed.

A portion reserved for individual investors and non-institutional investors received 39 percent and 1.07 times, respectively, of the total subscriptions. The public issue was subscribed 21% on the second day of bidding on February 7. It is a promoter’s and investors’ OFS. As a result, the whole sum will go to the selling shareholders, and the firm will not benefit from the offer. The sale, which began on February 4, has a price range of Rs 824 to 866 per share.

The requested value of Rs 21,017 crore is obtained at a price-to-sales of 37.2x on FY21E annualized sales and 29.2x on FY22E annualized sales at the upper price range of Rs 866. There are no identified peers with the same company profile. On FY24E, the issue is valued at a P/S of 21.2x and a P/E of 44.7x. As a result, many analysts believe the issue is overpriced, leaving investors with little margin of safety. As a result, valuations should be approached with care. Furthermore, a high level of receivables (average 50% of sales between 2019 and 2021) might erode the operational cash flow margin in the future.

Vedant Fashions, founded in 2002, specializes in Indian celebration wear with a varied portfolio of brands such as Mohey, Manyavar, Mathan, Mebaz, and Twamev. With a pan-India presence, its main brand ‘Manyavar’ is the category leader in branded Indian wedding and celebration attire.

How do Vedant Fashions engage with its service users?

The firm relies on a franchisee basis, with franchisee-owned Exclusive Brand Outlets accounting for 85-90 percent of sales. The firm normally enters into one of two kinds of agreements with each franchisee: (i) the franchise is liable for all store-related costs, or (ii) the corporation is responsible for the EBO’s rental expenditures but not other store-related costs.

Pandemic’s Effects

The pandemic has slowed the development of the clothing and ethnic wear industries. Due to pandemic-related limits on public gatherings, the size of wedding festivities has shrunk, resulting in a severe drop of 45 percent to 47 percent in the entire Indian wedding and celebration category. Local brands dominate the mid-segment, which have lesser balance sheets than their Pan-India competitors.

Frequently Asked Questions (FAQs)

Q1. What is the pricing range for Vedant Fashions Ltd’s first public offering?

The price range for Vedant Fashions IPO is Rs. 824 to 866 per share.

Q2. What is the lot size for Vedant Fashions Ltd initial public offering?

The IPO’s minimum lot size is 17 shares, with a maximum of 13 lots available to retail investors.

Q3. When will the allotment basis be released?

On February 11th, allotments will be finalized, and reimbursements will begin on February 14th. By February 15th, allotted shares will be credited to Demat accounts.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.