Vedant Fashions IPO To Open On February 4, 2022: Key Details & Should You Subscribe?

The IPO of Vedant Fashions- the third mainstream IPO of 2022 shall open for subscription. Here are the key details:

1. IPO issue details:

IPO offer period : 4th Feb-8th Feb, 2022 

Issue size: Rs. 3149.19 crore

Price band: Rs. 824-866 per share

Lot size: 17 shares

Share allotment: February 11, 2022

Listing date: February 16, 2022

2. GMP:

The premium for the share in the unlisted market is Rs. 42 per share.

3. About the company:

Manyavar owned the company's product line includes men's ethnic and celebration wear items such as Indo-western, sherwanis, kurtas, jackets and accessories such as jutti, safa, mala, and women's ethnic and celebration wear items such as lehengas, sarees, stitched suits, gowns and kurtis.

Under the umbrella of Vedant Fashions Limited (formerly known as Vedant Fashions Pvt. Ltd.) and paving the path for a happier family, the brand introduced Mohey, Indian wedding and celebration wear for women, in 2015 and acquired one of the biggest fashion brands in southern India, Mebaz, in 2018, a one-stop heritage brand catering to the entire family, with an established presence in the states of Andhra Pradesh and Telangana.

 

4. Valuations:

"We believe the next six months' performance will be significant. On the valuation front, the issue is priced at 108x to its earnings and 29.2x price to sales based on annualised FY22 earnings and sales," Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told Financial Express Online. Doshi added saying that the valuations look expensive leaving nothing for investors on table.

 

5. Brokerages take on Vedant Fashions IPO:

In terms of valuations, the post-issue TTM P/E works out to 84.4x (at the upper end of the issue price band), which is high considering VFL's historical top-line CAGR of 10% over FY18-20, Amarjeet Maurya, AVP - Mid Caps, Angel One, said. "However, VFL has a high operating margin, asset-light business, strong brands, and a wide range of products but we believe that these positives are captured in the valuations commanded by the company. Thus, we have a neutral rating on the issue," Maurya added.

"The financials of the company are not promising and are in the downward direction since covid pandemic. The company's total assets and profit margins have also reduced," Ravi Singh, VP & Head of Research, Share India Securities, told Financial Express Online. Singh added that the IPO price band seems at a higher side as compared to the valuations. "We advise investors to avoid the subscription of this IPO," he said.