The subscription period for Vedant Fashions’ IPO started on 4th February, 2022, and will run through 8th February, 2022. The public issue of Rs 3,149.19 crore was acquired 0.14 times, while the retailer portion was acquired 0.22 times, according to the Vedant Fashions IPO subscription status after the initial day of bidding.
Vedant Fashions’ share price in the grey market has been harmed by a trend reversal in the secondary market and a lackluster reaction from buyers, according to market experts. They claim that Vedant Fashions shares are trading at a premium of 13 on the grey market today, compared to roughly 42 prior to the subscription opening. The firm’s broad distribution framework, inventory control, asset-light framework, solid balance sheet with negligible debt and a greater return profile, and improved understanding of customer priorities, make Vedant Fashions, a great investment.
The business will begin accepting subscriptions for its first public offering, which will conclude on February 8. After Adani Wilmar and AGS Transact, this would be the third IPO in 2022. The offer’s price range has been set at Rs 824-866 per equity share. Vedant Fashions, founded in 2002, sells Indian wedding and celebration clothing for men, women, and children via an omni-channel network of 546 exclusive brand shops, 825 multi-brand stores, 145 large-format stores, and online platforms. It is India’s leading firm for men’s Indian weddings and celebrations, and it operates on a franchisee-owned company basis.
Twameva, Manyavar, Mohey, Manthan and Mebaz are among the company’s multi-brand product portfolios, which appeal to a variety of situations. In India, the firm intends to expand into new locations, build additional shops in current cities, and expand its market share. In foreign markets, the firm has a plan to expand its footprint in current global markets and penetrate new nations with a large Indian diaspora. It will continue to invest in its current brands while also looking for inorganic expansion options.
The company’s strength is founded on four essential pillars that have served as entry barriers over the previous 20 years: supply chain and vendor management, inventory management, customer preference knowledge, and a solid distribution strategy.
It has a healthy financial sheet and an asset-light business strategy. Increased spending on festivities and a change from tailor-made to ready-to-wear clothes have helped the firm grow its income. It has the most exclusive brand outlets and a better return and margin profile, with an operating margin of 43 percent and a return on capital employed of 41 percent, both of which are the highest among peer brands, as well as an asset-light EBO model that allows them to focus on vendor and inventory management by analyzing secondary sales data.
Despite a major loss of revenue in 2020 owing to pandemic-induced lockdown, financial performance during the reported fiscals has been good. Operating revenue increased at a negative 16 percent annual rate from FY19 to FY21. Despite having an EBITDA margin of over 40%, the firm was nevertheless able to make a profit of Rs 132 crore in FY21, demonstrating significant operational efficiency. Over the course of FY19-FY21, the operating cash flow margin stayed stable at 33.5 percent on average. On an annualized basis, return on equity is predicted to rise to 23% in FY22, reverting to a historical pattern of roughly 21% in FY19-20.
Vedant Fashions has pricing leverage since the Indian wedding and celebration dress industry is less price sensitive. However, margin at these levels appears difficult to maintain, given competition from local retailers, online retailers, and non-branded products, as well as rising inflationary pressure. Additionally, business is highly concentrated on wedding and festival wear, making it vulnerable to demand fluctuations.
Manyavar accounted for 84.2 percent of revenue in FY21, while Mohey accounted for 7.5 percent. The branded Indian wedding and celebration market is predicted to increase at an annual rate of 18-20% between FY20 and FY25, indicating that the business has enormous growth potential.
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