Vedant Fashions (Manyavar) IPO Review

Vedant Fashions (Manyavar) IPO comprises purely an offer for sale of 36,364,838 equity shares by promoter and existing shareholders. The company will raise up to ₹3,149 crore at the upper price band through the IPO. The firm is in the men’s Indian wedding and celebration wear market.

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Vedant Fashions (Manyavar) IPO Details:

Issue OpensFriday, 4th Feb 2022
Issue ClosesTuesday, 8th Feb, 2022
Issue DetailsOFS upto 36,364,838 Equity Shares
Face Value₹ 1/- 
Issue Size (₹ Cr)₹ 2,996 – 3,149 Cr
Bid Lot17 shares 
Price Band₹ 824 – 866
QIB50% of the offer 
NIB15% of the offer ( ~  472 Cr)
Retail35% of offer ( ~ 12,727,694 Shares, 1,102 Cr)
Appl. for 1x Retail~ 7.5 Lac

Updates :

  • ANCHOR ISSUE: Ahead of its IPO, Vedant Fashions (Manyavar) Ltd garnered Rs 944.76 crore from 75 anchor investors. The anchor investors include Government of Singapore, Monetary Authority of Singapore, Fidelity, Nomura, Abu Dhabi Investment Authority, Morgan Stanley Asia BNP Paribas Arbitrage and Societe Generale etc.
  • Fidelity Blus Chip Growth Fund, Wellington Trust, Ashoka India Opportunities Fund, Pioneer Investment Fund, PineBridge, Eastspring, Carmignac, and Volrado Venture Partners were other anchor investors.
  • A third of the anchor issue was subscribed by 14 domestic mutual funds through a total of 44 schemes.
  • Mutual funds like SBI, Kotak, Axis, ICICI, Aditya Birla, Mirae, DSP, UTI, Sundaram, IDFC, Motilala Oswal, ITPL Invesco, Canara Robeco, and Edelweiss together subscribed for shares worth Rs 316.8 crore.

About Vedant Fashions (Manyavar)

  • Vedant Fashions (Manyavar) was incorporated on May 24, 2002.
  • Vedant Fashions is the largest company in India in the men’s Indian wedding and celebration wear segment in terms of revenue, for FY20.
  • The company offers a one-stop destination with wide-spectrum of product offerings for every celebratory occasions.
  • The company’s brands include (i) Manyavar, (ii) Mohey, (iii) Mebaz, (iv) Manthan, and (v) Twamev.
  • Manyavar’ brand is a category leader in the branded Indian wedding and celebration wear market with a pan-India presence.
  • As of September 30, 2021, it had 740 employees .
  • It operates a multi-channel retail 146 distribution network across India.
  • As of September 30, 2021, company had a retail footprint of 1.2 Mn sq. ft
  • This included 535 EBOs spanning 212 cities and towns in India, and 11 EBOs overseas across the United States, Canada, and the UAE

Vedant Fashions (Manyavar) IPO: Financials

Particulars / (₹ In Cr)H1Fy22H1FY21FY21FY20FY19
Revenue from Operations359.8471.71564.82915.55800.74
Revenue Growth (%)401.80%-38.31%14.34%
EBITDA as stated175.9529.35281.71398.77337.95
EBITDA (%) as stated48.90%40.93%49.88%43.55%42.21%
Profit Before Tax132.47-21.42181.92311.84270.94
Net Profit for the period98.41-17.65132.9236.64176.43
Net Profit (% )as stated25.32% 21.26%24.96%21.52%
Equity Share Capital24.2424.7924.7925.0525.05
EPS (₹ )4.01^-0.715.369.457.04
NAV (₹ )35.4537.9544.0342.5635.25
Post IPO Equity24.26
FV1
IPO Price866
EPS ( FY20)9.75
PE( FY20)88.78
PE (TTM)37.50
Market Cap21009
Market Cap / Sales (FY20) 22.95

Salient Points

  • The company has a hybrid model of home-grown and acquired brands.
  • Vedant Fashions (Manyavar) bought back its shares in July 2021 at Rs 495. The offer is now at Rs. 866.
  • The company has an asset-light model. Its EBOs are predominantly operated by franchisees across the country.
  • In the six months ended September 30, 2021, 44.76% of the Sales of its customers was generated by its franchisee-owned exclusive brand outlets from Tier I cities, 38.64% from Tier II cities and 13% from Tier III cities. The remaining 3.59% of its franchisee-owned Exclusive Brand Outlets revenues were generated from international markets
  • Manyavar still accounts for 82% of company’s revenue

Cons

  • Pandemic led business uncertainties can impact business severely
  • Business is highly concentrated on wedding and celebration wear and thus is vulnerable to variations in demand
  • Increasing competition. Margins may come under pressure amid building inflationary pressure in the economy and competition.

Vedant Fashions (Manyavar) IPO: Assessment

  • Manyavar brand is a category leader in the branded Indian wedding and celebration wear market
  • Vedant Fashions has played a leading role in developing wedding and celebration wear market in the country.
  • With time, it has been expanding its product offerings from wedding wear to festive and celebration wear, and has made some acquistions as well.
  • asset-light model which enables it to achieve a high return on capital employed.
  • Majority of sales being generated through franchisee-owned EBOs.
  • The pandemic hit the company badly and impacted the bottom-line of the company. The revenue of the company declined in FY21.
  • The company has in placed a Tech-based strong supply chain, inventory replenishment systems aided by data analytics, good processes and long-standing vendor relations
  • Shares are being offered at a Price to revenue multiple of more than 24x and PE multiple of ~ 80X based on best sales in FY20 before the pandemic.
  • Valuations look steep.
  • Listed peers of company Like Raymond, Aditya Birla Fashion Retail, Siyaram Silk etc. are trading at much lower PE and Price to Revenue multiples.
  • PE investor is making a complete exit, in this 100% OFS

Vedant Fashions (Manyavar) IPO: Apply or Not

  • Risk  :  High
  • Reported GMP   :  Rs. 20 There has been drop in GMP in last few days.
  • Listing Gains  :  Low to Moderate Profit / Low to moderate loss.
  • Hold for Long Term  :  Peers look better,
  • Subscription  :  Expected to be low to average due  to high valuations being demanded.
  • Apply or Not: I am less likely going to apply in this IPO.
  • Above are my views only. Please do your own diligence.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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