Vedant Fashions IPO listing today: Analysts see flat to discount debut for Manyavar owner's offer—Here is why

Vedant Fashions IPO listing date: The initial public offer of Manyavar owner Vedant Fashions IPO is all set to be listed on the bourses today, February 16. Market experts and analysts are of the view that shares of Vedant Fashions would be listed at flat to discounted rates on the exchanges.  

The IPO of Vedant Fashions, which owns the ethnic wear brand Manyavar, had received lukewarm response from investors as the issue was subscribed 2.6 times, while the retail portion saw barely 0.39 times subscription on the last day February 8. The Rs 3,149-crore offer-for-sale saw maximum interest from qualified institutional buyers category as QIBs booked the issue 7.49 times. 

Expensive valuations, poor financials behind tepid reponse  

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"The company's financials suffered a setback due to the pandemic but returned to normal in the first half of FY22. The issue is valued at P/E 161(x) to its FY21 earnings and P/BV of 24.42(x), which seems to be overpriced. Also, the IPO proceeds are purely an offer for sale and the company will not benefit from such proceeds. This is the reason the company received a tepid response from the investors," said Aayush Agrawal, Senior Analyst, Swastika Investmart Ltd 

What grey market premium hints? 

Speaking of listing gain, Aayush said that the company’s grey market share price is at par with the upper price band and the ongoing global scenarios will continue to impact the Indian market, and hence the shares are expected to list below the issue price. 

Likhita Chepa, Senior Research Analyst at CapitalVia Global Research, is also of the view that the IPO might not genrate any listing gain on Wednesday.  

Likely to list at 8 to 10% discount 

"We expect Vedant fashion to list at a discount of 8 to 10 percent, although its GMP is signaling at par listing. Its expensive valuation, impact on its revenue due to the pandemic and 100 percent OFS has already led to tepid response of the investors," highlighted Likhita Chepa.  

With sell off pressure and increasing volatility in Indian markets, we do not expect gains on the listing day from this issue, Chepa added.  

IPO details 

The public issue was purely an offer for sale of 36,364,838 equity shares by promoter and existing shareholders. Since, the IPO is entirely an offer for sale, the company will not receive any proceeds from the public issue.   

Half of the issue size was reserved for qualified institutional buyers, 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.  

In the quarter ended September, Vedant’s revenue grew 31 per cent to Rs 853 crore from Rs 651.1 crore a year ago.  

Prior to the public issue, it had raised Rs 944.75 crore from 75 anchor investors such as government of Singapore, Fidelity, Nomura, Morgan Stanley, Abu Dhabi Investment Authority, SBI Mutual Fund, Kotak Mutual Fund, Axis Mutual Fund, UTI, ICICI Prudential Life, etc., at the upper price band of Rs 866 per share. 

What Vedant Fashions do? 

Vedant Fashions' Manyavar brand is a category leader in the branded Indian wedding and celebration wear market with a pan India presence. The company's other brands include Twamev, Manthan, Mohey and Mebaz.