Vedant Fashions IPO opens today: Should you subscribe Manyavar brand owner's public issue? Know what analysts suggest

The Initial Public Offering (IPO) of Vedant Fashions will be launched on Friday, February 4, 2022. The company own Indian wedding, celebration wear brand Manyavar. Several analysts’ advice to subscribe for the public issues, however, with caution, as the valuation of the issue is speculated to be higher. 

The Rs 3149 crore IPO will be launched between February 4-8, 2022, with price band of Rs 824-866 per share. The issue is completely offer-for sale. Edelweiss Financial, ICICI Securities, IIFL Securities, Kotak Mahindra Capita are the lead book running managers for the issue. 

Incorporated in 2002, Vedant Fashions Limited (VFL) offers Indian wedding and celebration wear for men, women and kids under the brands such as Manyavar, Mohey, Manthan, Twamev, Mebaz. The analysts list out the positive, negatives and valuations along with the overall outlook of the IPO. 

Choice Broking 

Outlook: The company commands dominant position in conventionally unorganized market. Flagship brand ‘Manyavar’ is the category leader in branded Indian wedding & celebration wear market with pan India presence. The company in its DRHP said, the wedding and celebration wear market of branded products in India is expected to grow around 18-20 per cent over 2020-2025. 

Positive: Market leader in Indian celebration wear; Increased spending demand; differentiated business model; omni-channel network with the seamless integration of offline and online channels; Technology-based strong supply chain and inventory replenishment system. 

Valuations: At the higher price band of Rs 866 per share, the demanded valuation of Rs 21,017 crore is derived at P/S of 37.2x on FY21E and 29.2x on FY22E annualized sales. On P/E front, the issue is valued at P/E of 106.8x on FY22 annualized EPS basis. 

Anand Rathi 

Outlook: The company has all-India multi-channel operations with around 90 per cent of sales to customers (FY21) through its exclusive-brand outlets (EBOs). It operates through 546 EBOs, 145 large format stores (LFS) and 825 multi-brand outlets (MBOs). Entire supply chain and inventory is system driven and algorithmically managed at every stage in its supply and distribution chain. 

Valuation. At Rs 866 per share, the high of the issue price band, the stock is valued at around 52x EV/EBITDA and 92x P/E on FY20 figures. The company’s category advantage, industry-leading margins and return-ratios are positives.  

Negatives: Mounting competition in men’s celebration wear from Aditya Birla Fashion Retail Limited and Reliance among others are keen competition in women’s celebration wear, slow-down in consumption. 

Axis Capital 

Outlook: The company has dominance in the premium segments of the men’s Indian wedding and celebration wear market through – Twamev and Manthan, respectively, and in the women’s Indian wedding and celebration wear market through their brand, Mohey, launched in 2015. 

Positives: It is asset-light in respect of their plant, property and equipment which enable them to achieve a high return on capital employed, primarily due to the nature of their sourcing and manufacturing operations, with a substantial majority of their sales being generated through EBOs.