Vedant Fashions IPO: Valuations expensive, apply for long-term, says Anil Singhvi

The three-day initial public offering (IPO) of Vedant Fashions Ltd that opened on February 4 was subscribed to 14 per cent on the first day of subscription on Friday. The initial public offer of the company, which owns ethnic wear brand Manyavar, will close on February 8.   

The IPO had received bids for 35,32,872 shares against 2,54,55,388 shares on offer, according to data available with the National Stock Exchange (NSE). 

Vedant Fashions has fixed a price band of Rs 824-866 for its Rs 3,149-crore issue.   

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As the IPO enters in the second day of the subscription, Zee Business Managing Editor Anil Singhvi has recommended to apply for long-term. 

He said strong brand leader, asset light model makes it a good long-term candidate. "Besides, it also boasts of strong financial, margin and cash flow," he said.  

Speaking of negatives, the Market Guru said at the upper price band of Rs 866, Vedant Fashions IPO appears little expensive. "Currently, promoters holding in the company stands at 85%, which has to be reduced by at least 10%," he said.  

The public issue is purely an offer for sale of 36,364,838 equity shares by promoter and existing shareholders.  

The OFS comprises sale of up to 1.74 crore shares by Rhine Holdings Ltd; up to 7.23 lakh shares by Kedaara Capital Alternative Investment Fund-Kedaara Capital AIF I; and up to 1.81 crore shares by Ravi Modi Family Trust.  

The promoters of the company are Ravi Modi, Shilpi Modi and Ravi Modi Family Trust.  

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

Since, the IPO is entirely an offer for sale, the company will not receive any proceeds from the public issue.   

Investors can bid for a minimum of 17 equity shares and in multiples thereof.  

 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.  

As of September 2021, the company has an extensive retail network with 546 exclusive brand outlets (EBOs) including 58 shop-in-shops globally, including 11 overseas EBOs across the United States, Canada and the UAE, which are countries with a large Indian diaspora.  

In India, the company's EBO network spans across 212 cities and towns, as of September 2021.  

Vedant Fashions IPO Timeline (As per Upstox)   

Open date: February 4   

Close date: February 8  

Allotment begins:  February 11   

Refund initiation: February 14   

Allotment finalisation date: February 15