Vedant Fashions IPO: All you want to know

Kolkata-based Vedant Fashions Limited, which owns top-selling ethnic wear brands Manyavar, Mohey, and Manthan, has filed a draft red herring prospectus (DRHP) with the Securities Exchange Board of India (SEBI) to raise capital through an IPO. Here’s everything you need to know about the IPO.

Offer details

• IPO size: Not disclosed
• Issue size: 36,364,838 equity shares
• Fresh issue: NA
• Offer for sale: 36,364,838 equity shares

• Dates: November 2021
• Price band: Not announced
• Lot size: Not announced
• Face Value: ₹1

The offer for sale comprises shares of existing shareholders including Rhine, Kedaara AIF and Ravi Modi Family Trust (acting through its trustee Modi Fiduciary Services Private Limited). Shares will be listed on BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). 

The selling shareholders will be entitled to the entire proceeds of the offer after deducting the offer expenses and relevant taxes.

The lead managers of the stock issue are Axis Capital, Edelweiss, ICICI Securities, IIFL Securities, Kotak Investment Banking, and Kfin Technologies.

Reasons for going public

Vedant Fashions expects the listing of equity shares to:

• Enhance visibility and brand image of the company and its brands
• Provide a public market for the equity shares in India

Objectives of the offer:

With the proceeds of the public offer, the company aims to:

• Carry out the offer for sale of up to 36,364,838 equity shares 
• Achieve the benefits of listing the equity shares on the stock exchanges

Company fundamentals

Before investing in an IPO, one should understand the company fundamentals.

Largest selling shareholders of the company

Financial information

Here’s a look at the company’s financial status.

Company overview

Vedant Fashions is a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion in India. It aims to deliver an aristocratic yet seamless purchase experience to customers through its brands: Manyavar, Mohey, Mebaz, Manthan and Twamev.

As of June 30, 2021, Vedant Fashions has a retail footprint of 1.1 million square feet covering 525 exclusive brand outlets, spanning across 207 cities and towns in India, and 12 overseas across the United States, Canada and the UAE, which are countries with a large Indian diaspora.

Industry outlook

The apparel retail market in India is estimated to rebound sharply in FY2022. And the long-term growth in the domestic market is expected to be driven by a rising working population and income levels, higher penetration of organized retail stores and e-commerce, and growing preference for ready-made garments over tailor-made garments.

Competitive strengths

Vedant Fashions has managed to set itself apart in the following ways:

• Considers itself a market leader in the Indian celebration wear market with a diverse portfolio of brands catering to the aspirations of the entire family
• Large and growing Indian wedding and celebration wear market driven by increased spending towards it
• Unique and innovative business model combining the strengths of retailing with branded consumer play
• Works on a multichannel networking approach with the integration of online and offline channels
• Technology-based strong supply chain and inventory replenishment systems driven by system-wide data analytics, strong processes, and longstanding vendor relationships
• Experienced and well-qualified founder-led leadership team

Opportunities

• The trend for multi-day and multi-event wedding celebrations leads to shopping for celebration wear outfits
• Growing income levels is leading to higher spending on weddings and festivals
• Increasing trend of wearing appropriate Indian wedding and celebration wear for respective festive events 
• Increasing association with brands in the Indian wedding and celebration wear segment 
• There is a shift in trend from tailored to ready-to-wear celebration attire 
• Addition of new categories such as Indo-western ethnic wear

Threats

• Not staying up-to-date on the latest designs and styles which may lead to high unsold inventory
• Not adapting to newer technologies 
• Inability to identify and retain skilled third-party suppliers, vendors and manufacturers for various parts of production or procurement processes may adversely affect the business 
• Pricing pressure from competitors may affect the ability to maintain or increase product prices 
• Inability to identify customer demand

Risks

• Highly concentrated only on Indian wedding and celebration wear
• The pandemic can affect the nature of operating business 
• Failure to maintain or expand brand’s visibility
• Procuring adequate amounts of raw materials, finished goods, accessories and packing materials in a timely manner 
• The business model relies heavily on technology with minimal manual interruption
• Dependent on weddings, festivals and other ethnic celebrations that may be affected by seasonal variations
• Inability to maintain inventory in stores
• There are outstanding legal proceedings involving the company and its subsidiaries, directors, and promoters

Conclusion

India is culturally diverse and celebrates festivals and weddings throughout the year. It serves as a strong fundamental driver of the organized ethnic wear market.