The initial public offering (IPO) of Go Fashion India Ltd (GFIL), which owns women's wear brand Go Colours, opens today.
The issue, with a price band of Rs 655-690 a share, will open for public for subscription on November 17 and conclude on November 22.
At the upper end of the price band, the IPO is expected to fetch 1,013.6 crore.
It comprises of a fresh issue of equity shares aggregating up to Rs 125 crore and an offer for sale (OFS) of up to 12,878,389 equity shares by promoter and existing shareholders.
Under the OFS, PKS Family Trust and VKS Family Trust are going to offload 7.45 lakh equity shares each, Sequoia Capital India Investments will sell up to 74.98 lakh shares, India Advantage Fund S4 I will divest up to 33.11 lakh shares and Dynamic India Fund S4 US I will sell up to 5.76 lakh shares.
Currently, PKS Family and VKS Family Trust hold 28.74 per cent stake each in the company, Sequoia Capital holds 28.73 per cent stake, India Advantage Fund has 12.69 per cent stake and Dynamic India Fund owns 1.1 per cent stake in the firm.
Go Fashion raises Rs 456 cr from anchor investors
Go Fashion, on Tuesday said it has raised a little over Rs 456 crore from anchor investors ahead of its IPO roll-out on November 17.
The company has decided to allocate a total of 66,10,492 equity shares to 33 anchor investors at Rs 690 apiece, aggregating the transaction size to Rs 456.12 crore, according to a circular uploaded on the BSE website.
Government of Singapore, Monetary Authority of Singapore, Nomura, Abu Dhabi Investment Authority, Fidelity, SBI Mutual Fund (MF), ICICI Prudential MF, HDFC MF, Axis MF, Aditya Birla Sun Life MF and SBI Life Insurance Company are among the anchor investors.
Proceeds from IPO
The proceeds from the fresh issue will be used to fund the roll-out of 120 new exclusive brand outlets, to support working capital requirements and general corporate purposes.
About 75 per cent of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors, while the remaining 10 per cent has been set aside for retail investors.
Investors can bid for a minimum of 21 equity shares and in multiple thereof.
Women's fashion wear brand
The company is engaged in the development, design, sourcing, marketing and retailing a range of women's bottom-wear products under the brand, 'Go Colors'.
It is among the few apparel companies in India to have identified the market opportunity in women's bottom-wear and have acted as a 'category creator' for bottom-wear.
Its bottom-wear products, including churidars, leggings, dhotis, harem pants, patiala, palazzos, culottes, pants, trousers and jeggings, are sold across multiple categories such as ethnic wear, western wear, fusion wear, athleisure, denims and plus sizes.
JM Financial, DAM Capital Advisors (Formerly IDFC Securities) and ICICI Securities are the lead managers to the issue. The equity shares will be listed on the BSE and the NSE.
Women's bottom wear market
Women’s bottom-wear market amounting to Rs. 13,547 crore, contributed 8.3 percent to the total women’s apparel market. The women’s bottom-wear market is expected to grow at a 12.4 percent CAGR to reach Rs. 24,315 crore by FY25 and will be among the fastest growing categories in women wear. Women bottom-wear products comprise the ethnic, fusion and western categories. Moreover, the share of bottom-wear category in women’s apparel market is anticipated at 9.6 percent in FY25 as compared to 8.3 percent in FY20. The branded women’s bottom-wear market is expected to see the continued high growth in the future as well.
GFIL is the first company to launch a brand exclusively dedicated to the women’s bottom-wear category. Over the period, it has created a direct-to-consumer brand with a diversified and differentiated product portfolio of quality products at competitive prices. The company is one of the key players with a market share of around 8 percent in the women’s bottom-wear segment (size of Rs. 4,473 crore) in FY20.
Key competitive strengths
Women’s bottom-wear brand in India with well-diversified product portfolio
Multi-channel pan-India distribution network with a focus on EBOs, enhancing brand visibility
Strong unit economics with an efficient operating model
Extensive procurement base with highly efficient and technologydriven supply chain management
In-house expertise in developing and designing products
Demonstrated track record of strong financial performance
Risk and concerns
Slowdown in consumer spending
Re-emergence of another Covid-19 pandemic wave
Inability in adapting to the rapidly changing customer preferences
Difficulty in effectively managing and expanding the retail network
Pressure on profitability
Choice Broking said, "At higher price band of Rs. 690, GFIL is demanding an EV/Sales multiple of 13.8x, which is at premium to peer average of 10.9x. Thus the issue seems to be fully priced. However considering the target market potential & the market share of GFIL in the niche category coupled with the largest network of EBOs, we feel that it has the potential to expand the business and also almost fully recover the lost profitability due to the pandemic. Thus we assign a “Subscribe for Long Term” rating for the issue."
Marwadi Shares and Finance Limited, says 'Subscribe'. It explains: Considering TTM (June-2021) sales of Rs. 2,714 mn on the post-issue basis, the company is going to list at Market cap/sales of 13.73 with the market cap of 37,266 mn, while its peers namely Page industries and Trent are trading at market cap/sales of 13.21 and 11.89 respectively. We assign a “subscribe” rating to this IPO as the company is a renowned women’s bottom wear in India with a well-diversified portfolio and multi-channel pan India distribution network. Also, it is available at a reasonable valuation as compared to its peers."
Hem Securities said, "We like the efficient operating model of the company with strong unit economics and extensive procurement base with highly efficient and technology-driven supply chain management; hence we recommend “Subscribe” on issue."
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