Manyavar IPO (Vedant Fashions) is all set to open for subscription on 4 February 2022. The company is the largest player in the men’s Indian wedding and celebration wear segment. Apart from its flagship brand, Vedant Fashions has Mohey, Mebaz, Twamev and Manthan brands. Manyavar IPO Review is aimed to bringing readers up to the speed with regards to the company’s business, strengths and IPO valuation.
Manyavar IPO Review – Strengths
- Market leader in Indian wedding and celebration wear with a diverse portfolio of brands
- Large and growing market
- Asset light business model (over 90% revenues from franchise-owned outlets)
- franchise300 franchisees as of September 2021
- Broad customer reach (535 exclusive stores across 212 cities) and strong brand recall
- Strong raw material sourcing capabilities
Vedant Fashions IPO – Risk Factors
- Highly concentrated business on Indian wedding and celebration wear
- Business is vulnerable to variations in demand as well as changes in consumer preferences
- Excessive reliance on Manyavar brand (84.2% of revenues in FY2021)
- Large portion of attires and accessories are manufactured by third-party players (jobbers)
- The company’s warehouse, factory and a majority of its jobbers are based in Kolkata, West Bengal
Manvayar IPO Analysis – Financial Performance
| Â | FY2019 | FY2020 | FY2021 | H1 FY2022 |
| Revenue | 819.8 | 948.0 | 625.1 | 387.3 |
| Expenses | 548.9 | 636.4 | 443.1 | 254.8 |
| Net income | 176.5 | 236.5 | 133.0 | 98.4 |
| Margin (%) | 21.5 | 24.9 | 21.3 | 25.4 |
Vedant Fashions Valuations & Margins
| FY2019 | FY2020 | FY2021 | H1 FY2022 | |
| EPS | 7.04 | 9.45 | 5.36 | 4.01 |
| PE ratio | – | – | 153.73 – 161.57 | 102.74 – 107.98* |
| RONW (%) | 20.00 | 22.21 | 12.19 | 11.46 |
| ROCE (%) | – | – | – | – |
| EBITDA (%) | 42.21 | 43.55 | 49.88 | 48.90 |
| Debt/Equity | – | – | – | – |
| NAV | 35.25 | 42.56 | 44.03 | 35.45 |
Manyavar IPO Review – Subscribe or Avoid?
Indian weddings have traditionally been big as well as fat. Another characteristic of Indian weddings has been the participation of unorganized sector and even when organized, brands were involved, they have been mostly local. A notable exception of this well-established trend has been Tata which made inroads with its Tanishq jewelry brand. And now, we have Vedant Fashions which has established itself through differentiated and coveted brands.
The company’s success is evident from the operational and financial figures mentioned above and from the fact that whatever little competition it has is from unorganized sector. This is a massive achievement in a fragmented market.
Topline figures in the last couple of years were impacted due to the Covid-19 pandemic and thus, are unlikely to give a correct picture of the company’s success. Nevertheless, the fact that its margins remained intact during pandemic says a lot about the robustness of the business.
Adding further to the management’s credit, the company has a lean balance sheet with no debt. This essentially means that Vedant Fashions doesn’t really need IPO funds for capital expansion and this explains the pure OFS nature of the issue. However, it is worth noting that its private equity investor Kedaara Capital is making a full exit from the company.
Thanks to a visibly long runway of industry growth, IPO investors can be assured of the good show continuing at the company.
In terms of valuations, Vedant Fashions’ pricing of INR824 – 866 per share translates into a P/E multiple range of 153.7 – 161.6 based on FY2021 earnings. When H1 FY2022 earnings are taken into consideration and are annualized, the comparable figures come down to 102.7 – 108. While this is certainly not inexpensive, it is no secret that earnings have been depressed in recent times and are set to rebound as Covid-19 restrictions go away gradually.
All in all, Manyavar IPO review tells the story of a brand that is scaling up beautifully and has potential to maintain its monopoly in the branded space for several years to come. Without a doubt, valuations are rich as is the case with every good story. There is even a small premium in the informal market indicating chances of positive listing. Nevertheless, an investment decision needs to be taken keeping individual risk appetite into consideration.
Vedant Fashions IPO Review – Broker Calls
Angel One – Neutral
Arihant Capital –
Ashika Research – Unrated
Asit C Mehta –
BP Wealth – Avoid
Canara Bank Securities – Subscribe
Choice Broking – Subscribe with caution
Elite Wealth – Avoid
GEPL Capital –
Hem Securities – Long term Subscribe
ICICIdirect – Unrated
KR Choksey – Subscribe
Marwadi Financial Services – Avoid
Motilal Oswal –
Nirmal Bang –
Religare Broking – Unrated
Samco Securities – Subscribe with caution
Share India Securities – Avoid
SMC Global – 2/5
Ventura Securities – Not rated
VEDANT FASHION – UNJUSTIFIED SKY HIGH PREMIUM . WILL GO PAYTM WAY AFTER LISTING. FINANCIALS NOT JUSTIFYING SUCH MIND BOGGLING PREMIUM OF 824-866 PRICE BAND FOR 1/- PAID UP SHARE . 100% OFS ISSUE WHICH MEANS ENTIRE FUND WILL GO IN PORMOTERS POCKET AND COMPANY WILL GET NOTHING . FIRST DAY SUBSRCIPTION IS CLEAR INDICATION THAT IT IS A BIG FLOP AND FAILURE DUE TO UNJUSTIFIED PREMIUM . I WONDER HOW FEW PEOPLE HAVE APPLIED DESPITE KNOWING UNREASONABLE & UNWARRANTED HIGH PREMIUM ??
IS IT BETTER THAN ITC ? ITC AT 230 -235 WITH CONSISTENT TRACK RECORDS OF HIGH DIVIDEND, BOUS ISSUE, EXCELLENT CORPORATE GOVERNANCE, PROVEN MANAGEMENT AND MORE. VEDANT CAN NOT BE 4 TIMES THE PRICE OF IPO . NOW A DAYS , GREEDY PROMOTERS WITH THE HELP OF SEBI, LEAD MANAGERS & GRAY MKT OPERATORS CREATING BIG HYPE LIKE PAYTM IPO AND ABLE TO DUMP THEIR SHARES AT UNBELIEVABLE HIGH PREMIUM AND GRAB COL BOOTY TAKING ADVANTGE OF BULLISH MARKET SENTIMENTS. MANY SUCH IPO ARE CRASHING DOWN AFTER LISTING N PROMOTERS JUST DONT BOTHER TO SUPPORT THEIR SHARES N ENJOY THE PARTY AT THE COST OF BONAFIDE INVESTORS. PROMOTERS COST OF MOST SHARES ARE AROUND JUST RE. 1 PER
SHARE OR LESS DUE TO LARGE BONUS ISSUES IN PAST.
SEBI SHOULD NOT ALLOW SUCH HIGH PREMIUM ON SALE OF SHARES. IF FEW IPO FAIL N REJECTED BY INVESTORS, IT WILL BE A BIG LESSON TO GREEDY PROMOTERS, SEBI , LEAD MANAGERS N GRAY MKT OPERATORS . INVESTORS SHOULD TEACH THEM A LESSON . HOW ONE CAN GO TO SUCH EXTENT TO GRAB MONEY BY ADOPTING SUCH MEANS. LOOK AT PAYTM IPO CRASH ? PROMOTERS SHAMLESSLY SITTING ON LARGE SUM OF MONEY GRABBED BY SELLING SHARES AT UNREALISTIC PRICE OF 2150/- AND NOW NOT SUPPORTING THEIR OWN SHARE AT BELOW 900/- ? IT SHOWS THAT THIS SHARE IN NOT EVEN WORTH 900/- OTHERWISE PROMOTERS WOULD HAVE COME OUT AND SUPPORT BY USING MONEY THEY GRABBED BY SELLING AT 2150/- PER SHARE . THEY LOST INVESTORS TRUST. HOPE SEBI N LEAD MANAGERS WILL TAKE A CORRECTIVE ACTION TO STOP SUCH CORPORATE LOOT OF SHARE PREMIUM .