Go Fashion IPO: The maiden initial public offering (IPO) of Go Fashion, owner of women’s bottomwear brand Go Colors, is set to close today on November 22, Monday. The company has received decent investments from investors across the country for its maiden offer during the bidding process. The public offer, which was issued last week, has already been oversubscribed 6.87 times during the first two days of its bidding. So far, at the end of the second day of bidding, the Go Fashion IPO has received bids for 5,55,12,051 equity shares against the gross issue size of 80,79,491, as per data available with the National Stock Exchange or NSE.
The issue has been oversubscribed largely on the backing of retail investors. Retail buyers have bid for 24.64 times of the issue, or 3,61,93,920 shares against 14,68,998 shares reserved for their category. Qualified institutional buyers bought 3.24 times of the shares reserved for them, while non institutional buyers put in bids for 2.30 times of the portion set aside for them.
Go Fashion IPO Key Details
The Go Fashion IPO, open between November 17 to 22, comprises of fresh proceeds worth Rs 888.60 crore and an offer for sale (OFS) worth Rs 125 crore. The price band for the initial public offer is Rs 655-690 per equity share. The company will not receive any proceeds from the OFS part of the offer.
Go Fashion IPO has been divided among qualified institutional buyers, non institutional buyers and retail buyers. Of this, up to 75 per cent of the shares have been reserved for qualified institutional buyers or QIBs while 15 per cent has been set aside for non institutional buyers. The remaining 10 per cent stakes have been reserved for retail buyers.
The leading book running managers to the issue are JM Financial Limited, DAM Capital Advisors Limited, and ICICI Securities Limited.
Through the OFS, shareholders and promoters including PKS Family Trust, and VKS Family Trust will let go of their stakes. They will offload 7.45 lakh equity shares each. The other entities selling their shares include investors Sequoia Capital India Investments IV (74.98 lakh shares), India Advantage Fund S4 I (33.11 lakh shares), and Dynamic India Fund S4 US I (5.76 lakh shares).
Issue Objectives of Go Fashion IPO
An amount of Rs 33.70 crore raised for the issue will be be used for funding the roll out of 120 new exclusive brand outlets of Go Fashion. It will also be used to working capital requirements (Rs 61.45 crore) and for general corporate purposes, said the company.
Should You Subscribe to Go Fashion IPO?
HEM Securities: Company is bringing the issue at price band of Rs 655-690 per share at ev/ebidta multiple of 28x on FY20 basis. Company being well known women’s bottom-wear brand has well-diversified product portfolio with multi-channel pan-India distribution network has a focus on EBOs, enhancing brand visibility. We like the efficient operating model of company with strong unit economics & extensive procurement base with highly efficient and technology-driven supply chain management; Hence we recommend “Subscribe” on issue.
Angel Broking: In terms of valuations, the post-issue FY20 EV/EBITDA works out -30.2x to (at the upper end of the issue price band), which is almost in similar range compared to its peers TCNS Clothing Co. (FY20 EV/EBITDA -29.3x). Further, Go Fashion India has better track record of revenue growth, higher operating margin & high Return on equity compared to TCNS Clothing Co. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue.
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