Go Fashion (India) Limited is in an IPO of Rs 800 crore.

The Go Fashion initial public offering (IPO) will conclude on November 22, according to the red herring prospectus (RHP).

Go Fashion (India) Ltd: Rs 800-crore initial share-sale of Go Fashion (India) Ltd, which owns women’s wear brand Go Colors, will open for public subscription on November 17

The Rs 800-crore initial share-sale of Go Fashion (India) Ltd, which owns women’s wear brand Go Colors, will open for public subscription on November 17.

Go Fashion IPO will open on November 17, check the issue size and other details   Gift For You on Below

What is an IPO?

An IPO is a fresh issue of shares by a company, which is either a real estate, wealth management, finance, trading, or merchant banking entity.

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How is an IPO managed?

The initial public offer (IPO) opens for subscription during a day and closes a day later. Investors who subscribe to an IPO get their allotment at a discount to the actual price. However, the final share price is determined by the stock market.

Stocks in the offer?

Go Fashion will sell a total of 1,47,32,000 shares in its IPO, including an offer for sale of 60,22,500 shares by its promoter Kishore Biyani. The stock will be listed on BSE and NSE.

Go Color is also owned by a unit of Future Retail Ltd, which operates D-Mart.

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How does it work?

The company plans to sell fresh shares worth Rs 270 crore and an offer-for-sale (OFS) of 3.94 million equity shares by existing shareholders of the firm including Institutional Venture Partners, Wellington Management Company, Qualcomm Ventures, and Sofina Farma Investments Ltd.

After the fresh issue is settled, the promoters will have a stake of 93.07 percent in the company after the IPO.

SBI Capital Markets and Axis Capital are managing the company’s issue. The IPO will see the company diluting a 20 percent stake.

Revenue

The revenue of the company increased to Rs 752.09 crore for the year ended March 31, 2017, from Rs 501.62 crore in the previous year.

Expenses

The expenses grew to Rs 546.18 crore for the year ended March 31, 2017, from Rs 497.71 crore a year ago.

Why go public?

Go Fashion’s business has shown double-digit growth in recent years with the operating profit more than tripling to Rs 17.7 crore in FY18 over the previous year.

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During FY17, net sales grew 25 percent to Rs 60.5 crore. While Go Colors is an established brand, the company wants to expand the chain of its stores by 300 stores by 2020, besides setting up 10 own-brand stores in the next three years.

The company is looking to follow the same strategy as some large fashion brands such as H&M and Zara by opening its stores and own brands in the future.

Go Fashion’s IPO will be a pure offer for sale and comprises a fresh issue of shares worth Rs 160 crore and an offer for sale of 1.57 crore equity shares by promoters holding a 5 percent stake.

Issue size and price band

The public issue will close on November 22, according to the prospectus. The IPO will open for subscription for qualified institutional buyers (QIBs) and non-institutional investors on November 17.

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The price band has been fixed at Rs 600 to Rs 620 per share for the company’s 29.33-million share public issue.

The public issue comprises fresh issues aggregating up to Rs 600 crore and an offer for sale of up to Rs 100 crore.

What to expect

The IPO is slated to provide a market for Go Fashion, which currently derives revenue from the wholesale business and business-to-business (B2B) fashion trading business. Go Colors has four stores and retails through tie-ups with retailers and online marketplaces, according to the IPO prospectus.

Proposed use of proceeds

The company plans to use a part of the net proceeds from the issue for the acquisition of an additional business interest in Go Colors Limited (a subsidiary) as well as to meet the working capital requirement of the group.

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The balance portion of the net proceeds will be utilized towards repayment/repayment of existing borrowings of the group and general corporate purposes.

The company is engaged in manufacturing, marketing, and distributing branded women’s apparel, its major products being apparel for women and other clothing accessories. It also provides outsourced product designing and manufacturing.

Go Fashion operates through two companies—Go Fashion (India) and Go Colors Limited.

Risk factors

Go Fashion (India) Ltd is a new entrant to the public listing arena. One of the key risks is that the company’s competitors may undercut the company on pricing, and target the same customer base.

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Go Colors offers a wide variety of ethnic and western wear, which is likely to fuel consumer demand. The company plans to use the proceeds from the issue for investment in marketing, branding, buying back shares, payment of taxes, and working capital.

The company will be using nearly Rs 38 crore of the IPO proceeds for repayment of debt and other general corporate purposes. Go Colors earns 80% of its revenue from its brand Go Colors.

Go Colors plans to sell 12 million equity shares through the share-sale offer.

Is Fashion IPO Increase GDP of India?

On Tuesday, Indian High Commissioner to the UK Madhu Chavan wrote a column in The Financial Express saying that, on average, a woman wearing high-end clothing purchases twice the amount of clothes that a man wears.

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He further said that the sheer size of this retail market is about the size of the UK market (which is the world’s third-largest) and that this is about £5 billion, which is Rs 400,000 crore, the size of the luxury industry in India.

Fashion Industry in India – A Visionary Idea

Chavan wrote that these statistics suggest that the fashion industry in India, as a vision, may be a visionary idea.

He further wrote that the fact that the average woman in India buys twice the amount of clothes as the average man is phenomenal and remarkable.

Thanks For Reading.

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Ajay Rawat

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