Go Colors brand operator Go Fashion saw a stellar debut on the bourses on November 30 as the stock listed at a whopping 90 percent premium over the issue price of Rs 690 per share. It opened at Rs 1,316 on the BSE and at Rs 1,310 on the National Stock Exchange.
The listing premium was ahead of analysts' expectations (65-75 percent) as well as the grey market price (Rs 1,140-1,210 per share).
The maiden public offer of the women's bottom-wear brand operator had seen tremendous response from investors as the offer was subscribed 135.46 times. It saw the biggest demand from non-institutional investors, who bid for shares 262.08 times the portion set aside for them. Qualified institutional investors had put in bids 100.73 times the reserved portion, and retail investors subscribed for 49.70 times the reserved portion.
Go Fashion has mopped up Rs 1,014 crore through its public issue that comprised a fresh issue of Rs 125 crore and an offer for sale of Rs 888.61 crore. The funds from the fresh issue will be utilised to roll out 120 exclusive brand outlets, and meeting working capital requirements.
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Most analysts had given a "subscribe" rating to the issue, citing its multi-channel pan-India distribution network, strong revenue growth, high operating margin, and high return on equity.
Incorporated in 2010, Go Fashion sells a range of women's bottom-wear products under the brand 'Go Colors'. The company serves its customers primarily through its extensive network of 459 exclusive brand outlets (EBOs) that are spread across 23 states and union territories in India, as of September 2021.
"In terms of valuations, the post-issue FY20 EV/EBITDA works out to 30.2x to (at the upper end of the issue price band), which is almost in similar range compared to its peers TCNS Clothing (FY20 EV/EBITDA 29.3x)," said Angel One.
"Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue," the brokerage added.
Marwadi Financial Services had also assigned 'subscribe' rating to the IPO as the company is a renowned women's bottom-wear brand in India with a well-diversified portfolio and multi-channel pan-India distribution network.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.