Go Fashion IPO opens tomorrow | 10 key things to know about public issue including grey market premium, risks & concerns

The bidding by anchor investors for anchor book opened for a day on November 16. The details of anchor investors who invested in an IPO will be disclosed by the company in a separate release in the evening on the same day.

2) IPO Price Band

The offer price band has been fixed at Rs 655 to Rs 690 per equity share.

3) Offer Details

The public issue comprises a fresh issuance of shares worth Rs 125 crore, and an offer for sale of more than 1.28 crore equity shares by promoters and investors.

Promoters PKS Family Trust and VKS Family Trust are going to offload 7,45,676 equity shares each via offer for sale. Among investors, Sequoia Capital India Investments IV will sell 74,98,875 equity shares, India Advantage Fund S4 I will offload 33,11,478 equity shares, and Dynamic India Fund S4 US I will sell 5,76,684 equity shares.

4) Fund Raising and Objectives of Issue

The offer will fetch the company Rs 968.53 crore at lower price band and Rs 1,013.6 crore at the upper price band.

The company will utilise net proceeds from fresh issue for funding roll out of 120 new EBOs (exclusive brand outlets); working capital requirements; and general corporate purposes. However, the offer for sale money will go to selling shareholders.

Click Here For Latest Tarsons Products IPO Subscription Data

5) Lot Size and Investors' Reserved Portion

Investors can bid for a minimum of 21 equity shares and in multiples of 21 equity shares thereafter. As a result, retail investors can make a minimum investment of Rs 14,490 per lot and the maximum investment would be Rs 1,88,370 for 13 lots.

Up to 75 percent of total offer is reserved for qualified institutional buyers, 15 percent for non-institutional investors, and the remaining 10 percent for retail investors.

6) Company Profile and Industry Trend

Go Fashion's brand Go Colors has a market share of approximately 8 percent in the branded women's bottom-wear market in India in FY20, serving customers primarily through its extensive network of 459 EBOs (including 12 kiosks operated on a 'company owned and company operated' (COCO) model and 11 franchise stores) that are spread across 23 states and union territories in India, as of September 2021.

Also read - Sapphire Foods IPO share allotment likely today; check latest grey market premium, listing date

The women's apparel market is estimated to be approximately 36 percent of the total apparel market and the women's bottom-wear market formed 8.3 percent of women’s apparel market in FY20.

The share of organised retail within women's apparel has increased from 19 percent in FY15 to 27 percent in FY20 and is expected to reach 42 percent by FY25. The organised share of women's bottom-wear market is expected to reach Rs 9,240 crore in 2025, with its 38 percent market share in FY25 growing at a CAGR of 24.3 percent.

The company also sells its products through distribution channels including large format stores; own website and online marketplaces and through multi-brand outlets (MBOs).

7) Financials

Sale through exclusive brand outlets contributed 68.92 percent to total revenue, large format stores 22 percent, online 4.76 percent and the remaining contribution of 4.31 percent to revenue was by MBOs and others.

Also read - Daily Voice | Investing in a 'hot' IPO just out of FOMO can harm your portfolio, says Atanuu Agarrwal of Upside AI

Go Fashion posted a loss of Rs 3.54 crore in FY21 against a profit of Rs 52.63 crore in FY20, impacted by COVID19-led lockdowns. Revenue was Rs 250.66 crore for FY21, a fall from Rs 392.01 crore in the previous year.

The loss in the quarter ended June 2021 widened to Rs 18.99 crore from Rs 8.59 crore in the same period last year, partly due to second-wave-led statewide lockdowns and higher operational expenses. However, the company increased its revenue to Rs 30.99 crore from Rs 10.3 crore on quarter-on-quarter basis by focussing more on online business.

8) Promoters and Management

Prakash Kumar Saraogi, Gautam Saraogi, Rahul Saraogi, PKS Family Trust, and VKS Family Trust are promoters of the company, owning a total of 57.47 percent in the company. The rest is held by investors.

Among investors, Sequoia Capital India Investments IV holds 28.73 percent stake in the company, followed by India Advantage Fund S4 I with 12.69 percent and Dynamic India Fund S4 US I with 1.1 percent.

Promoter Prakash Kumar Saraogi is the managing director of the company, having over 28 years of experience in garment manufacturing, fashion industry and retail industry.

Promoter Gautam Saraogi is an executive director and the chief executive officer of the company, having over 10 years of experience in consumer retail, marketing, brand building and garment manufacturing.

Promoter Rahul Saraogi is a non-executive director of the company, having over 10 years of experience in the garment industry.

Ravi Shankar Ganapathy Agraharam Venkataraman is the non-executive nominee director (nominee of Sequoia Capital India Investments IV), Srinivasan Sridhar is the chairperson and independent director, Rohini Manian is the independent woman director, and Dinesh Madanlal Gupta is also the independent director on the board.

R Mohan is the chief financial officer of the company. He is a chartered accountant by profession and has been associated with the company since April 16, 2019.

9) Risks and Concerns

ICICI Direct has highlighted some key risks and concerns including the company's dependence on single brand and category, high store network concentration in southern and western India, and dependence on single warehouse for pan-India distribution.

According to Angel One, the increase in competition, and slowdown in the economy could impact the overall revenue of the company.

The company sells all its products under a single brand, 'Go Colors'. "An inability to effectively market the products and brand, or any deterioration in public perception of the brand, could affect customer footfall and consequently adversely impact the business, financial condition, cash flows and results of operations," says Marwadi Financial Services.

The brokerage further says company may be unable to adequately protect the trademarks, including ‘GO GOLORS' and, and an inability to protect or use the intellectual property rights may adversely affect the business.

10) GMP, Listing Date

Go Fashion will finalise the share allotment of its IPO by November 25 and then initiate refunds of money to unsuccessful investors on November 26.

Eligible investors will get shares in their demat accounts by November 29 and the trading in those equity shares will commence with effect from November 30, on the BSE & NSE.

Currently its shares are available at Rs 940-1,040 per share in the grey market, an official trading platform to trade in IPO shares with the announcement of price band till the listing of shares on the bourses. This resulted into a grey market premium of Rs 250-350 or 36-51 percent over the upper price band of Rs 690 per share, as per the IPO Watch and IPO Central.

JM Financial, DAM Capital Advisors, and ICICI Securities are the book running lead managers to the offer.

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.