- Analysts had expected Vedant Fashions Limited’s IPO to list at a discount or at par, but it got listed at a premium of 8% on its issue price.
- They suggested that the company has good fundamentals, but the valuation was a major concern.
- Some analysts believe that investors can exit as the valuations are a little expensive and there is a little room for further gains.
Vedant Fashions Ltd., the owner of men’s celebration wear brand Manyavar and similar brands listed at a premium of 8% over its issue price of ₹866 per share on the NSE (National Stock Exchange) on February 16, 2022.
After its strong opening on the bourses, it managed to hold on in positive territory. Many investors made listing gains. It surged to almost reach the 4-figure mark, but could not.
Its IPO was an offer for sale and many analysts had suggested that it might get listed at a discount or at par, owing to its perceived expensive valuations and weak response with a 2.57x subscription. However, the listing was much better than what was expected. It closed just marginally above the listing price.
“The company has strong brand value with good fundamentals, however, valuation is a major concern, therefore, investors should approach it from the long-term perspective where any dip of 15-20 per cent from current levels will be a good buying opportunity,” said Santosh Meena, head of research at Swastika Investmart.
Some analysts believe that investors can exit as the valuations are a little expensive and there is little room for further gains. Most of them had recommended it for long-term gains and not for listing gains.
“If non-allotted investors wish to buy on the listing day, it is better to wait and watch for better-discounted pricing, while risk-takers may consider holding it as a high-risk high-return with a long-term perspective,” said Prashanth Tapse, vice president of research at Mehta Equities.
“The company has an asset-light EBO model that lets them focus on vendor and inventory management by understanding consumer preferences through the collected secondary sales data. Considering its operating margins and strong balance sheet backed with higher brand recall for celebration wear, we recommend to subscribe the issue for long term,” said Canara Bank Securities.
Vedant Fashions Ltd raised 3149.19 crores through the IPO and did not receive any proceeds as it was an offer for sale.
