Shares of Go Fashion (India) Ltd contracted 5 per cent on Monday’s intraday trades to reach a low of ₹ 1135.00 apiece amid news of a stake sale by venture capital firm Sequoia Capital.
Reports suggested that the firm would sell its entire 10.18 per cent stake in Go Fashion, the parent company of the Indian clothing brand Go Colours in a block deal on Monday. As a result, Go Fashion’s shares opened deep in the red at ₹ 1150.00 apiece
The floor price for the stake sale will be ₹1,135 per share, indicating a 5 per cent discount from the scrip’s closing price of ₹ 1,194.60 on Friday. A CNBC report earlier suggested the total size of the block deal at ₹ 625 crores. Moreover, JM Financial was reportedly the sole broker for the deal.
Until the end of the previous year, Sequoia Capital owned a 13.8 per cent take in the Apparel manufacturer. However, in a block transaction, it sold a 3.7 per cent stake in December 2022. As per the shareholding pattern of the company in the March quarter, Sequoia Capital held 54,98,875 shares or a 10.18 per cent stake.
Go Fashion is engaged in the development, design, sourcing, marketing, and retailing of a range of women’s clothing in India.
Sequoia India is one of the largest venture capital firms in India and has a portfolio with approximately $ 9 billion in assets under management (AUM). Some of its investments include Zomato and Oyo.
Go Fashion is a small-cap company with a market capitalization of ₹ 6,452 crores. It has an ideal return on equity of 17.27 per cent and an ideal debt-to-equity ratio of 0.65. The company’s shares were trading at a price-to-earnings ratio (P/E) of 77.93 which is significantly higher than the industry P/E of 26.27, indicating that the stock might be overvalued as compared to its peers.
Currently, the company’s promoters hold a 52.79 per cent stake in it, followed by mutual funds with 24.14 per cent, foreign institutions with 16.57 per cent, retail investors with 3.26 per cent and other domestic institutions with a 3.24 per cent stake.
Written By Simran Bafna
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
