Go Fashion IPO: GMP, subscription status, other details. Should you apply?

Market


The three-day initial public offering (IPO) of Go Fashion has opened for public subscription today and will conclude on November 22, with the price band fixed at 655-690 a share. The public issue Go Fashion (India) Ltd, which owns women’s wear brand Go Colors, witnessed strong demand from retail investors as portion got oversubscribed within minutes of opening.

At the end of Day 1 of bidding, the issue was subscribed 2.46 times, led by strong retail participation.  Retail investors, whose investments cannot exceed 2 lakh per individual, subscribed 12.14 times of the 1.47 million shares on offer.

The IPO comprises a fresh issue of equity shares aggregating up to 125 crore and an offer for sale of up to 12,878,389 equity shares by promoter and existing shareholders. At the upper end of the price band, the IPO is expected to fetch 1,013.6 crore.

As per market observers, Go Fashion shares premium (GMP) have surged to 535 in the grey market today. The shares of the company are expected to list on stock exchanges BSE and NSE on November 30, 2021.

“We believe the company’s core category products, higher gross margins and return ratios are positives,” said Anand Rathi in a note which has a Subscribe rating on the issue on the back of profitable and scalable EBO model. Though, the brokerage house sees key risks to be possibility of more Covid-19 cases; dependence on a single brand and category, and intense competition.

Go Fashion is engaged in the development, design, sourcing, marketing and retailing a range of women’s bottom-wear products under the brand, ‘Go Colors’. The proceeds from the fresh issue will be used to fund roll out of 120 new exclusive brand outlets, to support working capital requirements and general corporate purposes.

“In the current market scenario, most of the IPO’s are expected to perform well. We expect Go Fashion IPO to also receive a good response during listing. The boost in textile sector will also help Go Fashion in longer term. However, we advise the investors to book the premium at the time of listing,” said Ravi Singh, Head of Research & Vice President, ShareIndia.

Go Colors serve its customers primarily through its extensive network of 459 EBOs (Exclusive Brand Outlets) that are spread across 23 states and union territories in India, as of September 30, 2021.

“Go Fashion India has a better track record of revenue growth, higher operating margin & high Return on equity compared to TCNS Clothing Co. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue,” said Angel One in a note.

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