Go Fashion IPO: GMP, price band, what brokerages say about issue that opens tomorrow

16 Nov , 2021 By : Kanchan Joshi

Go Fashion (India) Ltd, which owns women's wear brand Go Colors, has fixed a price band of Rs655-690 a share for its Rs1,014-crore initial public offering (IPO). The three-day initial share-sale will open for public subscription on November 17 and conclude on November 22.

Go Fashion's IPO comprises a fresh issue of equity shares aggregating up to Rs125 crore and an offer for sale (OFS) of up to 12,878,389 equity shares by promoter and existing shareholders.

As per market observers, Go Fashion shares in the grey market today have surged and commanding a strong premium of Rs540. The shares of the company are expected to list on stock exchanges BSE and NSE on November 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.

Incorporated in 2010, Go Fashion (India) Limited is one of the largest women's bottom-wear brands in India. The company is engaged in the development, design, sourcing, marketing, and retailing of a range of women's bottom-wear products under the brand, 'Go Colors'.

Go Fashion brand outlets (Exclusive Brand Outlets or EBOs) are spread across 23 states and union territories in India, as of September 30, 2021. As of September 30, 2021, Go Fashion had 459 EBOs located across 118 cities.

“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.

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.