Vedant Fashions falls 12% in three days post listing; nears issue price

The stock has fallen 12 per cent from its listing day high of Rs 993 on February 16, 2022. Currently, it is trading just 1 per cent higher over its issue price of Rs 866 per share.

Shares of Vedant Fashions, the owner of ethnic wear brand Manyavar, were trading lower for the third straight day on Monday, falling 3 per cent intra-day to Rs 877.05, which is close to its issue price of Rs 866 per share on the BSE. This comes after the company made a decent market debut last week.

The stock has fallen 12 per cent from its listing day high of Rs 993 on February 16, 2022. Currently, it is trading just 1 per cent higher over its issue price. 

Vedant Fashions' shares were listed at Rs 936, an 8 per cent premium over its issue price of Rs 866 per share on the BSE. On the National Stock Exchange (NSE), the stock opened at Rs 935 per share despite poor subscription figures.

The Rs 3,150-crore IPO of the Kolkata-based company had received lukewarm response with the issue being subscribed nearly three times. The institutional investor portion of the IPO saw 7.5 times oversubscription; the wealthy investor portion was subscribed 1.07 times, while the retail portion remained undersubscribed at 40 per cent.

Vedant Fashions is among the top companies in the Indian wedding and celebration wear segment with the brand name Manyavar Mohey. The company has strong brand value with good fundamentals. However, valuation is a major concern.

"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. Those who applied for listing gain should maintain a stop loss of Rs 890," Santosh Meena, Head of Research, Swastika Investmart had said after the stock's listing. 

Vedant Fashions has registered a 15 per cent revenue and 31 per cent profit after tax (PAT) CAGR in FY17-20. With the company’s strong brand franchise, it looks to tap the large and growing Indian wedding and celebration wear market driven by increased spending.

High dependence on wedding and celebration wear, inability to maintain and scale up brands and dependence on third party for manufacturing the products are key risk and concerns, said ICICI Securities in an IPO note.