Go Fashion (India) Ltd - IPO Note

Apparel Retailing

Go Fashion (India) Ltd - IPO Note

Apparel Retailing

Price range
Rs. 655-690
Issue Period:
Nov 17, 2021
Nov 22, 2021
November 17, 2021

Stock Info

CNX Nifty
Face value (Rs.)
Market lot
Issue size
Rs. 1014 cr.
Public Issue
1.47 cr. shares
Market cap post IPO
3727 cr.
Equity Pre - IPO
52.19 cr.
Equity Post - IPO
54.00 cr.
Issue type
Fresh issue & OFS

Shareholding (Pre IPO)

Source: Ace equity, StockAxis Research

Shareholding (Post IPO)

Source: Ace equity, StockAxis Research


First mover advantage in Women’s bottom-wear brand in India with diversified product portfolio:
Go Fashion is among the first companies to launch a bottom-wear brand in the organized market that has led to a significant first mover advantage for the company and has been recognized as a category creator for bottom-wear in India. In addition, given that bottom-wear is a ‘core essential’, demand for their products is consistent across regions where the products are sold. As of September 30, 2021, Go Fashion retail 50 bottom-wear styles in a range of over 120 colours under the brand ‘Go Colors’. They are among the few women’s apparel retailers that offer bottom-wear products across all categories, including ethnic, western wear, fusion and denims and have one of the largest bottom-wear product offerings in women’s apparel.

Multi-channel pan-India distribution network with a focus on EBOs
Go Fashion has a multi-channel retail presence across India. They retail their products directly to consumers primarily through their network of EBOs and as of September 30, 2021, they operated 459 EBOs across 118 cities in 23 states and union territories across India. As of March 31, 2021, they had the largest network of EBOs among key women’s apparel brands in India. Further, as of September 30, 2021, they also retailed their products through 1,270 LFSs, such as Reliance Retail Ltd, Central, Unlimited, Globus Stores Pvt Ltd and Spencer's Retail among others, across 499 cities spanning the entire country covering 31 states and union territories. They also sell their products through online marketplaces and through their own website.

Strong unit economics with an efficient operating model
Go Fashion has a standardized and scalable development model for their EBOs based on their know-how and experience. Their ability to identify and determine the optimum location, size of a store, manage rental costs and the marketing leverage of their EBOs ensures visibility among target customers and sustainability of store profitability, resulting in the company having one of the highest sales per square feet among key women’s apparel companies and among EBOs in India in FY21.

Extensive procurement base with highly efficient and technology-driven supply chain management
Go Fashion offers customers premium quality products at affordable prices and in FY21, more than 88.32% of their products were retailed at a price lower than Rs 1,049. They have managed to deliver value proposition to customers through low procurement and operating costs. They outsource manufacturing of their products and thereby save costs. They have automated their entire procurement and supply chain operation through their ERP system, which allows them to maintain flexibility and enables them to meet their requirements in an efficient manner without relying on any one vendor, supplier, or factory.

In-house expertise in developing and designing products
The company develops products in-house based on demand and sale of similar products that they track and monitor through their ERP system. They design their products keeping in mind trends in fashion, fabric, textiles, stitch, and pricing. They have a skilled team of in-house designers and merchandisers focusing on creating quality products with innovative designs and, optimal fit & sizing.


Deterioration of brand image:
Brand awareness is essential for the company’s continued growth and financial success, and its operations are influenced by brand marketing and advertising initiatives. The company sells its products under one brand ‘Go Colors’.

Location specific risks:
Current locations of Go Fashion exclusive brand outlets may become unattractive, and suitable new locations may not be available for a reasonable price. In addition, the company is exposed to all of the risks associated with leasing real estate and any adverse developments could materially affect business, results of operations and financial condition.

Disruption in operation of warehouse:
The company has one warehouse which is currently located in Southern India. Any significant disruption, in that region may adversely affect operations.

Threat from new entrants:
Any player can enter the market segment where Go Fashion operates by incurring huge capex upfront in setting up EBO/LFS, spending on advertisement & marketing (A&P), offering huge discounts etc. This can put pressure on Go Fashion to increase its footprint/ A&P spends in order to maintain the market share which may impact profitability in the near-term.

Company Description

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'. The company offers one of the widest portfolios of bottom-wear products among women's apparel retailers in terms of colors and styles. As of September 30, 2021, Go Colors sold bottom-wear in over 50 styles in more than 120 colors. Go Fashion serves their customers primarily through their extensive network of 459 exclusive brand outlets (“EBOs”) (including 12 kiosks operated on a “company owned, and company operated” (“COCO”) model and 11 franchise stores) that are spread across 23 states and union territories in India, as of September 30, 2021. The company's distribution channels include large format stores (LFSs) including Reliance Retail Limited, Central, Unlimited, Globus Stores Private Limited, and Spencer's Retail among others. The company's LFSs have grown from 925 LFSs in 2019 to 1,270 LFSs in September 2021. The company also sells its products through its website, online marketplaces, and multi-brand outlets (MBOs).


Outlook & Valuation:
The Indian women’s apparel industry, particularly for ethnic and non-western apparel, is highly fragmented with several regional brands and retailers present in local markets across the country. The company caters to a niche category (bottom-wear) in the women’s apparel segment where they have 8% market share. They are among the few apparel companies in India to have identified the market opportunity in women’s bottom-wear and have acted as a ‘category creator’ for bottom-wear. They have leveraged their first-mover advantage to create a direct-to-consumer brand with a diversified and differentiated product portfolio of premium quality products at competitive prices.  At the upper price band of Rs 690, the IPO is valued at 15x of FY21 sales. We recommend SUBSCRIBE to the IPO for listing day gains as well as for long term investment.

Key Information

Use of Proceeds:
The offer comprises of a fresh issue and an offer for sale. Out of the fresh Issue of Rs 125 crores, Rs 34 crores is proposed to be utilized for roll out of 120 new EBOs, Rs 61 crores is to be used for working capital requirements and the balance ~Rs 30 crores for general corporate purposes. The balance ~Rs 889 crores of the issue would be through offer for sale by the shareholders and proceeds would go to such selling shareholders.

Book running lead managers:
JM Financial, DAM Capital, ICICI Securities

The company was promoted by Prakash Kumar Saraogi, Gautam Saraogi, Rahul Saraogi, PKS Family Trust and VKS Family Trust. Prakash Kumar Saraogi is the Managing Director of the company and has over 28 years of experience in garment manufacturing, fashion industry and retail industry. Gautam Saraogi is the Executive Director and the Chief Executive Officer of the company and has over 10 years of experience in consumer retail, marketing, brand building and garment manufacturing.

Financial Statement

Profit & Loss Statement:- (Consolidated)

Yr End March (Rs Cr) FY19 FY20 FY21
Net Sales 285.00 392.00 251.00
Material Cost 94.50 130.00 92.10
Employee Cost 42.00 62.00 62.00
Other Expenses 69.00 74.00 51.00
EBITDA 79.50 126.00 45.90
EBITDA Margin 28.00% 32.00% 18.00%
Depreciation & Amortization 32.00 47.00 61.00
EBIT 47.50 79.00 -15.10
Other Income 5.00 5.00 32.00
Interest & Finance Charges 11.00 16.00 20.00
Profit Before Tax - Before Exceptional 41.50 68.00 -3.10
Tax Expense 11.00 16.00 0.40
Effective Tax rate 27.00% 24.00% -
Net Profit 31.00 52.00 -3.00
Net Profit Margin 11.00% 13.00% -1.00%