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Go Fashion (India) Ltd, the owner of women’s bottom-wear brand Go Colors made a stellar stock markets debut on Tuesday. Shares of the company were listed at 1,310, an 89.85% premium over the issue price of 690. It closed at 1,253.70 on the NSE.

The 1,014 crore issue was subscribed 135.46 times in the price band of 655-690.

Amarjeet Maurya, analyst, Angel One Ltd said in terms of valuations, the post-issue FY20 EV/Ebitda works out to 30.2 times which is in a similar range as that of its peer TCNS Clothing Co.

“Further, Go Fashion India has a better track record of revenue growth, higher operating margin & high return on equity compared to TCNS Clothing Co," he said.

Go Colors will not receive any proceeds from the offer for sale (OFS) and the proceeds received from OFS will not form part of the net proceeds. Net proceeds will be used to fund the roll-out of 120 new exclusive brand outlets (EBOs), working capital requirements and general corporate purposes.

“At the upper price band of 690, the stock is available at market capitalization/sales of 14.9 times (FY21) which appears fully priced," said Geojit Financial Services Ltd.

It added that growing numbers of working women, rise in disposable income, and a consumer shift towards buying from safe and hygienic facilities augur well for the company.

The brokerage firm likes the company on a long-term basis considering its investment in digital channels, omnichannel engagement, focus on e-retail, distributive growth strategy to tap customers from tier-I to tier-III cities and expansion plans for existing and newer markets.

“Go Fashions is the first company to launch a brand exclusively dedicated to the women’s bottom-wear category. It is a play on the unorganized to the modern retail shift. At the upper end of the price band, it is valued at 9.4 times, 14.6 times EV/sales for FY20, FY21, respectively," said analysts at ICICIdirect.

However, they noted that dependence on single brand and category, high store network concentration in southern and western India and dependence on single warehouse for pan-India distribution are key risks and concerns.

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