GoColors IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

GoColors IPO– Incorporated in 2010, Go Fashion (India) Limited is one of the largest women’s bottom-wear brands in India.

Business — 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.

Way of Operation – Company has 450 exclusive brand outlets (EBOs) that are spread across 23 states and union territories in India. 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 1,332 LFSs in May 2021. The company also sells its products through its website, online marketplaces, and multi-brand outlets (MBOs).

Offer purpose — To part finance its plans for funding roll out of 120 new EBOs (Rs. 33.73 cr.), working capital (Rs. 61.40 cr.) and general corporate purpose, IPO has planned by company

Risks —

Highly competitive business

Third party contracts is a risk

Strength

One of the largest women’s bottom-wear brands in India
Wide, well-diversified, product portfolio and first-mover advantage
Multi-channel retail presence across India
Strong unit economics with an efficient operating model
Extensive procurement base and automated procurement & supply chain
In-house expertise in developing and designing products
Strong financial performance record

Future

Company is a pure long term story considering an expansion plan to increase outlets from 450+ to 2000+ in the coming five to six years plus its association with large format stores will bode well. Third party contracts may remain a risk

Valuations

Valuations are dicey as last two years Covid-19 plays havoc, though company was growing

Should we apply?

One can avoid and wait for company to perform and come back in positive territory

Risk takers can apply for listing gains(if any)

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