Go Fashion (India) Ltd.

Recommendation Subscribe BACKGROUND

Price Band Rs 690 - 655 Go Fashion (India) is a women’s bottom-wear brand in India, with a
th nd market share of approximately 8% in FY20. Under the brand name “Go
Bidding Date 17 Nov – 22 Nov
Colors” the company is the first to launch a brand exclusively dedicated
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JM Fin, DAM capital, ICICI

Book Running Lead Manager
Sec
to women’s bottom-wear category (ethnic, western wear, fusion and
Registrar kFintech
denims) and have leveraged this advantage to create a direct-to-
consumer brand with a diversified and differentiated product portfolio of
Sector Retail premium quality products at competitive prices.
Minimum Retail Application- Detail At Cut off Price
Objects and Details of the Issue
Number of Shares 21 The public issue consists of fresh issue of Rs 125 cr for the following
Minimum Application Money Rs 14490  Funding roll out of 120 new EBOs;(Rs 33.7 cr)
 Funding working capital requirements (Rs 61.3 Cr )
Discount to retail 0
Offer for sale of ~Rs 888 cr by Promoter and selling shareholder
Payment Mode ASBA
Consolidated Financials (Rs Cr) FY20 FY21 Investment Rationale:

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Growth in the industry will lead to growth for the company

Total Income 392 250.7  Expansion through EBO and Online Channel
EBITDA 126.5 46.3  Strong financials
Adj PAT 52.6 -3.5 Valuation and Recommendation -
Lower Upper Over FY19-21, the company sales has de grown at a CAGR of 6.3%
Valuations(FY20) Band Band
impacted due to Covid. FY20 the company sales has grown by 37.4%,
Market Cap (Rs Cr) 3538 3727 although in FY21 revenue dipped due to Covid. Q1FY22, company
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Adj EPS 9.7 9.7 recorded a growth of 200.8% YoY and revenue came at Rs 31 cr,
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indicating recovery. With covid situation normalizing, we expect revenue

PE
EV/ Adj EBITDA
Enterprise Value (Rs Cr)
Post Issue Shareholding Pattern
Promoters
Institutions
Bodies Corporates & Public
Offer structure for different categories
QIB (Including Mutual Fund)
Non-Institutional
Retail
Post Issue Equity (Rs. in cr)
Issue Size (Rs in cr)
Face Value (Rs)
Akansha Jain Research Analyst
(+91 22 6273 8034)
akansha.jain@nirmalbang.com
67.3 70.8
to bounce back. Going ahead, with Growth in the bottom wear industry
74.7 78.8 and with shift from unorganized to organized market, with higher
3462 3651 number of EBOs at right location will lead to higher revenue to the
company. Q1FY22, although gross margins stood at 64.2% levels,
however, company reported loss of Rs 5.9 cr which was majorly due to
52.8% impacted sales. Taking, FY20 into consideration since it was less
20.4% impacted year with Covid , EBitda margins for FY20 stood at 32.3%.With
Improvement in sales and with change in mix to higher EBOs revenue
26.8% with limited discount offers to selling price, will lead to higher
profitability, going ahead.FY21, Being covid impacted year , Working
75% capital for the company stands at 171 days vs 141 days in FY20. Going
ahead management indicates of bringing down the working capital days
15%
to 120 , majorly with reduction in inventory days to 90 from 106 in FY20,
10% receivable days to 30 from around 56 days in FY20. Cash flow from
54 operations of the company stands at Rs 57 cr, FCFF at Rs 29 cr in FY20 .
962-1014 Total debt for FY20 stands minimal at Rs 2.8 cr, indicating company is
debt free. Going ahead, higher growth accompanied with reduction in
10 working capital cycle will lead to higher operating cash flows to
company. This will lead to funding of opening of new stores through
internal accrual. ROE stands at 18.4% for FY20. Looking at the good
growth potential , At the given upper price band of issue of Rs 690, Go
fashions is offered at PE of 70.8 x FY20 EPS which we feel is attractive.
We recommend subscribing to the issue.

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 Go Fashion (India) Ltd.
Business
Go Fashion (India) Ltd. is a women’s bottom-wear brand in India, with a market share of approximately
8% in FY20. The company is engaged in the development, design, sourcing, marketing and retailing a
range of women’s bottom-wear products under the brand, ‘Go Colors’. The company is the first company
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to launch a brand exclusively dedicated to women’s bottom-wear category and have leveraged this
advantage to create a direct-to-consumer brand with a diversified and differentiated product portfolio of
premium quality products at competitive prices. The products of the company cater to women across all
age groups and girls and fits that are suitable to various body types and physiques. As of September 30,
2021, the company sold bottom-wear in over 50 styles in more than 120 colours making the company’s
portfolio ‘universal’ and for every occasion. The company provides customers with premium quality
products, and at a price range that caters across all income segments. The price of the products ranges
from ₹ 225 to ₹ 1,599 while the average selling price of the products at exclusive brand outlets (“EBOs”) in
FY21 was ₹ 584.02 and was ₹ 619.05 June 30, 2021.
Segment Product Price Range
Ethnic Churidar, Patiala, kurti-pants, salwar, Silk Pant and dhoti From ₹ 549 to ₹ 1,049
Western Leggings, Cropped Jegging, Jeans, Cargo Pants, Trousers, Ponte Pants, Track Pants, From ₹ 499 to ₹ 1,499
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Culottes, Treggings and Shorts

Fusion Jeggings, Palazzos, Pants and Harem Pants From ₹ 699 to ₹ 1,299
Athleisure Leggings, Track Pants and Joggers From ₹ 549 to ₹ 999
Denims Jeggings, Joggers, Jeans, Denim Palazzos, Pants, Denim Culottes and Capris From ₹ 1,049 to ₹ 1,499
Lounge Lounge Pants, Lounge Knit Pants, Lounge Capris and Lounge Shorts. From ₹ 449 to ₹ 749
Go Plus Churidars, Leggings, Jeggings, Pants and Palazzos From ₹ 599 to ₹ 1,599
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Girl’s Leggings, Jeggings, Palazzos, Pants, Shorts and Harem Pants. From ₹ 225 to ₹ 999
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The company serve customers primarily through its extensive network of 459 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 Sep 21. The company also has retailed its
products through 1,270 LFSs, (Large Format Stores) such as Reliance Retail Limited, Central, Unlimited,
Globus Stores Private Limited and Spencer's Retail among others, across 499 cities spanning the entire
country covering 31 states and union territories. The company also sells its products through online
marketplaces and through its own website.
Store Details
2019 2020 2021 Q1FY21 Q1FY22
EBO LFS EBO LFS EBO LFS EBO LFS EBO LFS
Top 2 cities 70 98 95 123 95 98 94 122 94 93
Next 6 cities 137 257 171 341 173 298 170 342 170 326
Tier 1 24 63 35 92 38 90 37 92 37 97
Tier 2 45 122 69 167 62 171 67 168 63 188
Tier 3 47 219 63 291 64 299 61 298 65 323
Tier 4 10 166 15 405 17 311 15 397 17 326
333 925 448 1419 449 1267 444 1419 446 1353

2019 2020 2021 Q1FY21 Q1FY22

EBO LFS EBO LFS EBO LFS EBO LFS EBO LFS
South 151 470 189.0 725 191.0 626 190.0 725 191.0 658
West 86 141 124.0 186 120.0 153 121.0 186 118.0 154
North 66 188 94.0 317 97.0 282 94.0 317 96.0 307
East 30 126 41.0 191 41.0 206 39.0 191 41.0 234
333 925 448 1419 449 1267 444 1419 446 1353
Source: - RHP, Nirmal Bang Retail Research

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 Go Fashion (India) Ltd.
Industry

The total Apparel market size is expected to reach ₹ 687263 cr in FY25 from ₹ 306225 cr in FY21 (+CAGR
22.4%). Of this, the share of womenswear apparel is expected to reach at a CAGR of 9.2% to ₹ 253733 cr
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in FY25 vs ₹ 163291 cr in FY20.

In particular, women’s bottom-wear is the fastest growing category in the women’s apparel segment
market and contributes to ₹ 135,47 cr in FY20 ( contributing 8.3% to total Women wear )and is expected
to grow at a CAGR of 12.35% to reach ₹ 243,15cr by FY25 ( contributing 9.6% to total Women wear )

The branded share of women’s bottom-wear market is expected to reach ₹ 11378 cr with a share of
46.8% to women’s bottom wear in Fiscal 2025 growing at a CAGR of 20.5% from ₹ 4473 cr in FY 20
contributing 33% to women’s bottom wear

Investment Rationale
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Growth in the industry will lead to growth for the company

The branded share of women’s bottom-wear market is expected to reach ₹ 11378 cr with a share of
46.8% to women’s bottom wear in FY25 growing at a CAGR of 20.5% from RS 4473 cr in FY 20 contributing
33% to women’s bottom wear. The organized bottom wear sector is also expected to grow at a CAGR of
24.3% over Fiscal 2020 -2025, taking the contribution to total bottom wear segment at 38% in 2025 from
23% in 2020, indicating a shift from unorganized to organized sector
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Industry growth
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(Rs cr) 2015 2020 2025 CAGR 2020-2025

Womens wear 104132 163291 253733 9.2%
Organise 19732 43817 107535 19.7%
Bottom wear 7723 13547 24315 12.4%
Organise Bottom wear 1081 3116 9240 24.3%
Branded Bottom wear 1521 4473 11378 20.5%
Contribution Branded Bottom 19.7% 33.0% 46.8%
wear to Bottom wear
Source: - RHP, Nirmal Bang Retail Research

Since the company has well diversified portfolio in women’s bottoms wear and strong brand with growing
distribution network, the company will be able to leverage its leadership position and capture the rising
opportunity from the industry.

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 Go Fashion (India) Ltd.
Expansion through EBO and Online Channel

EBO: - As part of the company’s growth strategy, the company intends to expand its EBO network in other
regions across India and is focusing to open EBOs is Tier 2 and tier 3 cities. On geographical front, the
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company is currently in most parts of the south and west regions with 191 and 118 EBO’s respectively and
intend to deepen its penetration in such regions, where there could be potential for further expansion. In
addition, the company also intend to add additional stores in the north and east regions in India where
they are focused on developing their presence. The company currently has 96 EBO’s in North and 41
EBO’s in East.

No of Revenue No of Revenue No of Revenue No of Revenue

store % store % store % store %
FY19 FY19 FY20 FY20 FY21 FY21 Q1FY22 Q1FY22
EBO 333 65.2% 448 68.0% 449.0 68.9% 446 78.2%
LFS 925 26.8% 1419 26.3% 1267.0 22.0% 1353 13.4%
Online marketplace 7 1.3% 9 1.0% 13.0 4.8% 10 6.5%
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MBO And others 64 6.8% 50 4.7% 48 4.3% 48 1.9%

1329 100.0% 1926 100.0% 1777.0 100.0% 1857.0 100.0%

FY19 FY20 FY21 Q1FY21 Q1FY22

New Stores opened 130.0 133.0 42.0 4.0 2.0
New Stores closed 15.0 18.00 41.00 2.00 5.00
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Stores EBO 333.0 448.00 449.00 452.00 446.00

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Cities 88.0 110.00 114.00 111.00 115.00

Same Store Sales Growth 20.0% 11.4% -36.8% -89.0% 183.8%
Avg Store area (Sq. Ft) 306.3 348.89 379.64 349.66 382.50
Revenue per store (Rs mn) 5.6 5.95 3.85 0.19 0.55
Capex per store (Rs mn) 1.2 1.4 1.7 1.7 2.4

2019 2020 2021 Q1FY22

Revenue on full price 177.8 261 143.1 23.3
Ebo revenue 185.9 266.7 172.8 24.3
% of full price on Ebo revenue 95.6% 97.9% 82.8% 96.1%
Gross margin of company 66.9% 66.9% 63.2% 64.2%

Same Store Sales Growth for FY20 stands at 11.4%. Company generates 96.1% of Revenue on Full price
product on EBO revenue in Q1FY22 which indicates that products being offered by the company is core
and essential to consumers which has enabled the company to operate on a business model where they
offer limited discounts and sale of products is typically at full price which in turn leads to greater
profitability. In addition, the company’s EBO’s average selling price has increased from ₹ 559.14 in FY19 to
₹ 584.02 in FY21 and was ₹ 619.05 in the June 2021, primarily on account of value added products
including pants, trousers and plus size products that the company have introduced as part of portfolio.

Going ahead, Management plans to open EBOs through internal accruals. Higher mix of EBO revenue
wherein there is limited discount will lead to higher growth and profitability to the company

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 Go Fashion (India) Ltd.
Online channel: -

E-retail in India has witnessed rapid growth and is expected to reach 9.9% (or ₹ 7, 800, 00 cr) of the total
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retail market by Fiscal 2025 from its share of 4.6% in Fiscal 2020 and is expected to grow at rate of 23%.
Between Fiscal 2015 and Fiscal 2020, ecommerce sales have grown at CAGR of 44%. It is estimated that in
Fiscal 2020, e-retail’s share in apparel and accessories was over 17.5% and this share is expected to reach
to approximately 22% by Fiscal 2025.

The company continues to focus on further strengthening its online sales channels by investing and
upgrading its online sites to benefit from evolving customer trends in market.

Strong financials

FY20 the company sales has grown by 37.4%, Although in FY21 revenue dipped which was majorly
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impacted due to Covid. Q1FY22, company recorded a growth of 200.8% YoY and revenue came at Rs 31
cr, indicating recovery. With covid situation normalizing, we expect revenue to bounce back. In Q1FY22,
although gross margins stood at 64.2% levels, however, company reported loss of Rs 5.9 cr which was
majorly due to impacted sales. EBitda margins for FY20 for the company stood at 32.3%.With
Improvement in sales and with change in mix to higher EBOs revenue with limited discount offers to
selling price, will lead to higher profitability, going ahead. FY21, being covid impacted year, Working
capital for the company stands at 171 days vs 141 days in FY20. Going ahead management indicates of
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bringing down the working capital days to 120 , majorly with reduction in inventory days to 90 from 106 in
FY20, receivable days to 30 from around 56 days in FY20. Cash flow from operations of the company
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stands at Rs 57 cr, FCFF at Rs 29 cr in FY20. Total debt for FY20 stands minimal at Rs 2.8 cr, indicating
company is majorly debt free. Going ahead, higher growth accompanied with reduction in working capital
cycle will lead to higher operating cash flows to the company. This will lead to funding of opening of
stores through internal accrual. ROE stands at 18.4% in FY20.

Risk

 Further extension Covid environment will impact the financials

 Inability to find right location for opening new stores and effectively manage or expand retail network
may have an adverse effect on business
 Unable to identify customer demand accurately and not having competitive pricing will impact the
company in this competitive market

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 Go Fashion (India) Ltd.

Valuation and Recommendation

Looking upon business of the company, we have compared Go Fashion (India) with TCNS clothing, Lux
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industries and Page Industries. Although the business model of the company is different, however, being
into the same industry the comparison is in terms of competition. Looking into the financials we feel, go
fashion growth of 37.4% in FY20 & EBITDA margins of 32.3%, stands strong and the company has the
potential to grow at a good growth rate going ahead.
Peer Comparison
FY20(Rs in Cr) Sales FY19-20 EBITDA Margins PAT EPS P/E EV/EBITDA EV/Sales
Sales
growth
TCNS clothing 1148.7 0.1% 186.3 16.2% 69.4 11.3 72.8 26.2 4.2
Lux industries 1667.8 38.2% 268.9 16.1% 177.2 58.9 71.0 47.5 7.7
Page industries 2945.5 3.3% 532.6 18.1% 343.3 307.7 132.5 85.1 15.4
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GO Fashion 392.0 37.4% 126.5 32.3% 52.6 9.7 70.8 29.2 9.4

Source: Company Data, Nirmal Bang Research

Over FY19-21, the company sales has de grown at a CAGR of 6.3% impacted due to Covid. FY20 the
company sales have grown by 37.4%, although in FY21 revenue dipped majorly due to Covid. Q1FY22,
company recorded a growth of 200.8% YoY and revenue came at Rs 31 cr, indicating recovery. With covid
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situation normalizing, we expect revenue to bounce back. Going ahead, with Growth in the bottom wear
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industry and with shift from unorganized to organized market, with higher number of EBOs at right
location will lead to higher revenue to the company.Q1FY22, although gross margins stood at 64.2%
levels, however, company reported loss of Rs 5.9 cr which was majorly due to impacted sales. Taking,
FY20 into consideration since it was less impacted year with Covid; EBitda margins for FY20 for the
company stood at 32.3%.With Improvement in sales and with change in mix to higher EBOs revenue with
limited discount offers to selling price, will lead to higher profitability, going ahead. FY21, being covid
impacted year, Working capital for the company stands at 171 days vs 141 days in FY20. Going ahead
management indicates of bringing down the working capital days to 120 , majorly with reduction in
inventory days to 90 from 106 in FY20, receivable days to 30 from around 56 days in FY20. Cash flow from
operations of the company stands at Rs 57 cr, FCFF at Rs 29 cr in FY20. Total debt for FY20 stands minimal
at Rs 2.8 cr, indicating company is majorly debt free. Going ahead, higher growth accompanied with
reduction in working capital cycle will lead to higher operating cash flows to the company. This will lead to
funding of opening of new stores through internal accrual. ROE stands at 18.4% in FY20. Looking at the
good growth potential, at the given upper price band of issue of Rs 690, Go fashions is offered at PE of
70.8x FY20 EPS which we feel is attractive. We recommend subscribing to the issue.

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 Go Fashion (India) Ltd.

Financials (Rs in Cr)

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Source: Company Data, Nirmal Bang Research

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 Go Fashion (India) Ltd.
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Disclosure:

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immediately preceding the date of publication of this research report.

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Analyst Certification: The research analysts and authors of these reports, hereby certify that the views expressed in this
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 Go Fashion (India) Ltd.

Disclaimer:
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