Everything you need to know about the company and the IPO!
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About Go Fashion India (Go Colors) Limited –
- An Indian women’s bottom-wear brand
- FY20 Market share of ~8% in branded women’s bottom-wear
- Women’s apparel market = 36% of the total apparel market
- Women’s bottom-wear market = 8.3% of women’s apparel market FY20
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Products -
- As of Q2FY22 - sold bottom-wear in 50+ styles in 120+ colors.
Price range -
- ₹ 225 to ₹ 1,599
Average selling price (ASP) -
- FY21 - ₹ 584.02
- Q1FY22 - ₹ 619.05
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Distribution –
- Exclusive brand outlets (EBO) including franchise stores, large format stores (LFS), multi-brand outlets (MBO), and online channels such as online retailers and their own websites.
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EBOs -
- Majority of Sales is from EBOs
- Q1FY22 - Operated 459 EBOs (including franchise stores)
- Img 1 and 2 talk about stores, Capex, area, sales, cities, regions, etc
- They periodically close EBOs which are non-profit-making (Img 3)
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As of Q1FY22 –
- 2855 employees (10 in design, 2517 front-end staff at EBOs+ LFS)
- Attrition - 4.27%
- Sourced RMs from 73 suppliers, finished products from 5 suppliers
- They do not own any manufacturing facilities - Job workers engaged in making everything (outsourcing)
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Promoters & Directors (Src - Axis Direct) -
Issue Details -
- Total market cap of Rs 3727 cr post listing
- Fresh issue - Rs 125 cr
- OFS - Rs 889 cr
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Objects of Issue -
- Rs 33.7 Cr - 120 new exclusive brand outlets (EBOs) to be opened
- Rs 61.3 cr being used to fund working capital requirements
- General corporate purposes
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Risks -
- PEs invested in 2018. With CCPS conversion, their price is 170 or less. 3 yrs later IPO at 690 rs. 4x increase in 3 yrs with business making loss now. Why/How the 4x then?
- All PEs selling 50% of the stake except Dynamic India which is selling fully.
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- Even 2 Promoter family trusts selling 50% of their stake
- Products cater to only female customers and are in a niche category i.e., only limited to bottom-wear Single warehouses located in Southern India.
- Inventory as % of current assets was 45.35% in Q1FY22
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- Inventory turnover days - 118 in FY21
- Go Color competes with local retailers, non-branded products, economy brands, and products of other established brands
- Also competes with in-house brands launched by LFSs including those through which they retail their products
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Pledge -
Promoters VKS Family Trust and PKS Family Trust have pledged 16.56% of total shares for a Rs 40 cr Loan
Pledges are really scary as the stock can take heavy beatings (as we have seen in the past few years with some pledged shares)
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Financials -
- Comfortable Debt to Equity figure
- Flat revenue
- Flat EBITDA
- Net loss in FY21
- P&L took a hit due to COVID
- CFO and FCF is good, gradually improving (Majority IPO size OFS anyways)
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Valuation -
- 3727 cr Mcap post issue
- As per FY21 Sales - 13.2x Price to Sales(P/S)
- As per FY20 sales - 9.4x P/S
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The business prides itself on being the go-to brand for women's bottom wear with the highest range of products and being one of the largest players according to market shares
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But we all know what happens when you pay frothy valuations for a business, you can end up with time correction/price correction
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price like Mr. Buffet Says.
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Questions to think about -
- What is the moat?
- What is the growth prospect ahead?
- What multiple should be paid for a traditional apparel-making company?
- What happens when biggies enter the same market who can outspend and outreach them?
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About the Market -
- Women’s bottom-wear market = 8.3% of women’s apparel market that was Rs 13547 Cr in FY20
- Expected to grow at a CAGR of 12.4% by FY25
- Share of bottom-wear in women’s apparel is expected to go to 9.6% by FY25 from 8.3% in FY20
(Src - Technopak)
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The branded Indian womenswear segment is dominated by large national/regional Players like TCNS, BIBA, Global Desi, Go Colors, AND, H&M, Zara, M&S and Fabindia, Soch, etc
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Polymetallic nodules are considered a future resource due to their high concentrations of valuable metals
A thread on this alternate source that has the power to quench Humanity's material thirst for resources -
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The story goes back to HMS Challenger and some strange-looking potato-sized lumps she dredged up from the bottom of the Pacific a century and a half ago
These dark, slightly crumbly stones, smooth on the top, rough on the bottom, later became known as polymetallic nodules
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The most famous region is the Clarion-Clipperton Zone (CCZ) in the Pacific Ocean, between Hawaii and Mexico.
It’s estimated to hold: Over 21 billion tonnes of nodules - Enough to supply battery metals for hundreds of millions of EVs
Ather IPO opened today - I read the DRHP over the weekend
Capex when it's not needed, bad numbers, losing market share, amazing product, and a great team
A thread on Ather and this IPO, do retweet -
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About Ather -
- Sells E-2Ws, software, charging infra, and smart accessories
- Battery packs made in-house
- Portable chargers/motors, Motor controllers, transmissions, DC-DC converters, harnesses, and chassis are designed by Ather, but manufacturing is outsourced
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- Hosur Factory - Annual capacity - 4.2L Units (E2Ws) + 3.8L battery pack units (9MFY25)
- New capex post IPO for Factory 3.0 in Chhatrapati Sambhajinagar to take this to 14.2 L Units
- 265 experience & 233 service centres in India, 9 in Nepal, 11 in Sri Lanka
The biggest winner in the Ather IPO is IIT-Madras Incubation Cell (IITMIC)!
IITMIC + IITMS Rural holds 15.58 L shares in Ather, valued at 50 Cr!
Their cost is just 15- 29L (1 Rs considered for IITMIC, but could be lower too)
172x to 333x made in 11 years! That's amazing :)
Forget Shark Tank, the real startup story is unfolding at IIT Madras Incubation Cell (IITMIC) in the IIT Madras Research Park
It has an 80% success rate with Startups!
I was there for an Investing conclave by TIA in Feb 2024 -
Quick History –
- Started with a 400 Cr debt, returned 600 Cr (principal+interest)
- IITMIC didn’t take any grants as they wanted to experience and showcase to startups how to create a sustainable bootstrapped business – they grew from the ground up in a lean way!
Reliance’s Jamnagar Refinery is an engineering marvel
It is the World's most complex and largest integrated, single-site refinery
It was the largest industrial investment made by an Indian enterprise at a single location
Some amazing facts on this Refinery -
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History –
Twenty-five years ago, on December 28, 1999, RIL launched its first refinery at Jamnagar
Overnight, this turned India from a fuel deficit nation to a self-sufficient one and later into a surplus, exporting gasoline and gasoil to Europe and the US
Img - BS
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It wasn’t so easy!
When RIL first spoke of it, experts said that it would be impossible for an Indian company to set up the world's largest grassroots refinery in 3 years. RIL did it in a world-record time of 33 months!
Lack of infra and a severe cyclone also hit Jamnagar
I have read 170 books in the last 5 years – 18 in 2024, 38 books in 2023, 30 books in 2022, 50 in 2021 and 34 in 2020 (List of books of earlier years in the end)
List of all the books that I read in 2024 and my top 6 picks –
Books I read in 2024 –
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1 - Behind Bars in Byculla: My Days in Prison by @JignaVora5 (Scoop series is based on the book)
2 – Cobalt Red: How the Blood of the Congo Powers Our Lives by @siddharthkara
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3 - Spreading Joy: How @Joyalukkas Became the World's Favourite Jeweller by Joy Alukkas, Thomas Scaria and Nidhi Jain
4 – The Winning Way: Learning from Sport Managers by @bhogleharsha and @BhogleAnita
5 - From Oberoi To OYO: Behind The Scenes by Chitra Narayanan