IPO Alert: FabIndia Limited files for initial public offering

The apparel industry in India is estimated to have grown at a compound annual rate of 10.6% over the past five years and reached ₹5,561 billion in fiscal 2020. Menswear accounted for 41% of the total apparel market, followed by women’s wear at 37%. Kidswear accounted for the remaining 22%.

The domestic apparel market is expected to return to 90% of pre-COVID levels this year, subject to stabilization in the number of COVID cases. Further, it is projected to grow 10.6% through 2026 and reach ₹7,515 billion.

FabIndia Limited recently filed a prospectus with market regulators for an initial public offering. The offer comprises a fresh issue of up to ₹500 crores and an offer for sale of 25,050,543 shares by existing investors or shareholders, as per the draft red herring prospectus filed by the company.

FabIndia plans to utilize ₹250 crores from the net proceeds for voluntary redemption of its non-convertible debentures, along with accrued interest. The remaining ₹1.39 crores will be paid through internal accruals. Further, the company will employ ₹125 crores for repayment of loans and use the remaining amount for general corporate purposes.

 Lifestyle Platform

The New Delhi-based company is a consumer lifestyle platform with an established 62-year legacy, focused on authentic, sustainable traditional lifestyle products. The brand names FabIndia and Organic India are well recognized in the Indian market. The company offers a diverse portfolio of lifestyle products across the apparel & accessories, home & lifestyle, personal care and organic food categories.

The firm provides an omnichannel experience through its pan-India network of 309 FabIndia stores and Experience Centers and 74 Organic India stores.

The company’s main competitors are Cotton Emporium, Khadi Gram Udyog and Good Earth.

Key Numbers

For the year ended 31 March 2021, FabIndia reported a total income of ₹1,087 crores, against ₹1,524 crores in the previous year. The company incurred a loss of ₹117 crores, compared to a profit of ₹30.6 crores in the prior year.  A significant portion of the revenue — more than 50% — is derived from the apparel segment.

Since the company deals in contemporary ethnic apparel and accessories, sales tend to increase during festive seasons. The revenue is, therefore, influenced by seasonal factors that vary between different quarters.