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12 December 2023

Vivaa Tradecom IPO: Weaving Through Threads of Transformation

Introduction:

Vivaa Tradecom IPO, a fixed-price issue of Rs 7.99 crores, unfolds a new chapter in the market with 15.66 lakh fresh shares. The bidding window stretched from September 27, 2023, to October 4, 2023. The allotment process concluded on October 9, 2023, and the shares commenced trading on BSE SME on October 12, 2023.

Pricing Dynamics:

Priced at ₹51 per share, the IPO addresses a wide investor base. The minimum lot size for retail participation was 2000 shares, requiring a minimum investment of ₹102,000. High Net Worth Individuals (HNIs) were required to invest a minimum of 2 lots (4000 shares), totaling ₹204,000.

Market Performance Snapshot:

As of December 15, 2023, Vivaa Tradecom Ltd (544002) traded at ₹30.00, experiencing a marginal decrease of 0.79%. The stock opened at ₹29.50, with a range of ₹30.00 to ₹28.85. The previous close stood at ₹30.24, with a total traded value of 10,000. The 52-week performance witnessed a high of ₹43.99 on October 13, 2023, and a low of ₹27.20 on November 20, 2023.

Key IPO Features:

The IPO, conducted from September 27, 2023, to October 4, 2023, presented a face value of ₹10 per share. The listing occurred on October 12, 2023, with a total issue size of 1,566,000 shares, aggregating up to ₹7.99 crores. It was a Fixed Price Issue and got listed on BSE SME.

Ownership Transition:

Pre-IPO, Vivaa Tradecom Ltd held 2,371,500 shares, which increased to 3,937,500 post-issue. The IPO included a market maker portion of 82,000 shares managed by Asnani Stock Broker.

Investor Allocation:

The IPO allocation was distributed among various categories, with 1,566,000 shares on offer. This included 82,000 (5.24%) for Market Makers, 742,000 (47.38%) for Non-Institutional Investors (NIIs), and an equal percentage of 742,000 (47.38%) for Retail Individual Investors (RIIs).

IPO Chronology:

The IPO timeline unfolded as follows:

- IPO Open Date: Wednesday, September 27, 2023
- IPO Close Date: Wednesday, October 4, 2023
- Basis of Allotment: Monday, October 9, 2023
- Initiation of Refunds: Tuesday, October 10, 2023
- Credit of Shares to Demat: Wednesday, October 11, 2023
- Listing Date: Thursday, October 12, 2023
- Cut-off time for UPI mandate confirmation: 5 PM on October 4, 2023

Lot Size Considerations:

Investors could bid for a minimum of 2000 shares and in multiples thereof. The table below illustrates the investment parameters for retail investors and HNIs:

Application	Lots	Shares	Amount
Retail (Min)	1	2000	₹102,000
Retail (Max)	1	2000	₹102,000
sNII (Min)	2	4000	₹204,000

Promoter Holdings Transition:

Promoted by Mr. Mitesh Adani, the pre-issue promoter holding of 50% decreased to 30.11% post the IPO.

Company Overview:

Incorporated in 2010, Vivaa Tradecom Limited has been engaged in both manufacturing and trading of clothes and garments. Initially involved in the manufacturing business of Readymade Garments, the company diversified its business in 2022 by selling the manufacturing unit and focusing on trading activities. It expanded its horizon further by entering into an agreement with Rushil Décor Limited for distributing VIR MDF Boards. Vivaa Tradecom's product portfolio includes Denim Fabric, readymade garments such as Denim/Cotton Jeans for Men and Women, and the trading of Printed Cotton Fabric. With clientele including Lifestyle International Pvt. Ltd., Aditya Birla Fashion and Retail Ltd., and others, the company is venturing into new segments for future growth.

Financial Health:

As of March 31, 2023, the company reported total assets of ₹4,918.80 lakhs, revenue of ₹13,402.83 lakhs, and a net profit of ₹25.48 lakhs. The financial indicators show a market cap of ₹20.08 crores, P/E (x) of 47.66, and a Debt/Equity ratio of 0.38. The Earnings Per Share (EPS) stands at ₹11.07, and the Return on Net Worth (RoNW) is 2.10%.

IPO Objectives:

The net proceeds from the IPO are designated for:

1. Meeting working capital requirements
2. General corporate purposes.
3. Covering public issue expenses.

Expert Commentary:

Advises caution, noting the company's operation in a highly competitive and fragmented segment. The fluctuating financial performance, especially in FY23, raises concerns, and the high pricing of the issue suggests potential risks. Investors are advised to exercise caution.

In Conclusion:

With a subscription rate of 1.81 times, Vivaa Tradecom IPO reflects moderate market interest. The company's move to transition from manufacturing to trading and expanding its product portfolio indicates a strategic shift. However, investors are urged to scrutinize the financial trajectory and exercise caution, especially considering the valuation concerns raised by experts. Seeking advice from financial experts can provide valuable insights, helping investors make informed decisions in alignment with their financial goals.

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