OBJECTS OF THE OFFER :
The Offer comprises of a Fresh Issue aggregating up to ₹900 million. Out of the net proceeds from the fresh issue, ₹700 million would be utilized for Repayment or pre-payment of certain borrowings availed by the Company. and the balance would be used for general corporate purposes. The offer also comprises of offer for sale of up to 2,77,62,010 shares.
BIBA FASHION INDUSTRIES IPO ANALYSIS
CONSISTENT TRACK RECORD OF FINANCIAL PERFORMANCE:
The company’s revenue from operations has decreased from ₹7,291.31 million in FY19 to ₹5,257.38 million in FY21. The company’s EBITDA decreased from ₹1,297.07 million in FY19 to ₹ 623.11 million in FY21 while PAT decreased from ₹202.43 million in FY19 to ₹(118.40) million in FY21.
CONSOLIDATED FINANCIAL SUMMARY OF BIBA FASHION
|(`₹ in millions)||FY19||FY20||FY21|
|Revenue from Operations||7,291.31||7,569.20||5,257.38 |
COMPETITIVE ANALYSIS: MARKET PEERS
The Warburg Picus-backed ethnic wear fashion label Biba Fashion is all set to dazzle the Indian markets with its debut. There are many other players within the retail clothing space that are already making their mark on markets. Let’s take a look at Biba's listed peers and their market capitalizations ahead of its debut.
|TCNS Clothing Company Limited||₹ 4,027 crore |
|Trent Limited ||₹ 51,970 crore |
|Go Fashion (India) Limited||₹ 6,863 crore |
|Vedant Fashions Limited||₹ 34,410 crore |
|Aditya Birla Fashion and Retail Ltd ||₹ 32,081 crore |
LEADING MARKET POSITION AND STRONG BRAND EQUITY ACROSS A DIVERSE SET OF CONSUMERS ACROSS THE VALUE CHAIN
BIBA Fashion Ltd is one of the largest lifestyle brands in the women’s Indian wear market in India in terms of market share, as of financial year 2020. Its flagship brand BIBA was amongst the first national brands in the Indian wear segment and has a rich legacy with a large online presence. The brand BIBA has the highest brand recall amongst women’s Indian wear brands online, as of February 2022, which it believes reflects the strength of its brand and has contributed to the growth of its business. As a ‘category creator’ for Indian wear in the women’s Indian wear segment, the company has a strong growth profile and benefit from market movements towards organized retail, large ecommerce growth trends in India and positive demographic shifts, including being one of the youngest populations globally compared to other leading economies, increasing urbanization, an increase in the number of working women and the rising spending power of middle-class consumers. The strength of its brand has enabled the company to expand into adjacent categories, including jewellery, footwear, wallets and fragrances, with scope for further expansion. It believes this creates high growth potential over an extended time horizon.
DIVERSIFIED PAN-INDIA MULTICHANNEL DISTRIBUTION WITH A STRONG FOOTHOLD ON BOTH OFFLINE AND ONLINE CHANNELS
BIBA Fashion Ltd’s brands has a pan-India presence with a multichannel distribution network of 427 EBOs (comprising 308 BIBA-branded outlets and 119 Rangriti-branded outlets) across 27 states and 160 cities in India, 930 LFSs across 29 states and 267 cities in India and 30 MBOs. As of December 31, 2021, 61% of its EBOs are on the Indian high street, 38% of its EBOs are located in malls, and 1% are in airports, with 82% of its EBOs owned by the company and 18% by franchisees. It has significantly expanded its EBO footprint by a net addition of 133 stores since April 2018, including limited store closures during the COVID-19 pandemic. In the period from 2018 to 2022, its EBO rollout CAGRs of 6% and 27% for its BIBA- and Rangriti-branded EBOs, respectively, is the highest compared to its peers, and its total number of EBOs is amongst the highest in the women’s Indian wear segment. Its key LFS accounts comprise retail stores such as Shoppers Stop, Lifestyle, Central and Pantaloons. For financial year 2021, 37.04% of its revenue from operations was generated from online channels, of which 11.55% was from its own website, BIBA.in, and 25.49% from third-party online marketplaces such as Myntra, Amazon, Flipkart, Nykaa and Tata Cliq.
SIGNIFICANT INVESTMENTS MADE IN DIGITAL CAPABILITIES WITH A STRONG FOCUS ON TECHNOLOGICAL EFFICIENCIES
A ‘digital first’ approach is an increasingly critical driver of growth across many consumer categories in India, as well as globally, with millennial and generation Z demographic segments now entering the workforce and driving digitization as active adopters of technology and digital media. This enables the company to continue growing at scale. Consequently, it believes it is well placed to take advantage of further digital growth. It launched its first online platform, BIBA.in, and later followed by Rangriti.com, and invested in building a strong e-commerce team. It has also made significant digital marketing investments through Google and other social media platforms in the past five years. For the financial year 2021, approximately 37.04% of its revenue from operations was generated through online channels, which is superior to its peers in the women’s Indian wear segment. It develops a strong understanding of fashion trends and engage in ongoing and deep conversations with its target customer group, which enables the company to obtain insight into the tastes and preferences of its consumers. This is further strengthened by significant online data, reviews and ratings which provide the company with a quick feedback loop, ensuring that it can quickly identify market trends and white spaces. Its digital marketing strategy creates high consumer engagement and demand for its products. It produces innovative marketing campaigns, collaborate with leading influencers and celebrities and create special online product launches.
STRONG IN-HOUSE DESIGN AND TECH-FIRST SUPPLY CHAIN CAPABILITIES TO DELIVER INNOVATIVE AND HIGH-QUALITY PRODUCTS
BIBA Fashion Ltd has a strong product proposition and believe that its products are well-designed and of high quality. As of December 31, 2021, it has an in-house design team of 36 people, which has created over 1,200 designs registered with the Controller General of Patents, Designs and Trademarks in India. It designs and release products for each of the two principal fashion seasons every year – one for spring / summer and another for autumn / winter. Given its large supplier and vendor network across the North India region, it can create products in a timely manner and with consistently high quality. As of December 31, 2021, it had a network of 251 fabric suppliers and 114 factories (comprising 67 stitchers and 47 contract factories for dying and printing). It has a diverse vendor base for its products. Geographically, it purchases textiles from all textile-producing hubs in India, including Delhi/NCR, Surat, Banaras and Ludhiana. It’s after-sales proposition offers customers an easy return and/or exchange process and it has made efforts to improve its working capital cycle to facilitate this benefit. In 2018, it implemented QlikView, a business intelligence tool, for data analytics and management reporting. It has also implemented artificial intelligence and machine learningbased software for merchandising, assortment planning, distribution and replenishment across its EBO stores. These system-driven processes and strong analytical capabilities enable the company to make data-based decision-making and forecast cultural and evolving fashion trends across India.
CAPITAL-EFFICIENT AND SCALABLE RETAIL MODEL TO CAPITALIZE ON THE STRONG INDUSTRY GROWTH PROFILE
BIBA Fashion Ltd operates a capital-efficient and scalable retail model to capitalize on strong industry growth in the women’s Indian wear market in India. In financial years 2019, 2020 and 2021 and the nine months ended December 31, 2021, it had a net addition of 37, 49, 17 and 30 stores, respectively, for its BIBA and Rangriti brands. It also had limited store closures as a result of the COVID-19 pandemic during this period. According to the Technopak Report, the apparel market in India was estimated at US$ 60 billion, in terms of consumer retail spending, as of financial year 2020, and is one of the larger segments of the Indian retail sector. Higher brand consciousness, increasing digitization, greater purchasing power and increasing urbanization are expected to further drive growth in this market. Historically, consumption of women’s apparel was centered around the informal market through standalone boutiques selling unbranded wares and the sale of unstitched fabrics, allowing women to use tailors to create their desired garments through made-to-measure services. However, as consumers seek better quality and a better overall shopping experience, with the emergence of aspirational brands with unique, differentiated offerings, increased trust in safety and pricing, the market is shifting rapidly towards branded and organized offerings. As one of the leaders in this fast-growing industry, it believes it is well-positioned to capitalize on this shift.
Its majority of the manufacturers are exclusively based in a single geographical region. Any adverse development affecting such region may has an adverse effect on its business.
If it is unable to accurately identify customer demand and maintain an optimal level of inventory in its stores, the business, results of operations and cash flows may be adversely affected.
Its growth and profitability depend on the level of consumer confidence and spending in India and the overseas jurisdictions in which it operates.
The Continued momentum in EBO roll-out to expand retail network in Tier 2, Tier 3 and Tier 4 cities and leverage its substantial past efforts and experience will help extend its reach and open newer markets.
The company intends to expand its existing category and launch additional products for women’s wardrobe requirements with the aim of widening its audience and capitalize on its pan-India distribution network.
Capitalize on the increasing e-commerce penetration in Indian retail as well as within its category.
The company’s business depends on the timely and continual purchases of and payments for the products by the franchisee and retailing customers, both in the short and long term. Their delay or failure to do so may adversely impact the business.<
Pricing pressure from the competitors may affect the ability to maintain or increase the product prices and, in turn, revenue from product sales, gross margin and profitability, which may materially and adversely affect the business
Operations could be adversely affected by labour shortages, strikes, work stoppages or increased wage demands by its employees or any other kind of disputes with its employees.
he industry is competitive in both the offline and the rapidly-growing online channels have the potential to adversely affect its pricing ability and disrupt its sales.
STRATEGIES GOING FORWARD:
SUSTAIN THE LEADING POSITION OF ITS FLAGSHIP BRAND BIBA
BIBA Fashion intends to continue to leverage its in-depth market research, robust technology plat-form and data analytics by introducing a wide range of products within the Indian wear market and consolidating its leading position. Its independent growth strategies for its brands and product ranges are set out below:
BIBA: It aims to continue and sustain its leadership within casual, office and occasion wear. The Indian formal wear market, however, represents a large opportunity for the company where there is a lack of a nation-wide brand in the mid-premium to premium segment. It will expand its offering in high demand markets and use cross-selling efforts at existing BIBA stores to drive demand for its formal range. To enhance and diversify its product range, it aims to cater to an even larger proportion of Indian women’s wardrobe requirements.
Rangriti: As its value fashion brand, it aims to increase its footprint with a targeted presence of EBOs in Tier II and Tier III cities. It aims to continue and expand its sales through the online channel (including its brand website and online marketplaces) and target new customers through attractive designs, strong marketing efforts and pricing initiatives.
BIBA Girls: A key factor driving the Indian kids apparel market is India’s young population with over 361 million individuals below the age of 15 as of financial year 2020. The Indian kidswear apparel market is highly organized with organized players representing 19.4% of the Indian apparel market and the share of the organized market is expected to increase from 19.4% in financial year 2020 to 27.1% by financial year 2025. It has a first-mover advantage in this market and has already made progress through its brand BIBA Girls and aim to leverage its strong design capabilities and the brand equity of its flagship BIBA brand to become a leading player in this category
Spelle: a key focus for its company is its expansion into adjacent categories. It intends to offer a ‘complete look’ for its customers across categories, including across beauty and fragrances. It aims to continue to develop its beauty brand through its product offering in its EBOs, as well as launch its brand on its own website, BIBA.in and online marketplaces.
CAPITALIZE ON THE INCREASING E-COMMERCE PENETRATION IN INDIAN RETAIL AS WELL AS WITHIN ITS CATEGORY
BIBA Fashion Ltd has made significant investments in its IT infrastructure and digital capabilities since 2014 and has enjoyed an industry-leading online presence even prior to 2019 and the shift to online shopping as a result of the outbreak of the pandemic. Partly as a result of these investments, its revenue from operations remained resilient during the pandemic. Its flagship brand BIBA is a renowned brand digitally with a strong follower base on social media channels and it has one of the highest number of followers on Instagram amongst Indian wear brands in India. Its online e-commerce platforms include BIBA.in and Rangriti.com, and in Financial Year 2021, it generated 37.04% of its revenue from operations from online channels, which is the highest amongst its peers. As of February 2022, its BIBA.in website was the number one ranked brand website in terms of consumer purchases in the women’s Indian wear segment. According to the Technopak Report, in January 2022, its websites, BIBA.in and rangriti.com collectively generated approximately 920,000 visits across 507,000 unique visitors, and it has the highest website ranking amongst peers in the fashion and lifestyle category. It intends to capitalize on this position by further increasing sales through its websites and online marketplaces.
CONTINUE MOMENTUM IN EBO ROLL-OUT TO EXPAND RETAIL NETWORK
As part of its growth strategy, BIBA Fashion Ltd intends to continue to expand its presence by setting up new EBOs and expand its EBO network in additional regions across India. Distributive growth across India is resulting in the growth of demand from Tier II, Tier III and Tier IV cities which together accounted for 34% of the demand in the apparel market in financial year 2020 and is further expected to grow further in the coming years. Having established EBOs primarily in Tier I cities in India, the company intends to expand its focus and establish additional EBOs on the basis of a similar model, across Tier II, Tier III and Tier IV cities in India. It intends to leverage its substantial past efforts and experience, to expand its presence across several markets in India which it has identified as having potential for opening further EBOs. It expects to leverage its existing extensive store network and its knowledge of various different markets in India to tap this growth opportunity. Its expansion into newer markets offers the company the potential for market share gains, increased brand recognition and economies of scale. The company intends to leverage the experience of its operations, existing store network and resources to tap into this growth opportunity.
INCREASE THE RANGE OF ITS PRODUCTS IN ADJACENT CATEGORIES TO DEVELOP THE ‘COMPLETE LOOK’ STRATEGY OF ITS FLAGSHIP BRAND BIBA
BIBA Fashion Ltd intends to develop a ‘complete look’ for its customers and increase the range of products offered by its brands in adjacent categories, including accessories, such as jewellery, footwear, wallets and fragrances. It intends to continue to develop and launch additional products for women’s wardrobe requirements with the aim of widening its audience and capitalize on its panIndia distribution network. It assesses consumer demand, international and local fashion trends and evolving market preferences in order to evaluate the feasibility of new types of product introductions. Leverage technology to bring cost efficiency and enhance customer experience It aim to improve its operating efficiency and ensure efficient supply chain management by adopting global best practices. Its investments towards improving its IT infrastructure are aimed towards increasing its productivity and the efficiency of its resources. The company also intend to manage its operating costs through leveraging technology as it expects it will not only improve its sales but also ensure customer satisfaction. The company also proposes to further strengthen its data analytics which will enable a better understanding of the preferences of its customers, improve sales and help in scaling its operations.
Disclaimer - The content on this page is made available on the basis of the DRHP (draft red herring prospectus ) filed by BIBA Fashion India Limited. The final content could change based on the Red Herring Prospectus (RHP) filed