Vashishtha Luxury BSE SME IPO review

•    The company is engaged in exporting high fashion hand embroidery work with related accessories and finished garments.
•    While it posted growth in its top lines, its bottom lined marked erratic movements.
•    Tall claims made by the company not reflected in its financial performance.
•    Based on its recent financial data, the issue appears aggressively priced.
•    Tiny paid-up equity capital post-IPO indicates longer gestation period for migration.
•    There is no harm in skipping this tiny and pricey issue.

ABOUT COMPANY:
Vashishtha Luxury Fashion Ltd. (VLFL) is engaged in the business of exporting high fashion hand embroidery work, accessories & finished garments. VLFL is reliable name considering existence and maintaining relationship for over a decade amongst International Designers, Fashion Houses & Boutiques. The Company caters to various brands and fashion houses across Europe, UK, USA, Australia, European countries & Turkey regions. Further, it also provides services in customized designs in apparel segment. It is a 100% Export House. 

Since inception, it is providing services to many Couture (the design and manufacture of fashionable clothes to a client's specific requirements and measurements) and prêt-à-porter (a French term that refers to clothing that is mass-produced in standardized sizes and sold in finished condition) brands from Europe, UK, USA, Australia, European countries & Turkey.

It endeavours to satisfy customers by continuous improvement through process innovation and quality maintenance. The company focuses on getting the quality product to increase customer satisfaction and develop a positive brand image in the industry. 

India's artistic adornment of finished fabrics to make garments and accessories beautiful and palatial dates back to centuries. Indian embellishments have truly stood the test of time and now are ruling the fashion world of current times. At Vashishtha, it aspires to take the timeless beauty of this wonderful art around the world. In fact, it has made it mission to make this kind of exquisite surface ornamentation and hand embellishments on garments and accessories thrive and reach out to the worldwide craft passionate clans who are passionate about the beauty of its existence. Along with nourishing the purity of this art, it also thrives to use highly sustainable materials in creating great designs. As of July 31, 2025, it had 21 employees on its payroll. In fact, the tall claims made by the company is not seen in its financial performance.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its book building route maiden IPO of 799200 equity shares to mobilize Rs. 8.87 cr. (at the upper cap). The company has announced a price band of Rs. 109 – Rs. 111 per share of Rs. 10 each. The IPO opens for subscription on September 05, 2025, and will close on September 10, 2025. The minimum application to be made is for 2400 shares and in multiple of 1200 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 33.91% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 3.64 cr. for capital expenditure on purchase of embroidery machines, Rs. 2.69 cr.  for repayment/prepayment of certain borrowings, and the rest for general corporate purposes.

The company has reserved 5.11% for market maker, and from the rest, the company has allocated not more than 9.97% for QIBs, not less than 34.97% for non-institutional investors, and not less than 55.06% for Retail investors. 

The IPO is solely lead managed by Expert Global Consultants Pvt. Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Nirman Share Brokers Pvt. Ltd. is the market makers. The IPO is underwritten to the tune of 15.02% by Expert Global and 84.98% by Cumulative Capital Pvt. Ltd.

The company has issued/converted initial equity shares at par, and converted further equity shares at a fixed price of Rs. 189.84 per share in June 2024. The average cost of acquisition of shares by the promoters is Rs. 10.00, and Rs. 16.37 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 1.56 cr. will stand enhanced to Rs. 2.36 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 26.16 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last previous two fiscals, the company has (on a standalone basis) posted total revenue/Net Profit of Rs. 6.86 cr. / Rs. 1.05 cr. (FY23), Rs. 7.45 cr. / Rs. 0.32 cr. (FY24), and (on a consolidated basis) Rs. 10.84 cr. / Rs. 1.54 cr. (FY25). While its top line marked growth, its bottom line posted inconsistency. Its profit declined for FY24. 

For the last three fiscals, the company has (on a standalone basis) reported an average EPS of Rs. 7.60, and an average RoNW of 47.25%. The issue is priced at a P/BV of 3.36 (standalone), and 3.28 ((consolidated basis) based on its NAV of Rs. 33.03 (standalone) and 33.85 (consolidated) as of March 31, 2025, but its post-IPO NAV data is missing from the offer documents.

On a consolidated basis for FY25 it marked an EPS of Rs. 10.92, and RoNW of 64.49%

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 17.05, and based on its FY24 earnings, the P/E stands at 81.62. Thus, based on its recent financial data, the issue appears aggressively priced. Its tiny equity capital post-IPO indicates longer gestation period for migration.

The company has posted PAT margins of 15.22% (FY23), 4.29% (FY24) – standalone, and 14.14% (FY25) - consolidated, and RoCE Margins of 81.02%, 33.50% - standalone, and 31.43% - consolidated, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends from inception. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORDS:
This is the 18th mandate from Expert Global in the last four fiscals (including the ongoing one). Out of last 16 listings, 1 opened at par, 2 at discount and the rest with premium ranging from 10.47% to 90.00% on the date of listing.