FabIndia desires to go public but its financials paint a worrying picture

FabIndia Overseas, according to media reports, is looking to raise as much as $1 billion through a public issue. The timing is most interesting given the impact Covid-19 has had on the industry with FabIndia, a name in the retail chain store business with an ethnic tilt, quite severely hit.

Business Today sourced the company's financials from the Registrar of Companies (RoC) and it does make for a worrying picture. For the fiscal ended 2020, when the pandemic was in its infancy, the net profit was at Rs 34 crore or a sharp drop of 66% from Rs 101 crore for FY19. These numbers are at a consolidated level and revenue growth has not been impressive either - between 2018 and 2020, it grew by just 13% to a tad over Rs 1,500 crore. The company counts PremjiInvest and Lighthouse Funds among its investors.

The numbers were filed in October-end last year and in a detailed note, FabIndia has said the fashion retail market in India "has observed various changes and challenges in recent years but has nevertheless been growing consistently. The major shift occurring in consumer and retail landscape is dominated by the rapid rise of e-commerce companies and brands that are building market share with very low prices." The fall in net profit has been largely on account of depreciation and amortisation at Rs 186 crore and finance costs up almost 6x to Rs 63 crore.

The actual impact of the pandemic on FabIndia's FY21 numbers is not public but there is an ominous mention in the report. "At the time of writing this report, your company now has 318 stores across the country and due to COVID-19 impact, 286 stores are operational and 32 stores are closed." In the midst of all this, going to the capital markets remains most interesting. The action is still waiting to play out on this one.

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