Should Go Fashion shareholders book profit or hold the stock for long term?

On the BSE, the scrip made its debut at Rs 1,316; on the National Stock Exchange (NSE), it debuted at Rs 1,310, compared with its issue price of Rs 690.

However, Go Fashion witnessed some profit booking after listing as it dropped 8 per cent to hit an intraday low of Rs 1,210 on the BSE.

The selling pressure has turned investors anxious about their post-listing strategy. They are not sure if they should hold the stock or book profits. Those who did not receive allotment are eyeing an opportunity to make an entry.

However, most analysts suggest investors should hold the stock for a longer term as the company is poised for a strong performance in the longer run. However, short-term buyers can exit at the listing pop, they say.

Vikas Jain, Senior Research Analyst at Reliance Securities, asks investors to hold the stock for the long term. There is more steam left as the company is well placed in its market. “However, one should avoid making fresh stake buys in the company at current levels,” he adds. “One should wait for the quarterly results before making a new purchase but the allottees may continue to hold it.”

Shares of Go Fashions have defied the grey market sentiments. Just a day before its listing, it was commanding a premium of Rs 490 apiece in the unofficial market, which is about 70 per cent above its issue price.

Despite the dampened sentiments, the company was able to hold ground in the grey market, thanks to its reasonable pricing and strong business model. The recent correction in the market has jittered the sentiments.

Astha Jain, Senior Research Analyst at Hem Securities, asks investors to book partial profits and hold the remaining half for the longer run. “One should wait for a decent correction till Rs 1,100 levels to make a fresh entry.”

The company has stable top line growth, and a strong operating margin with a market share of 8 per cent in the branded women’s bottom wear market as of FY20, says Akhil Rathi, Vice-President Advisory at Marwadi Shares and Finance. “It will utilise IPO funds for 120 exclusive brand outlets across tier-2 and tier-3 cities along with online channels,” he adds. “After strong listing, investors can book partial profit in the stock and can hold the stock for the long term.”

The company sold its shares in the range of Rs 655-690 during the initial offering and mopped up Rs 1,013.61 crore via the primary route.

The company has a strong management team with a mixed bag of financials and it is expected that it may perform well, says Santosh Meena, Head of Research, Swastika Investmart. “The aggressive investors who got the allotment can put a stop loss of Rs 1,000 and hold the stock with a long-term view, while safe investors can book profit and wait for new buying opportunities at lower levels,” he adds.

Go Colors has a sturdy brand value with fluctuating revenues. The company moved into losses in FY21. As the number of working women is increasing, along with new fashion trends, the company is poised for strong growth. It has a strong brand exclusively dedicated to the women’s bottom-wear category and is one of the key players in the women’s bottom-wear segment.

The company has a huge potential to expand its business and register profitability in the coming years, says Rajnath Yadav, Research Analyst, Choice Broking. “We have assigned a subscribe for long term rating for the issue. Short-term investors may book listing gains, while long-term investors are advised to remain invested.”