About the company:
Vedant Fashions Limited has a varied portfolio of products targetting the Indian celebration wear marketplace. Customers can visit the store for a one-stop-shop with a vast range of product selections for any special event. In terms of sales, OPBDIT, and profits after tax for the Financial Year 2020, Vedant Fashions was the best in India in the men’s Indian wedding and celebration wear supply chain.
The company’s brands include:
- Manyavar
- Mohe
- Mebaz
- Manthan
- Twamev
As of September 30, 2021, the firm had a retail presence of 1.2 million sq. ft, with 535 EBOs (including 55 shop-in-shops) spread across 212 Indian cities and towns, as well as 11 EBOs in the United States, Canada, and the United Arab Emirates.
Headquarter:
Kolkata, West Bengal
Sector:
Readymade Garments/ Apparells
Area of Operation:
- PAN India presence.
- International stores in Dubai, Nepal & USA.
- Merchandising tie-ups with retail chains Central, Lifestyle, and Ethnicity.
Chairman & MD:
Mr. Ravi Modi
Payment to Directors:
All their Independent Directors were appointed during the current Fiscal i.e. Fiscal 2022. Accordingly, no remuneration was paid to them in Fiscal 2021.
Subsidiaries:
- Manyavar: Flagship Brand
- Mohey: Introduced in 2015
- Mebaz: Acquired one of the biggest fashion brands in southern India, in 2018
- Manthan: Started in 2018 and is positioned as Men’s value brand in the value spectrum
- Twamev: Premium men’s wear brand launched in 2019
Competitors:
As per the offer documents, VFL has no listed peers to compare with. Accordingly, it is not possible to provide an industry comparison in relation to them.
Shareholding pattern:
- Pre Issue Promoters Share Holding – 92.40%
- Post Issue Promoters Share Holding – 84.9%
Industry Overview:
- CRISIL estimates the Indian wedding and celebration wear apparel market to grow at 15% to 17% over Financial Years 2022 to 2025, with an estimated 9.5 million to 10 million weddings per year.
- Consumers are also increasingly preferring ready-to-wear Indian wedding and celebration wear with the branded celebration wear market expected to grow at 18% to 20% as consumers migrate towards branded Indian wedding and celebration wear.
- The share of men’s wear is projected to attribute approximately 44% of the retail apparel market in FY25, clocking the highest growth rate of nearly 20% to 22% between FY22 and FY25.
Key points:
- Vedant Fashions Ltd. (VFL) is the largest company in India in the men’s Indian wedding and celebration wear segment.
- Franchise-owned exclusive brand outlets (EBOs) account for the majority of the company’s revenue, with the rest coming from multi-brand outlets (MBOs), large format stores (LFSs), as well as digital platforms.
- In the year 2019, launched its 600th store.
- Manyavar aims to expand its reach with 1000 exclusive stores.
- Over the period, it has increased its product portfolio to include women and kidswear.
IPO Details: Vedant Fashion
| IPO Opening Date | Feb 4, 2022 |
| IPO Closing Date | Feb 8, 2022 |
| Face Value | ₹1 per equity share |
| IPO Price | ₹824 to ₹866 per equity share |
| Lot Size | 17 Shares |
| Issue Size | ₹3,149.19 Cr |
Objectives of the issue:
- To achieve the benefits of listing the equity shares on the stock exchanges.
- To carry out the Offer for Sale of up to 36,364,838 equity shares by the selling shareholders.
Profit and Loss Statement:
Standalone P&L
| Mar-19 | Mar-20 | Mar-21 | Avg Y.O.Y Change | |
| Revenue from Operations | 801 | 916 | 565 | -11.98% |
| Expenses | 527 | 522 | 322 | -19.63% |
| Operating Profit | 274 | 394 | 243 | 2.74% |
| Profit before Tax | 280 | 312 | 182 | -15.12% |
| Net Profit | 182 | 237 | 133 | -6.83% |
| EPS | 7.04 | 9.45 | 5.36 |
Standalone Balance Sheet
| Mar-19 | Mar-20 | Mar-21 | Avg Y.O.Y Change | |
| Share Capital | 25 | 25 | 25 | 0% |
| Reserves | 863 | 1041 | 1067 | 11.56% |
| Borrowings | 0 | 316 | 292 | -7.59% |
| Trade Payables | 60 | 50 | 50 | -8.33 |
| Other liability items | 196 | 158 | 191 | 0.75% |
| Total Liabilities | 1146 | 1591 | 1624 | 20.45% |
| Fixed Assets | 253 | 507 | 459 | 45.46% |
| CWIP | 2 | 0 | 0 | – |
| Investments | 194 | 401 | 536 | 70.18% |
| Inventories | 91 | 121 | 101 | 8.22% |
| Trade receivables | 333 | 372 | 361 | 4.38% |
| Cash Equivalents | 119 | 20 | 7 | -74.10% |
| Loans n Advances | 49 | 141 | 116 | 85.01% |
| Other asset items | 104 | 30 | 43 | -13.91% |
| Total Assets | 1146 | 1591 | 1624 | 20.45% |
Financial Ratios
Stock Price
| 1. Asked Price | Rs 886 |
| 2. Market Cap | Rs 20,000 Cr |
| 3. Lastest GMP | Rs 42 (4.85%) |
Ratios
| 1. PE Ratio | 165.3 |
| 2. ROE | 12.19% |
| 3. ROCE | 15% |
| 4. Net Profit Margin | 21.26% |
| 5. Operating Profit Margin | 32.60% |
| 6. Debt to equity | 0.68 |
Positive Aspects:
- Monopoly in the men’s Indian wedding and celebration wear segment.
- Domestic apparel retail industry projected to grow 20% to 22% between FY22 and FY25.
- Technology-based strong supply chain and inventory systems.
- Though this company suffered a setback for FY21 on account of pandemics, it maintained its margins and posted profits in commensuration with top lines.
Negative Aspects:
- 90% sales through EBOs where as 6% sales through MBOs.
- Major financial hit during covid lockdown due to low store footfall.
- Major sales from the Men’s wedding segment which only peaks during occasions.
- Majority manufacturing is from different third party manufacturers.
- Entirely offer for sale and the company wont be benifited from the proceedings.
- Average 2 years CAGR is around -12%
- Average 2 years Net Profit is around -7%
- The issue is priced aggressively based on its latest annualized financial performance.
- Very high PE Ratio
Disclaimer: This shouldn’t be construed as a stock recommendation, investors discretion is advised while investing.
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