Textile, Trending in the Economy

Vedant Fashion : Next Titan in the Fashion Industry?

Vedant Fashion is the dominant player in the organized traditional wear with having ~35% market share in men's ethnic organized market.

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(A) About

Vedant Fashion - Logo

Incorporated in 2002 Vedant Fashion Ltd, one of the India's Largest company in Indian wedding and celebration wear segment, headquarters in Kolkata. It caters to Indian celebration wear market with a diverse portfolio of brands.

The company's products include men's ethnic and celebration wear items such as Indo-western, sherwanis, kurtas, jackets and accessories such as jutti, safa, mala, and women's ethnic and celebration wear items such as lehengas, sarees, stitched suits, gowns and Kurtis.

Company operates through franchisee owned EBOs (Exclusive brand outlets), MBOs (Multi Brand Outlets) and also through LFS (Large format stores) and Online.

(B) Journey

Vedant Fashion - Journey

(C) Industry Overview

Vedant Fashion - Indian Clothing Industry

Key Industry growth drivers

Vedant Fashion - Wedding Industry

The market size of ethnic wear industry is expected to increase to Rs 1,32,500 Cr with a 15-17% CAGR over FY22-FY25 driven by various factors:

- Huge domestic market of 9.5-10Mn weddings per year.

- Further, higher spending on apparel per consumer led by improved income levels.

- Increasing trend of multi-day wedding in India.

- Extended market size beyond bride/groom to immediate family, close friends and relatives.

- Acceptability of wearing ethnic wear during various festivities as well as the emergence of new brands, moreover increased penetration of branded players in tier II & tier III markets.

(D) Shareholding Pattern

Vedant Fashion - Shareholding Pattern
Vedant Fashion - Shareholding

(E) Board Members of Vedant Fashion Ltd

Vedant Fashion - Board Members

(F) Brands

Vedant Fashion - Brands

(G) Revenue Segmentation

(H) Cost Structure

Vedant Fashion - Cost Structure

(I) Financials

Vedant Fashion - Financial Trend

Company has grown its revenue at 12.32% in past 5 years, while PAT grew at a CAGR of 23.72%. Moreover, company’s operating and Profit margins increase from 19.53% in FY18 to 31.66% in FY23.

Vedant Fashion - Du Pont Analysis

Company Sales/Total Assets improved from 0.8 in FY18 to 0.6 in FY23, while Asset to Equity increase from 1.3 in FY18 to 1.5 in FY23.

(J) Management Discussion & Concall

Future Outlook

- Management plan to open 8-10 pilot stores of Twamev and 10-15 stores for Mohey. Further scalability will depends on the performance of these stores. The new stores addition are anticipated to be in FY24.

- The company generally experiences ~37% of the total sales in H1 of the year, however current figures stands at ~42%. They are also expecting this to normalize back to ~37% level in H1FY24.

- Meanwhile, company is anticipating high single digit same store sales growth in the coming periods.

- Company is aiming to achieve a gross margin of 66-67% in the coming periods and PAT margin to be more than 30%.

- Moreover company is also looking for external Merger & Acquisition.

Concall Highlights

- As on 31st March 2023, the company had 649 EBOs (exclusive brand outlets) spread across 1.47
million sq. ft. in 245 cities and towns in India. During the quarter, the company added 7 EBOs in India
and 2 international EBOs across 75,000 sq. ft. retail area.

- The company recorded SSSG (same-store sales growth) of 18.1% in FY23 and during the quarter, it
grew by 14% on a YoY basis.

- The grooms and bride’s business contributed 45%-50% to the total revenue in FY23.

- The reduction in employee cost is due to reduction in Director's remuneration as it reduce from 2.1% in FY22 to 1% in FY23.

- Moreover, management envisages to 8-10 pilot stores of Twamev and 10-15 stores for Mohey. Further scalability will depend on the performance of these stores.

(K) SWOT Analysis

Vedant Fashion - SWOT Analysis

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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