Manyavar IPO Review, Broker Views, Subscribe or Avoid

Last updated on February 13, 2022

Manyavar IPO (Vedant Fashions) is all set to open for subscription on 4 February 2022. The company is the largest player in the men’s Indian wedding and celebration wear segment. Apart from its flagship brand, Vedant Fashions has Mohey, Mebaz, Twamev and Manthan brands. Manyavar IPO Review is aimed to bringing readers up to the speed with regards to the company’s business, strengths and IPO valuation.

Manyavar IPO Review – Strengths

• Market leader in Indian wedding and celebration wear with a diverse portfolio of brands
• Large and growing market
• Asset light business model (over 90% revenues from franchise-owned outlets)
• franchise300 franchisees as of September 2021
• Broad customer reach (535 exclusive stores across 212 cities) and strong brand recall
• Strong raw material sourcing capabilities

Vedant Fashions IPO – Risk Factors

• Highly concentrated business on Indian wedding and celebration wear
• Business is vulnerable to variations in demand as well as changes in consumer preferences
• Excessive reliance on Manyavar brand (84.2% of revenues in FY2021)
• Large portion of attires and accessories are manufactured by third-party players (jobbers)
• The company’s warehouse, factory and a majority of its jobbers are based in Kolkata, West Bengal

Manvayar IPO Analysis – Financial Performance

Vedant Fashions Valuations & Margins

Manyavar IPO Review – Subscribe or Avoid?

Indian weddings have traditionally been big as well as fat. Another characteristic of Indian weddings has been the participation of unorganized sector and even when organized, brands were involved, they have been mostly local. A notable exception of this well-established trend has been Tata which made inroads with its Tanishq jewelry brand. And now, we have Vedant Fashions which has established itself through differentiated and coveted brands.

The company’s success is evident from the operational and financial figures mentioned above and from the fact that whatever little competition it has is from unorganized sector. This is a massive achievement in a fragmented market.

Topline figures in the last couple of years were impacted due to the Covid-19 pandemic and thus, are unlikely to give a correct picture of the company’s success. Nevertheless, the fact that its margins remained intact during pandemic says a lot about the robustness of the business.

Adding further to the management’s credit, the company has a lean balance sheet with no debt. This essentially means that Vedant Fashions doesn’t really need IPO funds for capital expansion and this explains the pure OFS nature of the issue. However, it is worth noting that its private equity investor Kedaara Capital is making a full exit from the company.

Thanks to a visibly long runway of industry growth, IPO investors can be assured of the good show continuing at the company.

In terms of valuations, Vedant Fashions’ pricing of INR824 – 866 per share translates into a P/E multiple range of 153.7 – 161.6 based on FY2021 earnings. When H1 FY2022 earnings are taken into consideration and are annualized, the comparable figures come down to 102.7 – 108. While this is certainly not inexpensive, it is no secret that earnings have been depressed in recent times and are set to rebound as Covid-19 restrictions go away gradually.

All in all, Manyavar IPO review tells the story of a brand that is scaling up beautifully and has potential to maintain its monopoly in the branded space for several years to come. Without a doubt, valuations are rich as is the case with every good story. There is even a small premium in the informal market indicating chances of positive listing. Nevertheless, an investment decision needs to be taken keeping individual risk appetite into consideration.

Vedant Fashions IPO Review – Broker Calls

Angel One – Neutral
Arihant Capital –
Ashika Research – Unrated
Asit C Mehta –
BP Wealth – Avoid
Canara Bank Securities – Subscribe
Choice Broking – Subscribe with caution
Elite Wealth – Avoid
GEPL Capital –
Hem Securities – Long term Subscribe
ICICIdirect – Unrated
KR Choksey – Subscribe
Marwadi Financial Services – Avoid
Motilal Oswal –
Nirmal Bang –
Religare Broking – Unrated
Samco Securities – Subscribe with caution
Share India Securities – Avoid
SMC Global – 2/5
Ventura Securities – Not rated