Vedant Fashions Limited is the the largest Indian company in the men’s Indian wedding and celebration wear segment in terms of revenue, OPBDIT and profit after tax for the Financial Year 2020 according to CRISIL report. The IPO opens for subscription on 4 February 2022, please head to this page to get regular updates such as subscription and allotment. Here are a few things to know about the upcoming IPO.
Diverse Brand Portfolio
Vedant Fashions has a diverse portfolio of brands. Its flagship brand- Manyavar is a category leader in the branded Indian wedding and celebration wear market with pan-India presence. Manyavar had contributed INR1,035.7 crore to Vedant Fashion’s overall revenues in FY20.
Unique Business Model
Vedant Fashions has a unique business model combining asset light brand play along with seamless purchase experience; and no end of season sales/ discounts for Manyavar brand. Vedant Fashions has a growing presence in women’s Indian wedding & celebration wear with Mohey being the largest brand (in FY20 pre-pandemic) in terms of the number of stores and a pan India presence (CRISIL report).
Vedant Fashions has multi-channel presence with 90%+ sales coming from 535 EBOs (including 58 shop-in-shops) in FY21 with 1.2 mn sq ft across 212 cities in India and 8 internationally (including United States, Canada and the UAE), which are countries with a large Indian diaspora.
Asset-light Business Model
Vedant Fashions has a robust franchisee led asset light model delivering high ROCEs. Among the players compared in the predominantly Indian wedding and celebration wear category (CRISIL report), Vedant Fashions has the highest EBO network. VFL generates approximately 90% of sales through the franchisee-owned EBO network consisting of 481 stores (excluding 49 shop-in-shops), as of Financial Year 2021. Vedant Fashions’ revenue per store was INR2.4 crore in Financial Year 2020. The average store size for VFL stands at 2,266 square feet as of Financial Year 2021. As per CRISIL study, these are market leading figures in the category.
The success of Vedant Fashions’ franchisee-based model is proven by the fact that as of September 30, 2021, approximately 73% of its franchisees have operated stores for three or more years, and 65% of the sales of Customers by its franchisee-owned EBOs is derived from franchisees having two or more stores.
Vedant Fashions has a technology-based strong supply chain and data-driven inventory replenishment system to help attain operational efficiencies in sourcing, manufacturing, distribution and sales processes and delivering an enhanced retail experience to customers.
Vedant Fashions utilises data analytics for capturing and analysing evolving consumer preferences and purchase trends across the country, and have developed a strong expertise and understanding of consumer preferences across India. Vedant Fashions also relies upon technology platforms to monitor and manage store inventory levels on a real-time basis and integrate stock and supply chain with the production cycle.
Robust Performance Despite Challenges
The company’s revenue from operations were impacted in FY21 and H1 FY22 due to Covid-19 resulting in business and the temporary closure of stores completely during the June quarter (Jun-Aug) due to lockdowns imposed in various parts of India. Even in this scenario, company had a PAT of INR133 crore when other retail companies had losses. It had LTM Sep 2021 PAT of INR249 crore in spite of Q1 FY22 having COVID-impact.
Vedant Fashions had reported strong growth and return ratios with FY17-20 PAT CAGR of 31% and EBITDA margin of 48.9% in H1 FY22 and PAT margin of 27.3% in H1 FY22. Vedant Fashions has best-in-class ROCE for Financial Years 2019, 2020 and 2021 and the six months ended September 30, 2021 at 48.24%, 47.80%, 34.07% and 22.16% respectively. Even in FY20, Vedant Fashions had INR237 crore of PAT in spite of full lockdown in last 10 days which hits sales and profitability. Vedant Fashions has grown in presence, revenue and profitability based on H1 FY22 details in the RHP. Hence FY21 isn’t the right year for valuation given COVID-related lockdown in H1.
Acquisitions and way forward
Vedant Fashions is focused on further enhancing its leadership position in the organized Indian wedding and celebration wear market and establishing dominance in the premium and value segments of the men’s Indian wedding and celebration wear market through its brands, Twamev and Manthan, respectively, and in the women’s Indian wedding and celebration wear market through its brand, Mohey, launched in 2015. Vedant acquired Mebaz in financial year 2018, which a regional legacy brand catering to the entire family with a rich heritage and established presence in the states of Andhra Pradesh and Telangana.
Vedant Fashions connects with customers at an emotional level through subtle messages that customers can relate to. These include values-based messaging themes embedded around traditional cultural values, such as “Diwali Wali Feeling”, “Shaadi Grand Hogi”, “Pehno Apni Pehchan” “Apno Wali Shaadi” and “Shaadi ka Kharcha Adha Adha”.