Vedant Fashions Limited IPO (May Subscribe)

Vedant Fashions Limited (VFL) caters to the Indian celebration wear market with a diverse portfolio of brands. The company offers a one-stop destination with a wide spectrum of product offerings for every celebratory occasion to its customers.

VFL’s ‘Manyavar’ brand is a category leader in the branded Indian wedding and celebration wear market with a pan-India presence. VFL offers a one-stop destination with a wide spectrum of product offerings for every celebratory occasion and aims to deliver an aristocratic yet seamless purchase experience to customers.

Vedant Fashions Limited has its dominance in the premium and value segments of the men’s Indian wedding and celebration wear market through their brands, Twamev and Manthan, respectively, and in the women’s Indian wedding and celebration wear market through their brand, Mohey, launched in 2015.

The issue is purely OFS through which the company’s promoter & existing shareholders will sell 3.64 cr shares At the higher price band, OFS size is stood at Rs 31.49 bn. Since the offer is 100 pct OFS, the company will not receive any proceed from the IPO.

• Vedant Fashions Limited is a category leader in Indian wedding, celebration wear, all-India. Established brands: Manyavar, Mohey, Manthan, Twamev, Mebaz. In FY20, Manyavar brought 82% to sales to customers. Brands comprise a diverse range of attire and accessories, of creations for various members of the wedding entourage, besides personalisations for bride and groom.
• Vedant Fashions Limited is asset-light in respect of their plant, property and equipment which enable them to achieve a high return on capital employed, primarily due to the nature of their sourcing and manufacturing operations, with a substantial majority of their sales being generated through EBOs.
• The success of their franchisee-based model is proven by the fact that as of September 30, 2021, approximately 73 pct of their franchisees have operated their stores for three or more years, and 65 pct of the Sales of their customers by their franchisee-owned EBOs is derived from franchisees having two or more stores.
• As of September 30, 2021, VFL had a retail footprint of 1.2 msf covering 535 EBOs (including 58 shop-in-shops) spanning across 212 cities and towns in India, and 11 EBOs overseas across the United States, Canada and the UAE.

Key Risks

Mounting competition in men’s celebration wear from ABFRL, Reliance, etc, keen competition in women’s celebration wear, slow-down in consumption

Valuation

At the upper end of the price band, the issue is quoting at a PE of 107x its annualized FY22 earnings, thus it is aggressively priced. However, considering the recent case of bumper listing of loss-making women’s bottom wear company Go Fashion in the recent past; this profit-making Company may to receive a decent response. High-risk investors willing to invest for longer-term may Subscribe.

Also, read our Blog on Union Budget 2022

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