Vedant Fashion is the largest company in India 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). The 'Manyavar' brand is a category leader in the branded Indian wedding and celebration wear market with a pan-India presence, as of Financial Year 2020. They have established a multi-channel network and introduced brands by identifying gaps in the under-served and high-growth Indian wedding and celebration wear category. They focus on spreading India's vibrant culture, traditions and heritage through the aspirational yet value for money brands at a diverse range of price points. They offer a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion and aim to deliver an aristocratic yet seamless purchase experience to the customers through the aesthetic franchisee-owned exclusive brand stores. The Company's brand includes:(1). Manyavar (2). Mohey (3). Mebaz (4). Manthan (5). Twamev Company 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 the brands, Twamev and Manthan, respectively, and in the women's Indian wedding and celebration wear market through company brand, Mohey, launched in 2015. Through the diverse portfolio of leading and differentiated brands, including the acquisition of Mebaz in FY 2018, a regional legacy brand catering to the entire family with a rich heritage and established presence in the states of Andhra Pradesh and Telangana, they are able to better cater to the needs of their customers and the aspirations of the entire family yet remain value for money and service the varying financial budgets of their Indian consumers. Company is asset-light in respect of the plant, property and equipment, primarily due to the nature of the sourcing and manufacturing operations, with a substantial majority of the sales being generated through the franchisee-owned EBOs. The omni-channel presence, through EBOs and online platforms, is designed in a manner such that products across the brands are available under one universal platform. As of September 30, 2021, approximately 73% of the franchisees have operated the stores for three or more years, and 65% of the sales of the Customers by the franchisee-owned EBOs is derived from franchisees having two or more stores. Through the network of over 300 franchisees as of September 30, 2021, they have a track record of commanding a high initial capital commitment from the franchisees and in return, provide all necessary support in connection with identifying and approving potential locations for new stores, managing multi-channel advertising on a national and regional basis, store development and inventory management, management of the supply chain and provide detailed training programmes for store staff and franchisees. They also incur lease costs in connection with EBOs operated by the franchisees on premises leased by the company. As of September 30, 2021, they had a retail footprint of 1.2 million square feet 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, which are countries with a large Indian diaspora. They also operate a QR-code enabled digital catalogue at many of the stores so that the customers can select a product of their choice from the entire range of offerings. As per financial performance, Vedant Fashion Limited has posted total income/net profits (loss) of Rs.819.79 cr. / Rs. 176.43 cr. (FY19), Rs. 947.98 cr. / Rs. 236.64 cr. (FY20), Rs. 625.02 Cr. / Rs. 132.90 Cr. (FY21) and Rs. 387.29 Cr. / Rs. 98.22 Cr. (H1FY22). So company has posted good growth, but due to pandemic sales and profits are down since FY20. Company has posted an average EPS of Rs 7 and average RoNW of 16.83% for last three fiscals. Issue is priced at a P/BV of 24.43 as per NAV of 35.45 on 30.09.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 158 and if we annualise Q1 FY22, then on fully diluted equity post issue P/E is 107 which looks very aggressively priced. Also the complete IPO is OFS and promoters are As per RHP, there are no listed peers. On BRLM's front, five BRLMs are associated with this IPO, and have handled around 155 IPO in last three fiscals. From last 10 IPOs, four are opened below issue price and remaining are opened above issue on the day of listing. As of now, three are trading below and other are trading above issue price. ( As on 25.01.22) As per financials, Vedant Fashion Limited (Manyavar) has shown good growth till pandemic started and then sharp decline in sales, RoNW is 12.19% and P/E is respectively 158 and 107 as per FY21 and annualised FY22 earnings, which looks very aggressively priced. Company is in business of celebration wear and its highly competitive segment with lot of organised and unorganised players, although there is good growth opportunities also available. Performance of BRLM is good. So, we are giving NEUTRAL rating to this IPO.
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