Vedant Fashion Limited IPO

Incorporated in 2002, Vedant Fashions Limited caters to the Indian wedding and 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.

The company's brands include (i) Manyavar, (ii) Mohey, (iii) Mebaz, (iv) Manthan, and (v) Twamev. The company operates its business through franchise-owned exclusive brand outlets (EBOs), with the remaining by multi-brand outlets (MBOs), large format stores (LFSs), and online platforms, including its website (www.manyavar.com) and mobile application.

• Vedant Fashions was the largest 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, its ‘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.
• As of September 30, 2021, the company had a retail footprint of 1.2 Mn sq. ft covering 535 EBOs (including 55 shop-in-shops) spanning 212 cities and towns in India, and 11 EBOs overseas across the United States, Canada, and the UAE.
• Company have focused on spreading India’s vibrant culture, traditions and heritage through its aspiration yet value for money brands at a diverse range of price points. It offers a one-stop destination with a wide spectrum of product offerings for every celebratory occasion.
• The company's distributors are in 28 states and 8 union territories throughout India, catering to over 1.6 million retail outlets. As of September 30, 2021, the company had 88 depots in India, with an aggregate storage space of approx. 1.8 million square feet across the country.

Outlook & Valuation

The company has mixed set of financials over the few years where the revenue grew in FY20 and fell back from Rs. 9,47.97 cr to Rs 625 cr in FY21. Similarly, profit also declined from Rs. 236.6 cr in the year FY20 to Rs. 132.9 cr in the FY21 which can be attributed due to the pandemic. However, the company's performance returned to normal in the first 6 months of FY22. Vedant Fashions is among the top companies in the Indian wedding and celebration wear segment. The company's financials suffered a setback, which could be due to COVID 19. The issue is valued at P/E 161(x) to its FY21 EPS of Rs. 5.36 and P/BV of 24.42(x) on NAV of 35.45 that seems to be overpriced also the issue is purely OFS based. Thus we assign an "AVOID" rating to the IPO.

KEY MANAGERIAL PERSONNEL

• Ravi Modi is the Chairman and Managing Director of the Company. He has been associated with the Company since its inception. He has more than two decades of experience in the garment industry. He oversees the design and marketing functions of the Company
• Shilpi Modi is the Whole-time Director of our Company. She has been associated with the Company since its inception. She has more than two decades of experience in the garment industry.
• Rahul Murarka, is the Chief Financial Officer of the Company.. He has over 16 years of experience in finance, accounting, audits, taxation and regulatory compliances.
• Navin Pareek is the Company Secretary and Compliance Officer of the Company. He has over 10 years of experience in legal, compliance, finance, direct taxation and secretarial functions.
• Amar Sethia, is the Chief Product Officer of the Company. He is engaged in product designing and in developing the product vision, strategy, analytics and metrics.
• Vedant Modi is the Chief Marketing Officer of the Company. He joined our Company on June 24, 2021. He holds a bachelor’s degree in science from University College London where his main field of study was information management for business.
• Kanchan Banerjee, is the Chief Human Resources Officer of the Company. She has over 10 years’ experience in the human resources industry.

COMPETITIVE STRENGTHS

• Market leader in the Indian wedding and celebration wear market.
• Large and growing Indian wedding and celebration wear market.
• Omni-channel network of seamlessly integrated business.
• Technology-based strong supply chain and inventory systems
• Differentiated business model combining the strengths of retailing with branded consumer play
• The experienced and professional leadership team

KEY STRATEGIES

• Expansion of footprint within and outside India.
• Scaling up its emerging brands through increased up-selling and cross-selling initiatives
• Enhancement of brand appeal through targeted marketing initiatives.

KEY CONCERNS

• IPO proceeds is purely an offer for sale and company will not get benefit from such proceeds
• Dependency on third parties for some production and activities.
• Highly dependent on the on organization of weddings, festivals and other such occasions and may be affected by seasonal variations.
• Exposure to supply chain and regional risk due to geographical location of its factory and warehouse.
• Growth and profitability depend on the level of consumer confidence and spending in India and the overseas.

COMPARISON WITH LISTED INDUSTRY PEERS(AS ON 31STMARCH 2021)

There are no listed companies in India that engage in a business similar to that of the Company’s business. Accordingly, it is not possible to provide an industry comparison in relation to the Company.

FINANCIALS (RESTATED CONSOLIDATED)

Particulars (Rs. In Millions) FY 2021 FY 2020 FY 2019 Equity Share Capital247.87250.46250.46Other Equity10,666.2310,409.688,577.24 Net Worth 10,914.1010,660.148,827.70 Borrowings--0.02 Revenue from Operations 5,648.169,155.498,007.42 EBITDA 2,817.053,987.653,379.54Profit Before Tax1,819.173,118.412,709.38 Net Profit for the year 1,329.032, 366.371,764.27

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The contents of this document are for information purpose only. This document is not an investment advice and must not alone be taken as the basis for an investment decision. Before taking any decision to invest, the recipient of this document must read carefully the Red Herring Prospectus (‚RHP‛) issued to know the details of IPO and various risks and uncertainties associated with the investment in the IPO of the Company.

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