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Target: ₹1,382
CMP: ₹1,151.90
Vedant Fashions (Manyavar) reported a 23.1 per cent y-o-y revenue decline, 12.1 per cent below our estimates. Same store sales growth (SSSG) declined 27.2 per cent versus our estimates of 25.0%, signifying continued demand weakness. This was on account of extremely low/ negligible wedding dates throughout the quarter.
Higher gross margin restricted EBITDA contraction Q1 EBIDTA margin contracted 57bps y-o-y to 47.0 per cent on account of weaker SSSG. Gross margin expanded by 171bps to 73.7 per cent, led by favourable revenue mix tilting to premium products. PBT declined by 33.3 per cent y-o-y due to higher depreciation and interest expenses.
The lower tax rate of 24.9 per cent was led by a deferred tax credit.
We favor Manyavar given strong brand portfolio, superior profitability, and robust supply chain. Expansion of other brands such as Twamev and Mohey and launch of a new brand in Q2FY25 may trigger the next leg of growth. We expect demand to revive with the onset of festival and wedding seasons in H2FY25 – Expect stronger recovery after almost two years of weakness.
Expansion of other brands such as Twamev and Mohey and launch of a new brand in Q2FY25 may trigger the next leg of growth. We expect demand to revive with the onset of festival and wedding seasons in H2FY25.
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