Vedant Fashions (VFL) reported Q4FY22 results, which were significantly above IIFL’s estimate. The brokerage believes the beat in Q4 is driven by a faster than expected recovery and, therefore, broadly maintains its estimates.
The brokerage house has maintained its Buy rating on the newly listed stock with a twelve-month target price of ₹1,180 apiece, implying a potential upside of over 27% from current stock level. Vedant Fashions shares made market debut in February 2022, and are currently trading over 7% higher from its IPO issue price of ₹866 per share.
“With a customer profile of mid-to-high income segments, Vedant Fashions is less likely to be impacted by a soft macro and remains well poised for growth delivery. Despite rich valuations, Vedant Fashions offers a unique model of growth and a high-returns profile in apparel retail,” IIFL’s note stated.
Vedant Fashions has increased its exclusive brand outlets (EBO) retail area, at a CAGR of 16% in the past few years (including Covid-impacted years), and expects to maintain the same run-rate along with a high single-digit SSS growth. With presence currently in 223 cities & towns in India, the firm has identified 150 new cities & towns, to expand its presence in the medium term, the brokerage added.
Vedant Fashions’ ‘Manyavar’ brand is a category leader in the branded Indian wedding and celebration wear market with a pan-India presence. The company’s other brands include Twamev, Manthan, Mohey, and Mebaz and it competes with Aditya Birla Fashion Retail, Trent, Metro Brands and TCNS Clothing Company.
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