Please refer to important disclosures at the end of this report
1
Vedant Fashions Limited (VFL) was incorporated on May 24, 2002. 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. The compan
y's brands include
Manyavar, Mohey, Mebaz, Manthan, and
Twamev. Vedant Fashions was the
largest in India in the men's Indian wedding and celebration wear segme
nt in
terms of revenue and profit after tax for the Financial Year 2020.
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 m
obile
application.
As of September 30, 2021, the company had a retail footprint of
1.2 Mn sq. ft covering 535 EBOs (including 58 shop-in-
shops) spanning 212
cities and towns in India, and 11 EBOs overseas across the Unit
ed States,
Canada, and the UAE.
Positives: (1) VFL is market leader in Indian celebration wear (2) D
iverse portfolio
of brands catering to the aspirations of the entire family (3) Unique b
usiness
model combining asset-light brand play along with seamless p
urchase
experience (4) Strong multi-channel network with wide pan-India r
each and
presence in international markets (5) Fully integrated technology-based s
upply
Chain network (6) Experienced & professional leadership team.
Investment concerns: Slowdown in economy and increase in competition
could
impact the profitability of the company.
Outlook & Valuation: In terms of valuations, the post-
issue TTM P/E works out to
84.4x (at the upper end of the issue price band), which is high considering VFL
’s
historical top-line CAGR of ~10% over FY18-20. However, VFL has
high
operating margin, a
sset light business, strong brands and wide range of
products but we believe that these positives are captured in the valuations
commanded by the company. Thus, we have a NEUTRAL rating on the issue.
Key Financials
Y/E March (` cr) FY20
19
FY2020 FY2021 1H
FY21
1HFY22
Net Sales
801
916
565
72
360
% chg
14.3
(38.3)
-
401.8
Net Profit
176
237
133
(17.7)
98
% chg
34.1
(43.8)
-
(657.6)
OPM (%)
41.9
43.0
43.0
5.5
44.6
EPS (`)
7.1
9.5
5.4
-
-
P/E (x)
121.7
90.7
161.5
-
P/BV (x)
24.2
20.1
19.7
-
RoE (%)
19.9
22.2
12.2
-
RoCE (%)
30.6
22.1
10.7
-
EV/Sales (x)
26.4
23.3
37.6
-
EV/EBITDA (x)
63.0
54.3
87.3
-
Angel Research; Note: Valuation ratios based on post-issue shares and at `866 per share.
NEUTRAL
Issue Open: Feb 04, 2022
Issue Close: Feb 08, 2022
QIBs 50%
Non-Institutional 15%
Retail 35%
Promoters 84.9%
Public 15.1%
Issue Details
Face Value: `1
Present Eq. Paid up Capital: `24.2cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `24.2cr
Issue size (amount): `3,149cr
Price Band: `824-866
Lot Size: 17 shares
Post-issue mkt.cap: `19,998*– 21,017cr**
Promoter holding Pre-Issue: 92.4%
Promoter holding Post-Issue: 84.9%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Amarjeet S Maurya
+022 40003600, Extn: 6831
amarjeet.mau[email protected]elbroking.com
Vedant Fashions Ltd
IPO Note |
Retail
February 02, 2022
Vedant Fashions Ltd| IPO Note
February 02, 2022
2
Company background
Vedant Fashions Limited (VFL) was incorporated on May 24, 2002. Vedant
Fashions Limited 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.
The company's brands include (i) Manyavar, (ii) Mohey, (iii) Mebaz, (iv)
Manthan, and (v) Twamev. 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.
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.
As of September 30, 2021, the company had a retail footprint of 1.2 Mn sq. ft
covering 535 EBOs (including 58 shop-in-shops) spanning 212 cities and towns
in India, and 11 EBOs overseas across the United States, Canada, and the UAE.
Issue details
VF
L
is raising
3,149
cr through
offer for sale
(
by
shareholder
selling share
)
in
the price band of 824-866.
Exhibit 1: Pre and post IPO shareholding pattern
No of shares (Pre-issue) % (Post-issue)
%
Promoter
224,249,848
92.4%
206,067,429
84.9%
Public 18,444,926 7.6%
36,627,345
15.1%
Total
242,694,774
100.0%
242,694,774
100.0%
Source: Source: RHP, Note: Calculated on upper price band
Objectives of the Offer
To achieve the benefits of listing the equity shares on the stock
exchanges; and
To carry out the Offer for Sale of up to 36,364,838 equity shares by
the selling shareholders.
Vedant Fashions Ltd| IPO Note
February 02, 2022
3
Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020 FY2021
Net Sales
801
916
565
% chg
14.3
(38.3)
Total Expenditure
465
522
322
Raw Material
223
251
146
Personnel
47
53
38
Others Expenses
195
217
137
EBITDA
336
394
243
% chg
17.3
(38.3)
(% of Net Sales)
41.9
43.0
43.0
Depreciation& Amortisation
64
89
96
EBIT
272
305
148
% chg
12.3
(51.6)
(% of Net Sales)
33.9
33.3
26.1
Interest & other Charges
20
26
26
Other Income
19
32
60
(% of PBT)
7.0
10.4
33.1
Recurring PBT
271
312
182
% chg
15.1
(41.7)
Tax
95
75
49
(% of PBT)
34.9
24.1
26.9
PAT before P/L Asso.Co.
176
237
133
Share in profit of Associates
-
- -
PAT after P/L Asso.Co.
176
237
133
Basic EPS (` cr)
7.1
9.5
5.4
% chg
34.1
(43.8)
Source: Company, Angel Research
Vedant Fashions Ltd| IPO Note
February 02, 2022
4
Consolidated Balance Sheet
Y/E March (` cr) FY2019 FY2020 FY2021
SOURCES OF FUNDS
Equity Share Capital
25
25
25
Reserves& Surplus
863
1,041
1,067
Shareholders Funds
8
89
1,066
1,091
Total Loans
-
316
292
Deferred Tax Liability
29
84
79
Total Liabilities
917
1,467
1,463
APPLICATION OF FUNDS
Net Block
253
507
459
Capital Work-in-Progress
2
0
0
Investments
194
40
1
536
Current Assets
696
683
629
Inventories
91
121
101
Sundry Debtors
333
372
361
Cash
119
20
7
Loans & Advances
33
64
50
Other Assets
120
107
110
Current liabilities
245
201
227
Net Current Assets
451
482
402
Deferred Tax Asset
16
77
66
Total Assets
917
1,467
1,463
Source: Company, Angel Research
Vedant Fashions Ltd| IPO Note
February 02, 2022
5
Consolidated Cash Flow Statement
Y/E March (` cr) FY2019 FY2020 FY2021
Profit before tax
280
312
182
Depreciation
9
89
96
Change in Working Capital
(3) (80) 4
0
Interest / Dividend (Net)
(1)
10
12
Direct taxes paid
(95)
(75)
(34)
Others
(13)
(11)
(42)
Cash Flow from Operations
177
243
253
(Inc.)/ Dec. in Fixed Assets
(7) (18)
15
(Inc.)/ Dec. in Investments
(156)
(77)
(103)
Cash Flow from Investing
(163)
(96)
(88)
Issue of Equity
0
0
0
Inc./(Dec.) in loans
(0) (59)
(37)
Dividend Paid (Incl. Tax)
0
(60)
0
Interest / Dividend (Net)
(13)
(21)
(129)
Cash Flow from Financing
(13)
(141)
(166)
Inc./(Dec.) in Cash
1
7
(2)
Opening Cash balances
1
2
9
Closing Cash balances
2
9
7
Source: Company, Angel Research
Vedant Fashions Ltd| IPO Note
February 02, 2022
6
Key Ratios
Y/E March FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
121.7
90.7
161.5
P/CEPS
89.2
66.0
94.0
P/BV
24.2
2
0.1
19.7
EV/Sales
26.4
23.3
37.6
EV/EBITDA
63.0
54.3
87.3
EV / Total Assets
23.1
14.6
14.5
Per Share Data (`)
EPS (Basic)
7.1
9.6 5.4
EPS (fully diluted)
7.1
9.5
5.4
Cash EPS
9.7
13.1
9.2
Book Value
35.8
43.0
44.0
Returns (%)
ROCE
30.6
22.1
10.7
Angel ROIC (Pre-tax)
47.2
31.7
17.5
ROE
19.9
22.2
12.2
Turnover ratios (x)
Asset Turnover (Net Block)
3.2
1.8
1.2
Inventory / Sales (days)
41
48
65
Receivables (days)
152
148
233
Payables (days)
28
21
32
Working capital cycle (ex-cash) (days)
166
176
267
Source: Company, Angel Research
Vedant Fashions Ltd| IPO Note
February 02, 2022
7
Research Team Tel: 022 - 40003600 E-mail: resear[email protected]elbroking.com Website: www.angelone.in
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