Vedant Fashions Ltd., owner of the ethnic wear brand Manyavar, aims to raise Rs 3,149.19 crore through its initial public offering starting Friday.
A large portion of the ethnic wear market remains unbranded, with branded accounting for 30-35% of the overall retail market.
The branded wedding wear market, however, is estimated to grow at an annualised rate of 18-20% between FY22 and FY25 to reach Rs 8.2 lakh crore, the prospectus said citing Crisil. That’d be driven by the menswear segment due to an increase in availability of brands catering to celebratory occasions and rising disposable incomes, acceptance of smart casual attire among corporates, global fashion awareness among the youth, and a favourable young demographic in India, it said.
Crisil estimates the average expenditure on weddings at Rs 10-20 lakh for a single-day function, with multi-event weddings trending in urban India.
Other new entrants in the lucrative market include:
Titan Co.: Launched Taneira, an ethnic-wear brand for sarees and ready-to-wear blouses.
Aditya Birla Fashion and Retail Ltd.: Acquired 51% of Sabyasachi Couture, formed a strategic partnership with Tarun Tahiliani’s brand and entered menswear through its e-commerce brand Jaypore.
Raymond Ltd.: Entered the ethnic wear category via Ethnix.
Financials
Vedant Fashions’ revenue has been affected by the Covid-19 pandemic. It, however, recovered in the first half of the current fiscal as mobility improved, state-wide curbs eased, and malls reopened.
In the six months ended September 2021, the company generated 44.76% of its sales from exclusive brand outlets in tier 1 cities, 38.64% in tier 2 cities, and 13% from tier 3 cities. The remaining 3.59% came from international markets.
Peers
Vedant Fashions does not have a direct listed peer in India. It, however, competes with Aditya Birla Fashion & Retail, and Tata-owned Trent Ltd., among others, that have a presence in the Indian wedding and celebration wear categories. Brands such as Biba and Soch also predominantly operate in this segment.
Risks
Subsequent Covid-19 waves or any other widespread public health emergency in the future.
High dependence on single discretionary product category—wedding and celebration wear. Demand for Indian wedding and celebration wear is dependent on the frequency and volume of weddings. Also, this business is characterised by rapidly-changing customer preferences.
By owning multiple brands catering to the Indian wedding and celebration wear market and operating each brand within the same omnichannel network, Vedant Fashions is able to up-sell and cross-sell its products through its existing retail channels. But its inability to successfully maintain or enhance the recognition and reputation of any of its brands may adversely affect business and competitiveness.
The company engages third-party manufacturers, also called jobbers, for a large portion of its attires and accessories. Vedant Fashions may face the risk of its competitors offering its jobbers better terms which may cause them to resort to stop supplying the products.
The company’s warehouse, factory, and a majority of its jobbers are mainly based in a single geographical region in and around Kolkata. Vedant Fashions’ operations are more susceptible to regional risks.
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