Vedant Fashions - Building Optimism: Motilal Oswal

Motilal Oswal Report

Manyavar owner Vedant Fashions Ltd. has successfully achieved scale within the men’s celebration and occasion wear markets, which is difficult to replicate.

While the company has a healthy runway for growth with footprint additions in Manyavar, coupled with expansions in Mohey (women's celebration wear) and Twamev (premium celebration wear), weak consumption remains a concern.

The stock has corrected 37% from its 52-week high (in December 2024) owing to a weaker revenue trajectory. Assuming a recovery in H2 FY25 and building in a 22% profit after tax compound annual growth rate over FY24-FY26, we believe the stock is fairly priced given the slowdown in consumption. Demand recovery and scaling up of emerging brands would remain the key catalysts for the stock.

The stock is currently trading at 38 times on FY26E. We are factoring in 18%/22% revenue/PAT CAGR over FY24-26E.

Reiterate Neutral with a target price of Rs 1,010, valuing the stock at 40 times FY26E price/earning.

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