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Motilal Oswal Report
Vedant Fashions Ltd., with revenues of Rs 13.5 billion (FY23), has successfully achieved scale within the growing Men's celebration and occasion wear market, which is difficult to replicate.
A healthy margin profile, coupled with an asset-light franchisee-led expansion model, ensures strong cash generation and strong returns with limited pressure on the balance sheet.
This justifies the healthy valuation of 32.4 times enterprise value/Ebitda and 50.1 times price/earning on FY25E basis.
Vedant Fashions has a strong runway of growth. Its focus on expanding Mohey (women celebration wear) and Twamev (premium men's celebration wear) offers an incremental upside.
We expect revenue/Ebitda compound annual growth rates of 17%/17% over FY23-25 on the back of 15% growth in footprint addition.
We ascribe a price/earnings of 57 times on FY25E earnings per share and arrive at a target price of Rs 1,400. We maintain our 'Buy' rating.
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