Vedant Fashions Stock Analysis (2024 Update)

Today, I'll be sharing with you, a Vedant Fashions Stock Analysis.

Vedant Fashions is India's largest wedding wear or celebration wear company, which includes many brands like Manyavar which is the most famous and popular.

I started investing in this stock in February 2024, and I’ll share my reasons with you in this article.

But remember, this Article is not financial advice or a stock recommendation. It’s just my personal viewpoint on why I believe the Manyavar brand and Vedant Fashions can show great growth and returns in the future.

Check Our Vedant Fashions Stock Analysis Video

Stock Performance

Vedant Fashions, a small-cap stock, has been listed on the Indian stock market since early 2022. After its IPO, the stock went up by about 60%, followed by a period of consolidation and downtrend.

Now, two years post-IPO, the stock is nearing its listing price.

Since December 1st, it has decreased by about 30%.  This indicates that the stock might be at a reasonable buying level.  Let's talk about it's PE ratio for a better understanding.

Even though Vedant Fashion’s PE Ratio is at its lowest, there hasn’t been a significant drop in it's earnings per share.

The fact that the stock is at a lower price and the PE ratio is also at an all-time low, it is absolutely safe to invest in the stock. 

Financial Performance

Now, let’s look at the company’s financial performance.

Out of the last four December quarters, the recent one showed the most growth with an increase in net profit and revenue. Annually, Vedant Fashions is already at its highest revenues and profits.

Moreover, they have maintained an impressive Operating Profit Margin of around 50%.

Financially, the company is in a healthy position, showing 70% sales growth over the past five years without any major debt.

The minor debt is around 365 crore with a Debt to Equity Ratio of 0.27.  Impressively, their interest coverage ratio is 14.7, meaning Vedant Fashions earns 14 times more profit annually than its interest payments.

A high ICR and a 50% profit margin ensure that the company can easily manage its debt well and risk further debts for expansion.

Many SEBI registered research analysts are hopeful that the stock will show a minimum 15% growth in stock price for next year. 

Remember, this is only the minimum projected growth, further growth can be expected.  However, Indian markets are currently a bit overvalued, and this is a small-cap stock.

If the market improves by 10-20% this year, which has a 50% probability, this stock will definitely drop further. However, I'm not worried about the drop as it ensures the best time to invest in a good stock. I’m mentally prepared to average down my investment over the next year.

But I won’t wait for the market to drop, because it might not, and I don’t want to miss the opportunity of buying Vedant Fashions at such an attractive price.

Also, since Vedant Fashions is a small-cap company, it will only make up a small portion of my portfolio. If you want to know exactly which companies are in my portfolio and in what ratio, you can join my Member Community. The link is below this video and on my channel.

Shareholding Pattern

Now, I will share some aspects of Vedant Fashion that makes it more attractive.

Let’s look at the shareholding pattern.

Even though the promoters have reduced their holding in the past year, it is still around 75%. This is not a problem as long as their shares are above 50%.

The good news is that FIIs (Foreign Institutional Investors) have started increasing their holding in this stock.

Mutual Funds’ stake has slightly decreased over the last three quarters but has increased over the past year. 

Moreover, other domestic investors like insurance companies have also increased their stakes.

Dividends

Now, let’s talk about dividends. Vedant Fashions has a 50% dividend payout ratio, and the company has been gradually increasing its dividends. This is a good sign as now the business is focusing more on its shareholders. 

Growth Potential

Now let's talk about the last and the most important question: Does Manyavar’s business has potential growth in the future?

According to Vedant Fashions, their growth strategy has three pillars. The first and most obvious is Retail Expansion. Vedant Fashions has market leadership in its brands Manyavar and Mohey and many exclusive brand outlets.

As Manyavar is already a well-established brand, increasing the number of stores will directly improve it's sales. With the transition from lower to middle class in India, Manyavar benefits directly as their products are targeted at mid-range customers.

Additionally, the Indian Wedding Industry is one of the largest in the world, growing at 7-8% annually, which is a big plus for Manyavar.

However, Manyavar does not brand itself as a wedding wear company alone, it is also branded as a celebration wear company.  It is visible in their latest campaigns targeting Indian festivals to boost sales

Vedant Fashions also has other relatively new and less established brands.

Twamev targets high-end and premium customers. Mebaz is an ethnic wear brand focused on South India, and Manthan is a low-priced or value brand mostly selling through e-commerce and multi-brand outlets.

These three brands have significant growth potential for Vedant Fashions.

According to the reports, the company has become successful through marketing campaigns with celebrity brand ambassadors for many years. They plan to continue the campaigns further. 

New brand acquisitions are also an important part of Vedant Fashions' strategy, but when and how effectively this happens remains to be seen.

Conclusion

It is clearly visible that Manyavar is a highly growth-oriented brand in this growing industry.

The company’s financial numbers are strong, and the stock is available at a relatively reasonable price today, encouraging my further investments.

I hope you enjoyed Vedant Fashions Stock analysis, the growing industry’s small-cap stock. I'd really like to know what your opinion is on Vedant Fashions Stock, so comment down below!