Buy Vedant Fashions Ltd For Target Rs. 890 By Geojit Financial Services Ltd
Fundamental View
Vedant Fashions Ltd (VFL), established in 2002 in Kolkata, is a leading player in India’s celebration wear market, anchored by flagship brand Manyavar. Through its five brands— Manyavar, Mohey, Twamev, Manthan, and Mebaz—the company offers ethnic wear for men, women, and children. VFL operates 662 exclusive brand outlets (EBOs) across India and 16 EBOs in 12 global cities, spanning ~17.9 lakh sq. ft., with a presence across 26 Indian states and in the US, UAE, UK, and Canada.
* Revenue grew ~17% YoY to ?281cr in Q1FY26, driven by a revival in wedding and festive wear demand, ongoing store expansions, strong customer traction (up by 23% YoY) and same–store sales growth (up by 17.6% YoY).
* VFL sustained its industry-leading performance, reporting a robust gross margin of 66.9% and a healthy EBITDA margin of ~ 43.2% in Q1FY26.
* EBITDA grew ~7% YoY to ?121cr, while EBITDA margins contracted by ~410bps YoY to 43% in Q1FY26 due to a rise in marketing spend (5.6% in Q1FY26 vs 2.3% in Q1FY25) and other expenses. Marketing spend is expected to normalise over the year, which should help maintain healthy margins going forward.
* Net profitability remained strong, with a PAT margin of around 25%, translating to a PAT of ?70cr—reflecting a 12.4% YoY growth compared to Q1FY25.
* VFL is prioritizing portfolio quality over aggressive expansion, consolidating weaker stores, managing rental costs selectively, and aiming for 8–10% store additions in FY26E, with muted net additions due to strategic closures.
* As per market consensus, the stock currently trades at 40x one-year forward P/E, which is attractive compared to its 3 year Avg. P/E of 51.3x. VFL’s strong brand equity, consistent margin leadership, expanding global footprint, and tech-driven omni-channel strategy collectively reinforce its position in the premium ethnic wear segment.
Technical View
* Vedant Fashions is consolidating after a prolonged downtrend and is attempting to cross a downward sloping trendline, indicating scope for a short-term reversal if follow-through buying emerges.
* The momentum indicators are showing early signs of improvement. RSI (14) is stabilizing at 48, and MACD, though negative, is narrowing, hinting at a potential shift in momentum.
* A long position can be considered in the ?727–750 zone, with a stop-loss at ?660 and an upside target of ?890.
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