Company Update : Vedant Fashions Ltd By Motilal Oswal Financial Services Ltd
Subdued FY25 ends with another weak quarter
9-11% miss on EBITDA and PAT
* Customer sales grew ~2% YoY to INR5.2b in 4QFY25, as ~5% increase in area was offset by a 4.5% decline in same stores sales.
* Consolidated revenue inched up ~1% YoY to INR3.7b (4% below) as demand remained subdued.
* Vedant Fashions (VFL) added 12 stores (six SIS and six EBOs) in 4Q, bringing the total store count to 678, with a store area of ~1.79m sq. ft. (up ~5% YoY).
* Gross profit increased 3% YoY to INR2.7b, as gross margin expanded 110bp YoY to 73.6% (100bp beat).
* Employee cost increased 15% YoY (6% higher), while other expenses rose ~20% YoY (7% higher).
* EBITDA declined ~5% YoY to INR1.7b (9% miss), driven by weaker revenue growth and higher other expenses.
* EBITDA margins contracted ~310bp YoY to 45.1% (~210bp miss).
* Depreciation/finance cost rose 3%/4% YoY, while other income declined ~9% YoY.
* As a result, reported PAT declined ~13% YoY to INR1b (11% miss).
Subdued performance continued in FY25
* Customer sales grew ~2% YoY to INR18.9b, as ~5% increase in area was offset by a 4.2% decline in same stores sales. Management indicated that LTL sales grew 2.9% YoY during July’24-Mar’25.
* Reported revenue grew modest 1% YoY to INR13.9b (1% CAGR over FY23-25).
* In FY25, VFL added 85k net retail area and two net stores (SIS count increased by 13, while EBO count reduced by 11), as the company exited 11 domestic and one international cities in FY25.
* EBITDA at INR 6.5b declined 2% YoY, marking the second consecutive year of a YoY decline.
* PAT declined 6% YoY to INR3.9b (~10% below FY23 PAT).
* FCF moderated to INR2.1b in FY25 (vs. ~INR3.3b YoY) on adverse WC changes.
* Inventory days rose to 53 in FY25 (from ~37 YoY), while receivable increased to ~187 days (from ~151 YoY).
* Overall WC capital days increased to 213 days (vs. 164 days YoY).
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