Company Update : Vedant Fashions Ltd By Motilal Oswal Financial Services Ltd
Weak results on higher other expenses
11-12% miss on EBITDA and PAT
* Customer sales grew ~9% YoY to INR7.1b, driven by a modest 2.6% SSSG.
* Consolidated revenues grew 8% YoY to INR5.1b (2% miss), driven by: 1) muted demand in the second half of 3QFY25, and 2) weak ~3% SSS growth in customer sales.
* Vedant Fashions (Manyavar) added 16 stores in 3Q (incl. 12 Shop-in-Shops). The total store count stood at 666, with a store area of ~1.75m sq. ft. (up ~7% YoY).
* Gross profit increased 8% YoY to INR3.7b (4% miss) as gross margin expanded 30bp YoY to 72% (but 150bp miss on our estimates).
* Employee cost increased 12% YoY, while other expenses grew by sharper 31% YoY (14% ahead). The increase in other expenses could be due to higher advertisement expenses and the launch of new brand ‘Divas by Manyavar’.
* EBITDA was flat YoY at INR2.4b (11% miss), driven by weaker revenue growth and higher other expenses.
* EBITDA margins contracted ~365bp YoY to 47.4% (460bp miss).
* Depreciation/finance costs grew 14%/25% YoY, and other income increased 45% YoY during the quarter.
* Consequently, PAT was stable YoY at INR1.58m (12% miss).
* For 9MFY25, Manyavar’s revenue grew by a modest ~1% YoY, while EBITDA/PAT declined 1%/4% YoY.
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