Company Update : Vedant Fashions Ltd by Motilal Oswal Financial Services Ltd
Another weak quarter; revenue declines 4% YoY,
EBITDA down 9% YoY (11% miss)
* Customer sales declined ~2% YoY to INR6.9b in 3QFY26, owing to the lack of wedding days in Dec’25 and Jan’26.
* Same-store sales declined ~4.5% in 3Q (+1.8% in 9MFY26), while area additions remained muted at 2.3% YoY.
* Consolidated 3Q revenue declined 4% YoY to INR4.9b (6% miss on our muted expectations).
* The company closed seven net stores during 3Q (three domestic EBOs, four SIS), bringing the total store count to 664 (vs. 666 YoY).
* Gross profit (GP) declined 6% YoY to INR3.4b (9% miss) as gross margin contracted ~195bp YoY to 70% (~200bp miss). Including job charges, GP declined ~6% YoY to INR3.2b, with margin contracting ~155bp YoY to 65.7%.
* Employee cost (excluding labor code provisions) increased 9% YoY, while other expenses declined ~2% YoY (5% lower).
* EBITDA declined ~9% YoY to INR2.2b (11% miss), due to weak revenue, lower gross margin and operating deleverage.
* EBITDA margins declined ~270bp YoY to 44.7% (~250bp miss).
* Depreciation/finance costs rose 13%/1% YoY, while other income declined ~4% YoY.
* VFL booked a one-time provision of INR16.17m related to the new labor code.
* As a result, adjusted PAT declined ~14% YoY to INR1.36b (15% miss).
* For 9MFY26, customer sales/revenue grew by a modest 5%/2% YoY, while EBITDA/PAT declined 5%/9% YoY.
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