Vedant Fashions, which owns ethnic put on model Manyavar, has seen its share value rally greater than 15 per cent to Rs 1,078.95 apiece from the IPO value of Rs 866 since itemizing. Research agency ICICI Securities has initiated protection on the inventory with a purchase score, pegging the goal value of Rs 1,200 apiece, implying an upside of 12 per cent from present ranges. The analysis agency famous that Vedant Fashions’ flagship model Manyavar instructions dominant place within the branded IWCW (Indian marriage ceremony and celebration put on) market and has emerged as a class chief and a model of first recall.
Vedant Fashions inventory value hit an all-time excessive of Rs 1,144.35 apiece in April. The shares made a modest itemizing on inventory exchanges on 16 February 2022, opening at Rs 938 per share. ICICI Securities mentioned that at a goal value of Rs 1,200, the inventory would commerce at 56x Jun’24E P/E, given Vedant Fashions’ industry-leading progress, profitability matrix, cashflow era and RoCEs and which might additionally adequately issue timing distinction on profitability.
ICICI Securities mentioned that first-mover benefit, scale efficiencies and no reductions on Manyavar permits Vedant Fashions to get pleasure from considerably increased gross margin vs most different listed manufacturers. “This, in our view, is the key differentiation enjoyed by VFL vs peers, which in turn results in higher profitability, more than 40% RoIC / RoCE and superior FCF generation,” it mentioned. The agency additionally famous that coupled with high-teens progress potential and asset-light mannequin, which the corporate enjoys justifies premium valuations vs friends.
“Vedant Fashions follows an outright sale model for its sales made to franchisee, this may result in higher receivables day and timing difference on profitability especially for the new stores opened during the year and makes comparison on reported numbers vs peers little less meaningful, in our view,” it mentioned. Accordingly, ICICI Securities believes key components which should be monitored/evaluated embody community additions; SSSG; end-customer gross sales progress, gross margins; OCF or OCF to EBITDA/PAT conversion; and RoCE. “Vedant Fashions continue to outperform peers even on these parameters.,” the analysis agency mentioned.
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Source: www.financialexpress.com”