JM Financial initiates coverage on Vedant Fashions with a Buy, target price Rs 930
JM Financial has initiated coverage on
Vedant Fashions
with a
buy call
at a target price of Rs 930. The current market price of
Vedant Fashions
is Rs 760.95. The time period given by the analyst is a year when Vedant Fashions price can reach the defined target. Vedant Fashions, incorporated in 2002, is a Small Cap company with a market cap of Rs 18549.99 crore, operating in the Apparels sector.
Vedant Fashions' key products/revenue segments include Income from Retailing, Other Operating Revenue, Export Incentives and Scrap for the year ending 31-Mar-2024.
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Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 533.67 crore, up 85.83% from last quarter Total Income of Rs 287.19 crore and up 8.93% from last year same quarter Total Income of Rs 489.92 crore. The company has reported net profit after tax of Rs 157.98 crore in the latest quarter.
The company's top management includes Mr.Ravi Modi, Mrs.Shilpi Modi, Mr.Sunish Sharma, Mr.Manish Mahendra Choksi, Mr.Tarun Puri, Ms.Abanti Mitra. Company has S R Batliboi & Co. LLP as its auditors. As on 31-03-2025, the company has a total of 24 crore shares outstanding.
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Investment Rationale
JM Financial initiated coverage on Vedant Fashion with a BUY rating and target price Rs 930, valuing the company at ~45x EPS (pre Ind AS 116) Mar-27, this is ~20-30% discount to their valuation multiples for the likes of Metro, Titan and Avenue Supermarts. At the CMP, VFL is trading at ~35x FY27 EPS and offers ~27% upside from the current levels. VFL?s robust business model allows it to generate strong EBITDA/PAT margins of ~35% and ~30%, with an average OCF/EBITDA and FCFF/PAT conversion of ~65% and ~80% during FY19-24 and revenue/PAT CAGR of ~11%/17% over this period. VFL is now trading at sharp discount of 20-50% to the like of Metro, Titan and Avenue Supermarts despite exhibiting similar kind of return ratios or slightly lower revenue/PAT growth over FY25-28. The brokerage expects revenue/EBITDA/PAT (Pre Ind AS 116) CAGR of 12% over FY25-28E led by 10% area CAGR and 3% sales per sq ft CAGR. They expect the company to generate robust RoE/RoCE/RoIC of 23%/ 27%/52% by FY28. A gradual pickup in the revenue growth is a factor of increasing competition in the W&C wear space and slowdown in the operating environment which JM Financial believes is temporary. They believe that revival in the performance of the company and increase of revenue CAGR to ~15% or more and along with higher EBITDA and PAT CAGR will lead to further re-rating in the valuation multiples in line with its historical multiples.
Promoter/FII Holdings
Promoters held 74.95 per cent stake in the company as of 31-Mar-2025, while FIIs owned 10.14 per cent, DIIs 10.59 per cent.
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