According to popular opinion in the investment community, Vedant Fashions (Manyavar) is expected to become the next Titan. To investigate this claim, Insiderpedia decided to examine the matter in more detail.
Let’s get started.
Can Vedant Fashions become the next Titan?
During the 1990s, Ravi Modi spent time in his father’s clothing store in Kolkata during his free time, where he identified a significant gap in the market. Although the store did not offer traditional Indian attire, it did sell various Western garments such as jeans, T-shirts, shorts, and pants. Recognizing the demand for Indian clothing, Modi saw an opportunity to fill this gap and thus created MANYAVAR.
Today, the company has a network of over 650 stores across India, and its products are also available online and in international markets.
Manyavar has a strong focus on innovation and design, which has helped it to differentiate itself from competitors. The company regularly introduces new designs and styles to its product range, which appeals to customers who are looking for unique and trendy ethnic wear options.
If you’re wondering what Titan and Vedant Fashions have in common, the answer is both are eyeing a piece of the Indian consumer’s discretionary spending.
Titan’s Tanishq created a brand out of a largely unorganized sector, and so did Vedant Fashions’ Manyavar.
When Vedant Fashion’s stock debuted in the market in early 2022 at an IPO price of Rs 866, it has since increased to Rs 1,100, representing a gain of 30 percent for investors who purchased shares at the IPO price. Meanwhile, the stock price once touched Rs. 1500.
What was the reason for the widespread optimism? You may ask.
The firm experienced a significant surge in its revenue, with an estimated 30% rise compared to the previous year, and a profit increase of 40%. This growth was mainly attributed to the accumulated demand for weddings.
You know many marriages were on hold due to the ongoing covid-19 pandemic. Investors should take into account whether the growth is a one-time occurrence or if it is ongoing when making their investment decisions.
When it comes to Manyavar’s competitive advantage it has a wide range of high-quality traditional wear, innovative designs, strong brand recognition, centralized design, and efficient procurement, these are hardly replicable. Needless to mention its vast retail presence in India.
Typically, buying traditional clothing for weddings and other events is not a regular occurrence for many Indians. As a result, Vedant Fashions relies heavily on attracting new customers and continually expanding its store locations.
There is also competition from big players like Aditya Birla Group & Reliance. For example, Aditya Birla Fashion and Retail has made investments in Sabyasachi. Reliance Retail has picked up stakes in designers like Manish Malhotra and Ritu Kumar.
Titan has also recently introduced a line of traditional women’s clothing called Taneira, which will directly compete with Manyavar’s Mohey brand. Titan aims to generate Rs 300 crore in revenue from this brand in the current fiscal year and Rs 1,000 crore by the fiscal year 2027, which is equivalent to the annual sales figures of Manyavar from the previous fiscal year.
Titan, being a company that benefits from Indians’ love for gold, has an advantage over companies like Manyavar, which do not have such favorable circumstances.
Currently, Titan generates 80% of its revenue from the sale of jewelry. Since 2000, its stock has grown at a compounded annual rate of 40% due to sales growth of 18% and net profit growth of approximately 23%. It currently holds a market capitalization of Rs 2.24 lakh crore and has a price-to-earnings (P/E) ratio of 70.
Titan holds such a higher valuation because investors believe it will continue to maintain its growth record.
While Vedant Fashions has made a notable impact on the Indian Ethnic wear sector, it is yet uncertain whether the company has the potential to become a significant force in the market. Time will be the ultimate judge of its success.
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