Vedant Fashions Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from Vedant Fashions Ltd (MANYAVAR) Q3 FY22 Earnings Concall

 Management Update:

• MANYAVAR plans to double retail space from FY21’s 1.1 million sq. ft. to 2.2 million sq. ft. in the coming years.

• The company also plans to leverage on e-commerce boost by adoption of omnichannel strategy to allow customers to have flexibility to access products through offline and online channels.

• 3QFY22 was one of the best ever quarter in the company’s history.

Q&A Highlights:

• Nihal Jham from Edelweiss asked about the gross margin corresponding number for 3Q21, including the subcontracting charges. Rahul Murarka CFO replied that in 3Q22, the company had a gross margin of 67.9% and 3Q21 gross margin was of 65.5%, including subcontracting charges.

• Nihal Jham from Edelweiss asked about the reason for the improved gross margin YoY. Rahul Murarka CFO replied that the company’s main focus has been improving cost efficiency and that was the reason for improvement in gross margin.

• Nihal Jham from Edelweiss enquired about EBITDA margins being lower. Rahul Murarka CFO answered that the EBITDA margins were lower because of higher marketing cost that was around 6.7% compared to 3.2% in 3Q21.

• Nikki asked about the revenue performance and what was the same store sales growth like versus pre-pandemic. Rahul Murarka CFO said that looking at YTD levels, FY22 to FY20, the same store sales growth was flat, at about -1-0%. In 3Q, the company saw an improvement of 15% compared to pre-pandemic levels.

• Nikki asked about 30 plus store rollout in 3Q22 and if that’s the kind of pace the company is targeting going forward. Rahul Murarka CFO said one shouldn’t see it on a number of stores but it should be in square feet terms. In the past from 2016 to 2021, the company has grown at a CAGR of 15-16% on a sq. ft. basis and MANYAVAR is confident of delivering the same penetration going forward.

• Ankit Kedia of Phillip Capital asked how much sq. ft. area is the rent being paid by the company and going forward of the store additions, what model does the company prefer and why. Rahul Murarka CFO replied that 60% of the revenue comes from the area where MANYAVAR pay rent in. And in terms of model, it’s a strategic decision the company takes and it’s based on each store. MANYAVER wants to hold the lease for strategic stores which are its flagship stores and stores in mall, where the control is over the land.

• Tejas Shah Spark Capital asked about the brand wise growth for the quarter and nine-months between Mohey, Manyavar, Manthan and Twamev. Rahul Murarka CFO replied that from a brand perspective, Manyavar has been leading the overall spectrum. Currently, as for brand growth, the company doesn’t want to discuss the growth as most of the brands are new for the company.