MANYAVAR - Vedant Fashions Limited Share Price

Management provided an optimistic outlook for Vedant Fashions Limited, focusing on building sustainable growth through several strategic initiatives. In Q3 FY'26, the company recorded approximately INR 692 crores in sales, reflecting a 5.4% growth year-to-date of INR 1,447 crores. Same-store sales growth (SSSG) was 1.8% for the nine-month period. Revenue for Q3 FY'26 was around INR 492 crores, maintaining a gross margin of 65.7% and EBITDA margin of 44.6%, resulting in a profit after tax of INR 135 crores (PAT margin of 27.4%).

Key forward-looking points include the successful launch of the "Manyavar Shaadi Show," enhancing brand visibility, and the introduction of new collections across brands like Twamev, which saw a remarkable growth of 40% in Q3. The focus on upscaling the Twamev brand will continue, with plans to expand its presence in response to the premiumization trend in consumer preferences.

Management emphasized the impact of fewer wedding dates in December, leading to subdued consumer sentiment, particularly affecting middle-class buyers, while more affluent segments showed resilience. Despite this, the management anticipates a recovery as government initiatives support consumer sentiment.

Looking ahead, management plans to initiate store expansion after consolidating existing locations, having added approximately 5,500 square feet during the quarter. The goal is to capitalize on improving demand while maintaining a disciplined focus on quality and performance. The company is poised to ensure that the gross margin remains above 65% in the coming periods, indicating confidence in managing the effects of the recent GST adjustments.

Q&A Section Summary from the Earnings Call Transcript (February 19, 2026)

1. Question: "We have seen compression in gross margin without commensurate acceleration in growth... Can we expect some acceleration in growth or both are not related?"

   Answer: "Our gross margin was impacted mainly due to the GST increase from 12% to 18% on 90% of our products. We chose not to increase MRPs significantly to maintain value for money. Moving forward, we are focused on enhancing designs, expanding product variety, and improving consumer experience, which we believe will normalize margins back to over 65%."

2. Question: "How would you frame your relative market position... Is this divergence more cyclical, regional or execution led?"

   Answer: "We have been monitoring competition closely. While some players opened recently and show growth, we are confident about our strong market position. Our premium brand, Twamev, saw 40% growth in Q3. Premiumization is trending, and we are positioned to benefit from this, particularly amidst competitive consolidation."

3. Question: "There would be some more additional factors... What exactly has happened apart from the wedding dates mismatch?"

   Answer: "Our Q3 performance was significantly impacted by lacking wedding dates in January"”unlike 11 days last year. December also had fewer wedding dates this year, leading to anticipated lower performance. However, our retail KPIs improved overall, highlighting our underlying strength. We also faced muted consumer sentiment, especially in the middle-class segment."

4. Question: "What are those pain points that you have identified... Is it entry price points, non-wedding merchandise, smaller stores?"

   Answer: "The primary pain point is the muted sentiment among middle-class consumers, affecting discretionary spending. We've observed that while our premium segment grows, the middle-class, which Manyavar serves, is lagging. We are actively addressing this with competitive pricing and expanding lower price points to capture more demand."

5. Question: "Would you say competition is consolidating, your efforts are in place... Is that a fair understanding?"

   Answer: "Yes, that's accurate. We've focused on improving our existing stores rather than expanding too rapidly during tough conditions. We plan to normalize store openings in the next 2-3 quarters. As conditions improve, our quality initiatives should enhance productivity and growth."

6. Question: "Given the slowdown and moving of demand between quarters... and on inventory, is there anything to worry about?"

   Answer: "We've enhanced inventory efficiency significantly, improving inventory turns while maintaining healthy levels. Despite the absence of weddings in January, our business performed decently. We're confident that our proactive inventory management positions us well as demand returns."

7. Question: "You mentioned a capex of around INR11 crores on COCO stores... What has been the initial performance insights?"

   Answer: "These COCO stores are performing decently and are on par with franchisee stores in the same regions. However, moving forward, we will primarily focus on the franchise model for expansion. The COCO stores were more of an experimental approach to assess performance."

8. Question: "Could you share the average selling price across your different brands?"

   Answer: "We track average selling price (ASP) brand-wise accurately. Currently, our blended ASP is around INR 5,000. Manyavar's ASP is lower, while Twamev's is around INR 15,000-16,000, indicating our diversified product positioning within the segments."

9. Question: "Could you help us with the net GST rate?"

   Answer: "The net GST rate would hover around a high single digit, considering most of our products are taxed at 18% while benefiting from input credits mostly around 5% for fabrics. Thus, the effective burden is balanced through input tax credits."

10. Question: "Is the consumer sentiment impacting your sales... has there been a slip-up in reading it?"

Answer: "We've consistently monitored sentiment and believe the middle-class segment faces distinct challenges that affect discretionary spending. Unlike jewelry, our market largely depends on wedding schedules, and combined with the wedding date mismatch, it led to lower performance this quarter."

These summaries encapsulate essential details from the questions and responses shared during the call, providing insights into the company's current performance and outlook.