smallcase manager Basant Maheshwari is betting on this stock.
After getting affected due to the pandemic restrictions and lockdowns, the Indian wedding industry is set to experience profits as the demand for venues, hotels, garments, and jewellery is high. “According to a report by Matrimony.com, the Indian wedding market is expected to reach $0.5 trillion over the next decade. The industry is expected to grow by a whopping 200% this year, according to a report by Ferns N Petals Pvt. Ltd.”
As per Wedding Wishlist, a digital invitation platform, a staggering 1 crore weddings take place in India every year. The Big Fat Indian wedding is legendary. People worldwide dream of attending one, and people in the country go to extreme ends to have one!
Why is Basant Maheshwari betting on Manyavar through his BM Vision 2030 smallcase –
Vedant Fashions Limited (VFL), the parent company of the fashion outlet Manyavar Mohey, is the market leader in Indian men’s fashion for weddings and festivals. The branded celebration wear is currently just 15-20% of the total menswear market, and in the branded space, Manyavar has just 10% market share, which is still the highest as it is a very fragmented space.
It has been able to create a strong brand name through celebrity advertisements and has placed its products uniquely in an aspirational yet affordable category.
Manyavar has a very strong pricing power as the company never sells its products at a discount. Unlike other retailers, Manyavar does not go for end-of-season sales as it has managed its inventory with great efficiency. It has an asset-light model with a strong franchisee relationship, which helps generate good margins while keeping the capex requirement low.
Manyavar is expected to grow revenues at a 25% CAGR for the next 3 years with an ROE of 38%. Strong business fundamentals, along with relatively inexpensive valuations compared to other retail players, makes Manyavar a unique opportunity in the consumer space.
The Indian wedding market is approximately $130 billion. Over the next few years, as the discretionary spending power of the Indian middle-class increases, the organised and branded players will benefit as people move away from the unorganised and unbranded ones. Manyavar, given its market leadership position, should be able to grow its earnings much faster than the industry growth of 15% for the branded segment.
Although the valuations are a bit on the higher side based on trailing earnings, we see the stock as reasonably valued on forward earnings based on 20-25% sustainable revenue growth rates.
The BM Vision 2030 smallcase has begun its journey of creating wealth over the next decade in a spectacular fashion. It has returned 25.30% since its launch on 20th June 2022.
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