 "Vedant Fashions stock falls 3% post Q4 as analysts cautious on FY25 outlook")
Shares of Vedant Fashions fell as much as 2.93 per cent to an intraday low of Rs 925.95 apiece, on Thursday, despite a 6.3 per cent increase in March quarter (Q4FY24) profit.
Vedant Fashions’ profit came in at Rs 115.8 crore in Q4FY24, from Rs 108.9 crore in Q4FY23. The company’s revenue soared 6.3 per cent to Rs 363.2 crore, from Rs 341.6 crore a year ago.
On the operating front, its earnings before interest, taxes, depreciation and amortisation (Ebitda) jumped 4.4 per cent to Rs 175 crore in Q4FY24, from Rs 167.8 crore in the same quarter previous fiscal.
Vedant Fashions’ margin, however, dropped 90 basis points to 48.2 per cent in the MArch quarter, from 49.1 per cent a year ago.
The board has also recommended a dividend of Rs 8.50 per share.
Kotak Institutional Equities analysts said Vedant Fashions’ Q4FY24 revenue print missed estimates, due to muted demand, lower wedding dates and SSSG of (-)3.3 per cent Y-o-Y, which offset the strong 15.6 per cent Y-o-Y retail store area addition.
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However, gross margin (GM) remained healthy at 67.1 per cent. Ebitda margin came in at 48.2 per cent due to weak SSSG performance and the cost of new stores. “We broadly retain FY 2025-26 estimates. The roll-forward to June 2025E leads to a revised FV of Rs 980. Maintain Reduce,” Kotak Institutional Equities said in a note.
Those at ICICI Securities expect retail expansion to be slow along with pressure on SSSG performance due to a lesser number of wedding days in FY25. Therefore, analysts have cut earnings per share (EPS) estimates by 4 per cent and 10 per cent in FY25E and FY26E
Key downside risks, analysts believe, include slower-than-expected pick-up in discretionary consumption and rise in competition from branded retailers. Considering these factors, ICICI Securities maintained ‘Add’ with a target price of Rs 1,000.
At 11:21 AM, shares of Vedant Fashions were trading 2.72 per cent at Rs 928 per share. By comparison, Sensex was up 0.31 per cent at 74,715.26 levels.