Vedant Fashions Limited — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

Vedant Fashions delivered a resilient performance in Q2 FY26, navigating a significant operational transition caused by GST rate rationalization. While primary revenue dispatches were hampered for 15-20 days due to the need to re-barcode over 1 million pieces, secondary sales (sales to customers) grew by 4.6%. Management remains optimistic about H2 FY26, citing strong H1 SSG of 8.2% and a strategic pivot in marketing to drive footfalls ahead of the peak wedding season.

Highlights

  • Sales of customers reached ₹349.4 crores in Q2, reflecting a 4.6% YoY growth.

  • H1 FY26 reported revenue from operations stood at approx. ₹544 crores, up 7.2% YoY.

  • H1 FY26 Same-Store Sales Growth (SSG) was healthy at 8.2% compared to H1 FY25.

  • Gross Margin remained industry-leading at 66.1% for H1 FY26, despite quarterly fluctuations.

  • EBITDA margin for H1 FY26 was robust at approximately 43%, with a PAT margin of 23.2%.

  • Operational disruption from GST rate changes (effective Sept 22) impacted dispatches for 15-20 days.

  • Net addition of 3,500 sq ft retail area during the quarter, with a total footprint of 1.79 million sq ft.

  • International presence strengthened with 2 new stores in Australia and the UAE.

Key financials

2 periods

Q2

  • Reported Revenue
    ₹263 Cr
  • Sales of Customers
    ₹349.4 Cr
    YoY +4.6%
  • PAT
    ₹56 Cr

H1

  • Gross Margin
    66.1%
  • EBITDA Margin
    43%
  • SSG
    8.2%

What they filed

Q4 FY26: revenue up 8.7%, net profit up 12.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26
Revenue240 268 511 367 281 +17%263 −2%492 −4%399 +9%
EBITDA113 122 242 166 121 +7%111 −9%218 −10%179 +8%
Net profit62 67 158 101 70 +13%56 −16%135 −15%114 +13%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Manyavar
    Flagship brand Status0.05 positive Competitive Delta
  • Mohey
    70% Brand Awareness30% Lehenga Contribution
  • Twamev
    ₹3 Cr Target Audience

Guidance & targets

Revenue

  • Mid-to-long-term SSG Revenue · mid-to-long term · Medium confidence 8% to 9%
    all in all, the goal is to definitely from a mid- to long-term perspective, have good single-digit growth in the range of 8% to 9%.

    — Vedant Modi, Chief Revenue Officer

Margin

  • SSG for Operating Leverage Break-even Margin · annual · High confidence 4% to 5%
    our broad understanding is if SSG is 4% to 5% at a year level, that means you're flat from an operating leverage standpoint.

    — Vedant Modi, Chief Revenue Officer

Capex

  • Additional Capex for FY26 Capex · FY26 · High confidence 0
    No, no, that's about it. There will be nothing in addition to this [₹11 crores].

    — Vedant Modi, Chief Revenue Officer

Risks & concerns

  • GST Rate Rationalization

    medium

    Majority of products moved from 12% to 18% GST, requiring calibrated price hikes and causing short-term dispatch delays.

    Management acknowledged

  • Weak Men's Segment Footfall

    medium

    Weak footfall in the men's segment was identified as a primary lag on growth in the previous financial year.

    Management acknowledged

  • Gross Margin Contraction

    low

    Analyst noted a 270bps contraction; management attributed this to quarterly mix and lack of wedding dates in Q2 FY26 vs Q2 FY25.

    Analyst downplayed

Areas of evasion (1)

  • Specific guidance for FY26 revenue or store additions beyond qualitative statements.

Q&A highlights

3 direct
GST Disruption and Revenue Gap Direct
we had to actually physically change the barcodes of all our products in the warehouse... our dispatches were sort of hampered... reflected in the difference in primary revenue and secondary revenue growth by about 6%-odd.

Explains why reported revenue lagged behind customer sales growth during the quarter.

Asked by Sameer Gupta, India Infoline

Operating Leverage and SSG Thresholds Direct
doing an SSG of about 4% to 5% means being flat from an operating leverage perspective because rentals typically, the deals are increasing rents by 15% every 3 years.

Provides a clear benchmark for investors to judge when the company will see margin expansion from organic growth.

Asked by Rahul Agarwal, IKIGAI Asset Management

Mohey Strategy Pivot Direct
Lehanga would be somewhere about 30% of our business... which has moved from about 50%, 55% to being 30% now over the last 2, 2.5 years.

Reveals a significant shift in Mohey's product mix from bridal-heavy to a broader occasion-wear portfolio to increase the Total Addressable Market (TAM).

Asked by Ankit Kedia, Phillip Capital

2 min read 5 chapters

Detailed narrative

GST Transition Impacts Primary Revenue

The quarter was significantly impacted by the government's GST rate rationalization effective September 22, 2025. Management had to physically re-barcode over 1 million pieces in the warehouse to reflect revised MRP tags, leading to a 15-20 day disruption in dispatches. This created a 6% delta between primary revenue and secondary customer sales, though operations have since normalized ahead of the peak season.

Strategic Portfolio Diversification

Vedant Fashions is actively diversifying its brand portfolio beyond the flagship Manyavar brand. Mohey has pivoted from a bridal-heavy focus to include more non-bridal categories like stitched suits and saris, with bridal lehengas now contributing only 30% of its business compared to over 50% previously. Meanwhile, the 'Diwas' brand is being positioned for the festive segment, with plans to remove the 'By Manyavar' sub-branding in the next 3-4 years as it scales.

Store Network Optimization and COCO Experiments

The company reported a net addition of only 3,500 square feet this quarter, reflecting a disciplined approach to expansion and the rationalization of underperforming locations. Notably, 9 of the 13 net EBO closures were SIS doors moving to MBO formats. The company also invested ₹11 crores in capex to experiment with Company-Owned Company-Operated (COCO) flagship stores in Bangalore to test retail innovations before pan-India franchisee rollout.

Resilient Margins Amidst Macro Headwinds

Despite a lack of wedding dates in Q2 FY26 compared to the previous year, the company maintained an industry-leading H1 gross margin of 66.1%. Management highlighted that an SSG of 4-5% is required to offset typical rental escalations of 15% every three years. With H1 SSG at 8.2%, the company is well-positioned to benefit from operating leverage as revenue growth accelerates in the second half of the year.

Optimistic Outlook for H2 FY26

Management expressed high confidence in H2 FY26, which typically represents the larger half of the financial year. A major pivot in marketing strategy, including the launch of the 'Manyavar Shadi Show,' is expected to drive footfalls. Management noted that while competition has increased, Manyavar stores located next to competitors have actually seen a 5% positive performance delta, reinforcing the brand's market leadership.

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