Risk Reward Update: Vedant Fashions Ltd | Asia Pacific

研报英文原文证据摘录

Risk Reward Update: Vedant Fashions Ltd | Asia Pacific

UpdateM

RiskRisk RewardReward– Vedant- FashionsVedantLtd Fashions(VEDN.NS) Ltd (VEDN.NS)

Lacking Growth Catalysts; Downgrade to UW

PRICE TARGET Rs372.00 UNDERWEIGHT THESIS

Probability-weighted residual income model with 20%, 50% and 30% weights to bull, base ▪Vedant Fashions is the largest organized

and bear values, respectively. Skew reflects the company's track record of driving retailer in the highly unorganized ethnic and

consistently strong revenue and earnings growth and strong cash generation. Key celebration wear clothing market.

assumptions: cost of equity 12.4% (risk-free rate of 7%, risk premium of 6%, beta of 0.9) and ▪VFL's business has seen growth slow

terminal growth 6%. down for the past three years. The scale of

the business remains small despite being the Rs513.50

largest player in the category.

Consensus Price Target Distribution Rs372.00 Rs635.00 see risk to medium-term growth MS PT ▪We

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates potential and see no scope for further

margin improvement. Growth might also

come at the cost of EBITDA margin.

▪Consistently weak trends lead us to

RISK REWARD CHART believe there are challenges relating to the

business model and rising competition as

INR well as weakness in discretionary

consumption, which may take time to

resolve.

800 ▪We expect valuation de-rating to continue.

UW.

Rs551.00Rs551.00(+36.91%)Rs551.00(+36.91%)(+36.91%)

Consensus Rating Distribution

60% Overweight

400 Rs402.45Rs402.45Rs402.45

Rs372.00Rs372.00(-7.57%)Rs372.00(-7.57%)(-7.57%) 30% Equal-weight

10% Underweight

200 MS Rating

Rs228.00Rs228.00(-43.35%)Rs228.00(-43.35%)(-43.35%)

Source: Refinitiv, Morgan Stanley Research