Ladies and gentlemen, good day and welcome to the Vedant Fashions Limited Q2 FY 2026 conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing * then 0 on a touch-tone phone. Please note, this conference is being recorded. I now hand over the conference to Mr. Dhiraj Mistry. Thank you, and over to you, sir.
Good afternoon, everyone. On behalf of ICICI Securities Limited, we welcome you all to Vedant Fashions Limited Earnings Call. We have with us Mr. Vedant Modi, Chief Revenue Officer, and Mr. Rahul Murarka, Chief Financial Officer. Without further ado, I would like to hand over the call to the management. Over to you, sir.
Good afternoon, namaskar, and a warm welcome to all the participants. I am Vedant Modi, Chief Revenue Officer of the company. Thank you for joining us today to discuss Vedant Fashions Limited Q2 and H1 FY 2026 results. I hope everyone got an opportunity to go through our financial results, and the presentation has been uploaded on the stock exchange as well as the company's website. During the second quarter of FY 2026, sales of our customers were INR 3,494 million, reflecting a growth of 4.6% over Q2 of FY 2025. The quarter saw significant operation transition following the government's GST rate rationalization effective on 22nd September. We responded swiftly with comprehensive system and stock realignments, process integrations, and barcode updates ahead of the peak season. Although dispatches were briefly affected during the transition, operations have since normalized, strengthening our long-term efficiency.
During H1 FY 2026, sales of our customers was at INR 7,551 million, reflecting a growth of 13.8%. Further, SSG during the first half of FY 2026 stood at 8.2% compared to the first half of FY 2025. With our continued strategic focus on enhancing customer experience, strengthening retail training, driving data-led merchandising and replenishment, fostering omnichannel integrations, and disciplined KPI management, this has driven consistent improvement in key retail performance matrices. In line with prevailing market conditions and evolving retail landscape, we pursued a focused and disciplined approach to expansion, prioritizing strategic and sustainable store openings. While we continued to open new stores and expand our footprint, we also undertook selective rationalization of underperforming locations, leading to a modest net addition of 3,500 sq ft in retail area during the quarter. We also strengthened our international presence with two new stores in Australia and the UAE.
As of September 2025, Vedant Fashions' EBO footprint stands at 1.79 million sq ft across 671 stores in 257 cities and towns globally. During the quarter and first-half period, we deployed a comprehensive suite of marketing initiatives across multiple brands and channels, leveraging both digital and traditional platforms to amplify brand visibility, strengthen positioning, and deepen consumer engagement. These initiatives included category-led campaigns, new wedding collection launches, festive and occasion-based marketing, store-level events and activations, and influencer collaborations, thereby collectively reinforcing brand equity and consumer connect. Mohey's latest campaign, Mohe Rundo – Celebrating Every Shade of Mohe, celebrates the brand's rich color palette, from coral pink and midnight blue to dusty cerulean and minty green, symbolizing self-expression and India's vibrant festive spirit. The campaign strengthened Mohey's positioning as the go-to destination for expressive, colorful fashion, contributing to its strong performance during the quarter and the first-half period.
Manyavar further reinforced its category leadership in wedding wear through high-impact campaigns such as Aap Ka Ban Raha Hai Manyavar, deployed across outdoor and digital platforms. Supported by the launch of the Aranya collection and engaging programs like Manyavar Wedding Ambassadors, these initiatives deepened brand affinity, boosted recall, and cemented Manyavar's identity as the definitive wedding wear brand. In the premium segment, Twamev continued to build momentum by amplifying its truly unique brand proposition through product-driven storytelling and curated experiential activations. This included marquee events such as Wedding Asia and Art Guru at select stores. These efforts translated into strong and encouraging performance for the brand during the period. The diverse marketing initiative, executed across digital and social platforms during key festivals such as Rakhi, Ganesh Chaturthi, Navratri, Durga Puja, Diwali, and Chhath Puja, successfully celebrated the spirit of festivity while expanding brand reach and engagement.
This approach significantly enhanced visibility, deepened consumer connection, and contributed to solid performance across the period. Collectively, these initiatives, built on our core strength of a well-curated inventory, distinctive designs, and efficient replenishment systems, have enhanced our brand positioning, reinforced our leadership within the category, and deepened consumer engagement, thereby reinforcing Vedant Fashions Limited as the definitive house of brands for all wedding and celebration venues, while paving the way for the next phase of evolution and growth. With this, I will now hand it over to Mr. Rahul Murarka to take you through the financial performance of the company. Thank you.
Thank you, Vedant. Namaskar and good afternoon, everyone. I would like to highlight the key financial matrices for the quarter and half-year ended 30th September 2025. Starting from Q2 of H1 FY 2026 performance update, the company achieved growth of 4.6% in sales of our customers compared to Q2 of H1FY 2025. The reported revenue from operations was approximately INR 263 crore, and the profit after tax stood at around INR 56 crore. This quarter also witnessed a significant operational transition following the GST rate rationalization implemented by the government effective 22nd September 2025. We completed all the actionables in relation to the implementation of GST rate changes, including revised MRP tags in the warehouse and stores, which was really a challenging aspect considering the upcoming season. Due to this, our dispatch process was impacted for approximately 15 to 20 days, affecting our reported revenue for the quarter.
Now coming to H1 of H1 FY 2026 performance update. During H1 FY 2026, the company reported revenue from operations of around INR 544 crore, with a growth of around 7.2% over H1 of H1FY 2025. During this period, the company continued to report industrializing gross margin of around 66.1%, along with a healthy EBITDA margin of around 43%. The company also reported a healthy PAT margin of 23.2%, and the profit after tax stood at around INR 126 crore. Moreover, during the trailing 12-month period of September 2025, the company reported a healthy cash conversion ratio of approximately 79%, which has been computed based upon operating cash flow to PAT, excluding finance income. During H1 FY 2026, the revenue from sale of our customers was around INR 755 crore, with a growth of 13.8%. While our SSG grew by 8.2%, respectively. Thank you and namaskar, everyone. We can now move to the Q&A session.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press * and 1 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sameer Gupta from India Info Line. Please go ahead.
Hi, good evening, everyone, and thanks for taking my question. First, just a clarification. I didn't get the 15-20-day disruption. Can you just repeat and probably elaborate a little as to what exactly happened?
Hi, Sameer. Thank you for the question. As you're aware, GST rates across all our products sort of got changed. This impacted the price change across the company. What we had to do is remove the barcodes physically in the warehouse on each and every product. We had more than a million pieces of that and put new, fresh barcodes on that. Hence, this process took us a lot of effort to change.
Sorry, I'll just interrupt your voice. I'm sorry. I'm not able to really get what you're saying.
Is it fine now?
Yeah, it is fine.
Okay, sorry. I'll repeat it again. As you're aware, the GST rate got changed from 22nd September. What we had to do is, because the majority of our products were affected by this, we had to actually physically change the barcodes of all our products in the warehouse. The last 15-20 days, our dispatches were sort of hampered. This is reflected in the difference in primary revenue and secondary revenue growth by about 6%. There's a delta, and one of the main reasons for that is the barcode changing in the warehouse and overall dispatches being slow during that period.
Got it. Basically, this.
This didn't affect secondary revenue at all.
Suffice to say that you've grown at 5% on a secondary revenue basis. If this disruption wouldn't have happened, net sales would be close to 5%.
Absolutely. Absolutely. That's right.
Okay. Fair enough. Now coming to my questions. There is a gross margin contraction of around 270 basis points. I have asked this question earlier quarters also, and this is being persistent now. For the last three quarters, we have seen a contraction. This quarter, the quantum is a little higher. I mean, just understanding what are the reasons here? Is it changing mix in favor of Mohey, DIWAS, higher inventory markdowns, any write-offs taken? Is it a function of store closures? If you give these major reasons which are leading to this, how should we look at it going forward?
Sure. Thank you, Sameer, for the question. I'm Rahul Murarka. Gross margin, quarterly, it can vary due to various factors, including product mix, wedding, non-wedding aspects, quarter, etc. This year, Q2 was a normal non-wedding quarter, while Q2 of previous year had weddings in July. Hence, the gross margin for both periods are actually not comparable. It is better to look at H1. If you look at H1 period, we have been able to achieve a gross margin of 66.1%.
Which is still a contraction on a base first half, right? I would assume the first half is still comparable.
First half, look, I mean, again, it can always change because last year's first half, this year's first half was different, Sameer. If you look at the full financial year basis, generally, that is the best thing to do. If I talk about first half of H1 FY 2024, which was there, right, then the gross margin was around 66% plus only. However, by the year end, it improved. I'm saying quarterly or H1-wise, the gross margins can always vary. It is always better to look at the full financial year level.
Fair. My limited point is that it has got nothing to do with the changing mix or anything of inventory markdowns. It's a normal waggery which can reverse in the future. That's the implication that you're stating, right?
Yeah, absolutely. Yeah.
Got it. Fair. The second question is on the EBO addition part. This quarter, we have seen a net closure of 13 EBOs. I remember last year, we had a large store consolidation exercise. The indication at that time was that usually happens in around three or four years' time where you take a large consolidation. Going forward, you do not envisage any larger store closures. I just wanted to reiterate, is this more of a normal store consolidation exercise, or is there something more that one should see? Going forward, how do you see the EBO store addition panning out?
Yeah. Sameer, as we've been discussing in the past couple of quarters, earnings call as well, we are really in a journey of improving the overall quality of the retail that we open. That has resulted in a few sort of closures that are not performing or where markets have changed, where they've moved from one market to another. That's majorly the kind of store closures we've taken. If I talk about this quarter particularly, the majority of that net is a result of SIS doors moving back to MBO doors. That's the core reason. One challenge that we also see when explaining these numbers is of the 13-odd net difference, 9 of that is actually SIS doors. That's also an important point to be taken.
How many out of the total are now SIS?
It's broadly 150, but I'll get back with the exact numbers to you.
Got it. That's fine. That's all from me. I'll come back in the queue for any follow-ups.
Thank you.
Thank you.
Thank you. The next question is from the line of Gaurav Jogani from JM Financial. Please go ahead.
Thank you for taking my question. [Foreign langauge] , my first question is with regards to the overall industry scenario. Now we have been seeing that the industry has kind of struggled over the last couple of years, especially post the COVID surge that we have seen. The competitive intensity has also increased then. Now, are you seeing any signs of the competitive intensity going down? In addition to this, you have also worked a lot on improving the quality of the retail, also on the merchandise, etc. What has been the initial signs or things that you're seeing?
Thank you, Vadhish. Something which I've repeatedly sort of said is we are extremely confident about our moats from across directions. That said, we've been very closely monitoring competition, stores that have opened up across India from all aspects. Like I mentioned, just thinking out loud from a common sense perspective, what was happening earlier with the amount of openings didn't make a lot of sense. All the players that we track from our end, we've seen around overall number of stores staying flat quarter on quarter. Overall, at a net level, no new stores have opened from an industry perspective is what our reading is, at least for now, which makes sense given the kind of financial pressure most of them were facing. Finally, your merchandising, etc. questions was for our company, right?
Yes. Yes. Yeah.
Like I've mentioned earlier as well, from a merchandising angle, we are taking a lot of inputs from across the market, and we've almost 2.5x the number of designs we test in a given financial year. Teams are working extra hard to ensure that we don't miss out on any design language that the company should be attempting to try and really trying to make the most out of whatever we can do.
Vedant, the question is, we know all these things. Are you seeing any green shoots in that sense? Is the competitive intensity now abating? That should help you to grow better. Also, what has been the results of this merchandising? Two and a half X new designs being introduced. What kind of results are you seeing? If you can quantify that or maybe any qualitative answers from that.
Sure. To your first point, this is something we'll have to see. Given it's just started to slow down, I think it's better to comment on this maybe after a quarter or two. To your second point around merchandising, I think definitely. Our repeat customers feel that our overall design sense has improved, our overall quality has improved over the last couple of three to four years. At the same time, conversion rates are also improving by certain basis points every single quarter. Overall, these things are quite positive to see.
Okay. My second question is with regards to just on the balance sheet side. We have seen this quarter around H1, there is some CapEx of around INR 11 crore. I specifically just wanted to understand what is that regarding to. The other bit on this thing is, while I see that the inventory has come down from March level, however, the receivables still continue to be a bit higher. Anything specific that you can follow?
I'll take the first part, and Rahul, you can take the second. Coming to your question around the CapEx of INR 11 crore, for a while, we wanted to experiment on running a few retail stores that are flagship stores by the company. This is a pure outcome of trying out a lot of experiments, which can be very costly to run in some cases. This was one of the ideas and themes that we wanted to do. We've taken over a few stores in Bangalore, which we wanted to experiment with. That's where the CapEx of INR 11 crore comes from. Rahul, you can explain this action.
Net receivables take a lot of time. For TTM September 2025, it is around 79 days, and in FY 2025, it was around 77 days. There is no major increase in the net receivables days. The main thing is about the revenue. As soon as we get back to the revenue growth trajectory, we will not see the increase which we are seeing now. Majorly, it is because of the primary revenue, wherein we see that the data has slightly increased. Nothing major increase we have seen in that.
Okay. Just a clarification. When you say that few retail stores, the flagship stores, for that, I think the CapEx that is done by, I mean, this would be kind of a COCO store in that sense.
Correct. Correct. Strategically, we remain a COCO company. We've done just a few COCO stores in Bangalore to test out things rapidly to see if something is working, then we can actually ask our franchisees to roll it out pan-India.
Got it. Okay. Would you have any guidance that you would give on the CapEx strategy for this year, given this experiment has been done?
No, no. That's about it. There will be nothing in addition to this.
Okay. Thank you. That's all.
Thank you.
Thank you. The next question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead.
Hello?
Yes, sir, you're audible.
Thank you for the opportunity. Thank you for the opportunity. The first question is, while you did explain the gap between the reported revenue growth and the primary sales for Q2, even if we look at Q1, there is a significant gap of almost 500 basis points. What is that attributed to, typically the gap between the primary sales and the retail sales and the reported revenue growth?
The reason is same, actually. If you look at Q2, it was pulling towards the same direction. It is because of the Q2 September dispatch, which was impacted, we can see that 6% gap. Majorly, I'm saying. The major reason is that only.
No, no. I'm asking for Q1. A similar gap is seen in Q1 also. Q2, you have explained that it is because of the GST transition. Even in Q1, we see a similar gap. The reported revenue growth was 17%, while the retail sales growth was around 23%.
So.
What is it?
Actually, to be very honest, if we look at it at an annual level, these numbers always end up falling in place. Sometimes what happens is our supply chain teams have a very core KPI, which is to improve inventory turns. Higher inventory turns at store means that you have slightly less products left at the store but doing better business. Sometimes what happens is in a quarter, if we get something right, we can actually do lower primary but better customer revenue. From a business angle, that's an amazing thing for us to be achieving because our cash flows would stay in line with how our secondary revenue is doing. The core KPIs for us is secondary revenue growth. Sometimes it can vary, but at an annual level, things will again move back to being very similar.
Another thing, if you could elaborate on, was not being able to understand the divergence between the men and women ethnic wear demand, right? If you look at a sari-based retailer in South, they've done almost 35% revenue growth in H1. If you look at one of our other listed peers and even us, the kind of H1 revenue growth that we've done is much lower than the 35% growth that the women's sari-wear retailer has reported. Is it that there is a divergence in terms of wedding wear demand across men and women? I believe that the wedding calendar was decently good in H1. If you could just comment on this. Also, is it that, let's say, because they are South-based, the demand was much better in Andhra Pradesh and Telangana?
If that is the case, did Mebaz perform better for us because it's more Andhra Pradesh and Telangana heavy? Your thoughts here would be very helpful.
Absolutely. Your voice is breaking down. Output was.
Sorry, your voice is breaking. Sorry to interrupt.
Apologies. Can you hear me now?
It's slightly better, but still.
Hello, can you hear me?
Yes, now it's better.
Okay. Sorry. I'll also reiterate a point that for us, South 2, which is Andhra Pradesh and Telangana, did extremely well as well. I would not go down into one level of breaking it down into men versus women or by categories. As we all know, Andhra Pradesh and Telangana as a region, which I've mentioned in the past, did not do very well last year. It was one of the big dragging points for us for the entire last financial year. What I understand from the industry, it was very similar for the majority of the players in that market. This year, overall, things have been very different. Even we've done extremely well, similar to the numbers you were mentioning, in the Andhra Pradesh and Telangana market.
Would it be fair to say that in H1, we would have also grown by around 35%, specifically in Andhra Pradesh and Telangana? If not the exact number you can quote, then at least, let's say, north of 20% or north of 30%, something.
North of 20% is what we would have grown in Andhra Pradesh, Telangana.
Got it. Is there any particular reason that this can be attributed to, that Andhra Pradesh and Telangana saw a bounce back?
It's very difficult for us to describe this. In fact, a lot of members of the Senior Management spent almost a week in Andhra Pradesh and Telangana last quarter. The reasons which we get from the market are very macro in nature. It's very difficult for us to explain. From our perspective, they were all related to footfalls. Last year, footfalls were missing, and this year, footfalls are back. From our perspective, that's the main KPI. The reasons we were getting were too macro for us to explain right now.
Sure. Just the last question. One is, how do you measure customer loyalty? Do you think that in the last two years where the competitive intensity has increased, have these numbers come down? Lastly, the DIWAS brand, it's more in the economy segment. How is the traction there, and how are we seeing the demand pan out in the economy range?
Sure. Thank you for that question. From a loyalty perspective, we have two core KPIs that we really monitor. Rather, three main KPIs. The first big one here is retention rate, which is what % of our business this year is coming from existing customers. The second KPI which we monitor is repurchase rate, which is, let's say, if I had customer data of 100 people before the end of last financial year, how many of those 100 customers have come back this year to shop? Finally, what are the NPS scores we are getting from every shopping experience, which basically is an indicator that they will come back in the future or not? All the three for us have been doing really well. Rather, I would say our customer lifecycle management team has brought in the most amount of customers for us.
That's been a very positive sort of vertical for us. Sorry, what was your last question? It was on.
DIWAS brand. It's an economy brand. How is the traction there and the demand in the economy range?
We would not call DIWAS an economy range. For us, it's our festive range. We feel it caters to a completely separate set of needs of our audiences. Overall, we've been very happy with the kind of performance DIWAS has shown us, especially because it aims at improving our other channel business, mainly geared towards the online and MBO side of things. Overall, given the kind of festivals India celebrates, we've really been happy with the kind of performance we've seen in Q2 and the early parts of October.
Sure, thank you.
Thank you very much.
Thank you. The next question is from the line of Aditya Sen from Findoc. Please go ahead.
Hi, thank you for the opportunity. Hope I'm audible.
Yeah.
All right. Sir, we understand that key metrics to measure, or rather forecast, the demand for our products, wedding products, is by forecasting the number of wedding days. In the last two to three years, we have seen a declining trend. Is it somehow possible that we as a company, Vedant Fashions Limited as a company, can forecast the number of wedding days in order to maintain the inventory and anticipate the sales of the coming two to three years?
That is something which we absolutely do. It's bread and butter for us because we sort of take wedding days as a data point in order to judge what kind of sales we would achieve in a particular quarter. Our SPNA team, along with our inventory planning teams, really rely on this data. The challenging part here is, it's not, I mean, there's a big correlation to how many wedding dates you have, but it's not, let's say if you have 10 wedding dates in a quarter and 20 wedding dates in a quarter, it means that you'll do double the business. There are many other factors also which make this analysis very tricky and qualitative. I'll give you an example. India prefers to get married in winters. A single date in December or January will always have more weddings than a single date in April.
We have to ensure that all these parameters are also kept in mind when judging or planning.
Sorry to interrupt. Your last line was not audible. Could you please go again with the last line?
What I was mentioning is that given there's no absolute direct correlation. Sometimes India prefers to get married in winters, so a single date in December is actually a lot more important than a single day in April.
Yes, I truly understand that. That is just my first perspective about it. How reliable can our forecast be? Let's say we forecasted 20% growth next year. Does that come with 100% accuracy, or is there some margin of error also?
I mean, there will always be some volume of error. I think it's very difficult to get planning right. At our company, what we try to do is be very real with it. If mid-quarter we understand that our planning is not going correct, we will take corrective measures within the quarter itself. If you notice, in the past two years, while we have not been able to meet our revenue targets, we were able to maintain our gross margins. This will typically never happen in a retail company unless they are taking day-to-day calls and understanding how inventory levels are and leveling down on production if needed in some cases.
All right. Understood. That was a great answer to that. Thank you.
Thank you.
Thank you very much. The next question is from the line of Archana Menon from Morgan Stanley. Please go ahead.
Hi. Thank you so much for taking my questions. My first question was more on the demand environment. If you could just help us understand the demand trends during the festive period a little better. How is the consumer sentiment this time around? Also, there's been some shift of reportment in the festive calendar now. October is behind us. If you look at festive on a like-to-like basis, how would you think the demand would have been?
Thank you for this question. Overall, from a demand environment perspective, while we've only seen a single month of Q3, which is October, one thing we are seeing on the ground is there's excitement with the GST rate rationalization. While our company didn't directly benefit from the cuts in GST because for us, the majority of the rates increased, the consumer sentiments are really good given that 99% of India's products saw a cut in GST. There's definitely some frenzy around that and some happiness. I would be in a much better stage to fully give you an answer at the end of Q3. Overall, things look decent as of now. From an October perspective, things were decent, but we would really like to stretch on that answer once Q3 is done.
Understood. We're kind of happy with the festive performance is what I'm taking out of this. Also, a second part.
Yes.
Okay. Understood. A second part of this on the wedding side. Firstly, a basic question, but we see a lot of wedding dates in November. Typically, how many months in advance do you see demand coming in? If there are a lot of wedding dates in November that we see both in terms of the calendar and anecdotally around us, would you have seen some benefits of that in October as well?
Yes. Typically, post-Navratri, people start shopping for weddings and even during Navratri. The biggest week for us typically is the week after Diwali for weddings because that's when the sales typically end up peaking. If I give you sort of an answer on how many days before do people actually buy, for us, men buy 10 to 15 days in advance, and women buy about 30 to 40 days in advance in our case.
Okay. Vedant, the last two years have been disappointing both in terms of festive and in terms of wedding demand because of a bunch of reasons. Do you think we are now over that phase? Are you more optimistic? You can't share any numbers, but are you more optimistic about the festive and wedding season this year?
Archana, to be very honest, I'm always an optimistic person. I will continue to always be optimistic. As a company, I think we've always been on the right track, doing the right things. If macro supports us, I offer a very strong belief that these numbers will bounce back very strongly.
Understood. Sorry to ask one more question on this aspect. In addition to the wedding dates itself, do the other trackers that you would be tracking in terms of either banquet bookings or some of the other elements that you would be tracking, do they also indicate towards a good wedding season this year?
Yes, we try to do it, but I would say we are not at a level where it's very accurate. We do try from our local networks, trying to understand how the banquet bookings are. Something which we actually now have started using is some states report the amount of marriages that have been reported to the government. Whichever states report that, this is a post-quarter analysis. This is now something we started to do, which is a post-quarter exercise, which also gives us a good understanding of what's happening.
Understood. Just last question from me. On the GST side, at a portfolio level, what would be the net net MRP increase?
This is a very difficult question to answer, but I'll give you a kind of explanation that will get you to a broad level. As a company, wherever we had to pass on the benefit to the consumer, we've done that. Wherever we had to take a price hike in order to sort of make up for the 12% - 18% increase, we've done it in a calibrated way where we've judged the performance of a product, seen the kind of value that product has, and then increased the price. In some cases, it's taken the full hike. In some cases, it's taken a medium hike. The reason why I'm not able to answer this question to you directly, even though I have the numbers, is because after changing the GST, we've not seen how the performance of the same products has changed over that due course.
Once that data comes in over this quarter or so, which is quarter three, I think we'll be able to give you a much more accurate answer. When the GST changed, the majority of our products moved from 12% - 18%.
Understood. Thank you for taking my question.
Thank you.
Thank you, ma'am. The next question is from the line of Aashish from InvesQ PMS. Please go ahead.
Hi. Thank you so much. Vedant, most of the conversation has been around macros not being good for the business for the last so many quarters. Don't you think that it's mostly to do with the competition coming up? There are a few other brands in the market which are kind of coming up, which give a good competition to your business. Secondly, I would like to understand different brands that we have. If you could give us some sense of how these different brands are performing. Anything to look forward to that would help perk up the growth rates of the company because it's not been as good for the last so many quarters now. Being investors, we are kind of struggling with that question, why with your company that's happening?
Sure. Thank you for that question. Taking your first part, while competition has increased overall across India from a number of stores' perspective, what we've seen is we judge the performance of our own Manyavar stores, which are next to competition doors, versus Manyavar stores where no competition has opened. Even in quarter two of this year, we see a 5% positive delta in the Manyavar stores where competition has actually opened next door. When we look at this sort of data, it takes us back to a point that other macro pieces are hitting us more than just competition. While competition is a factor, it's definitely not the largest factor overall from our industry perspective. Secondly, when I start breaking down overall, the growth path for each of our brands, Manyavar has continued to be our flagship product.
As I've been mentioning, one thing which we are really trying hard is trying different marketing initiatives in order to increase our footfall significantly. In terms of Mohey, we've really shifted our strategy from being a bridal-heavy brand to doing a lot more non-bridal categories and focusing on categories like stitched suits, saris, crop-top lehengas. This has not only dramatically increased our TAM, but also allowed us to cater to audiences which are a lot easier than the bride, if I must say. These audiences have also really helped us improve the Mohey business. Twamev is absolutely doing really well, both within the Manyavar stores and in the EBO format. Bridal luxury is about to become a really large market in India.
With the kind of products that we have in Twamev, with the kind of supply chain we've built for the brand, I think we are highly confident that this will be able to scale into something very good. Finally, with DIWAS, India has about 50 festivals. Given that this is just the second year of the brand, and it's not even fully completed its first year, the kind of results we've seen have been very encouraging. I think with time, we can build it into something very good, mostly in terms of the volume growth we can get across India. One thing which keeps me very excited from a DIWAS perspective is if India truly starts to dress in Indian wear across all festivals, this will really change the way we look at culture. Each and every city will look a lot more festive than before.
Okay. What takes us out of this issue of revenue stagnation? I understand that as a business, you might be doing many things. With the legacy that we had in terms of building this category, I mean, the category leader. What will it take now? We've been trying so many things for the past so many quarters now, but somehow it struggles to be there, struggles to be an answer to all that. Help us understand that. How do we view it? Now the base is also kind of there, where growth should kick in somewhere. Anything to share on that?
No, I think absolutely the right question to ask. As management, we are really committed to bringing back footprints. Marketing is a very key theme for us, where we are spending a lot of time trying to understand what more can we do, what can we change. Hence, a complete drastic shift in marketing this year is one big pivot that we've taken, which we've never done historically. I'll give you one example. In about 10 to 12 days, we launch the Manyavar Shadi show. While I don't want to spill a lot of the secrets, I think when you see the show in the next 10 to 12 days, you'll realize what we're trying to do with marketing and how we're trying to change the game. It's efforts like these, which I feel can add to the footfall, and that's something we are really focusing on this year.
Okay. Lastly, if I may, I mean, we have so many brands. From a customer perspective, does he recollect these brands, which are, I mean, except for Manyavar, when he has to shop for that particular attire? I think it's a bit too confusing when so many brands are there, sub-brands are there. I would say as a customer that I don't recollect when I have to shop for different, maybe, festivals or weddings. Except for Manyavar, nothing comes to my mind, actually. That's what I struggle with. I don't know. I mean, you guys might be having a good idea about it, but still.
Yeah. Again, a very interesting sort of question. From a consumer's angle, Mohey is now quite a well-known brand. When we do an awareness campaign across our TG, we see a 70%+ sort of level for Mohey's brand awareness. Mohey is definitely a brand which across India, people know. From a Twamev point of view, Twamev's goal is to be really famous within the top three to four crore Indians. That it has been able to achieve now in the cities where we have stores. In a market like South X of Delhi, there people will talk about Twamev. That, again, is going to become a big point for us in the Brishtu Luxury market, especially through Twamev EBOs. Finally, from a DIWAS point of view, we have just started the journey. Because the brand is called DIWAS by Manyavar, it is more viewed like a subline as of now.
The plan is to, in the next three to four years, take out the by Manyavar aspect. Once it starts to scale across marketplaces, it will really sort of bring in that brand recollection of DIWAS.
Okay. Do you see H2 being better on the numbers on a growth basis?
H2 for us is definitely the larger half of the financial year. Everything that we sort of, from a strategy point of view, are doing in this company is to bring growth in H2. We don't give any guidance as a company. However, all the efforts being put by everyone is to bring in growth during H2.
Sure. Thank you so much. Thank you.
Thank you for the questions.
Thank you very much. Ladies and gentlemen, to ensure management can address questions from all the participants, please limit your inquiries to two per person. If you have a follow-up, kindly rejoin the queue. The next question is from the line of Ankit Keria from Phillip Capital. Please go ahead.
Vedant, if I hold you right, you said you have not taken the full price increase for the GST increase. After the Q3 festive sales number, we would pay further price increases for the categories of products we haven't taken price increase. Is that right?
Again, a very, very tricky question. Not exactly. We've already done the price changing in the majority of the products that we had to. When asked about the price increase, it's a very difficult question for me to answer. If I give you one example, we've tried to see the positive in this whole change. If I explain Manyavar kurtas to you, our core price point in Manyavar kurtas was INR 3,000 for a kurta pajama. What we've been able to do is INR 3,000, you would pay 12% GST. Inclusive of that, it would be INR 3,000. Now we've brought the entire MRP down to INR 2,624, which allows us to play a much better defensive game across anyone in this industry. We've taken such sharper calls in this whole process.
To give an exact price change number is sort of difficult because the sales of each SKU will also change because of the kind of price changes we've done.
Sure. In certain products or certain SKUs, we might have absorbed the GST increase. Is that the right understanding then?
To a certain level.
Understood. Second is, given that now you are playing at 18% GST, unorganized market would not be paying GST. Are you seeing that the unorganized market is more aggressive going forward and them getting market share? Because for a long period of time, you maintained that the MBOs didn't have market share gains versus you. Now that the differential is 18% in GST, do you see them making a comeback and making some dent versus organized?
Definitely not yet. I mean, that's something which we don't see. Also, from our own experience, every MBO I deal with, the largest MBOs of this country, I think not paying GST is not such a big challenge across MBOs of India right now. Because the kind of price points we deal with, we don't see MBOs at similar price points not paying GST. That's an issue which I have personally not seen across the industry at our sort of price point levels. If we talk about really an organized sector, which I'm not exposed to, I won't be able to answer it. In our price point and the kind of people we deal with, almost everyone pays GST.
The last question is, what happened in Mohey that you had to pivot from wedding to occasion wear? Because be it lehengas or gowns or saris, the last multiple quarters, the commentary was very positive. Why did you have to pivot from wedding wear to occasion wear in Mohey then?
I don't think it's a question of why, but more a question of how. When we had started Mohey, we had started off with all categories. We realized, and this is back in 2016, within the first three to six months, we understood that what we have done is wrong. As a company, we can't do all categories at once. That's when we decided to only focus on lehengas. With time, when we had more data and we started to excel in lehengas, we started piloting other categories in parallel. Once we understood those categories, sometime late 2023, early 2024, that's when we really started to bump up their inventory and their stock within our stores. The kind of performance we've seen, we've understood that pivoting to being an entire wedding trousseau for Mohey is a much more beneficial thing for the brand.
What would be the contribution of, say, lehenga versus non-lehenga today in Mohey?
Lehengas would be somewhere about 30% of our business, which is bridal lehengas, which has moved from about 50%, 55% to being 30% now over the last two to two and a half years.
Understood. Thank you so much, Vedant, and all the best.
Thank you.
Thank you. Next question is from the line of Rahul Agarwal from Ikigai Asset Management.
Hi, very good evening, Rahul from Ikigai.
Hi.
Hi. Three quick questions. Firstly, your sense, more longer term, three years out, in terms of growth. I think we're not talking about guidance, but what I'm trying to achieve is just your views on sustainability of same-store sales growth and new store additions. My sense is the entire rationalization exercise should be completing in the next six months is what I'm assuming. For fiscal 2027, 2028, do we go back to adding about 150, 2 lakh square footage? Secondly, on sustainable SSGs, you've mentioned in the past that high single digits, something which makes sense. I think this year we're going to end about 8%, 8.5% range. Would that be a range even for more longer term? That's the first question.
Thank you for the question. Starting off with SSG, I think broadly, the way we look at it is we break down SSG into four parameters which we want to grow in. From an ASP level, within the categories, we sort of plan to have about 2.5% to 3% increase within the categories itself. Given that luxury, such as Twamev products and also Mohey products, are having a better share of the company's pie, that is also creating a 0.5% to 0.6% shift in mix that we deal with. On top of this, what we want to grow in is volumes, both from an average basket perspective, plus increasing the footfalls that come to our store. At the same time, something which I discussed in the call today is our repeat rate, bringing in more of our repeat customers back to the stores.
All in all, the goal is to definitely, from a mid to long-term perspective, have a good single-digit growth in the range of 8% - 9%. From a this year perspective, I won't be able to give you any guidance. When it comes to store openings, again, from a long-term aspect, we want to grow pretty decently when it comes to sq ft. As I mentioned, this year, we are really focusing on improving the quality of retail that we have rather than focusing on just pure quantity. Hence, just a slightly different pivot we've taken. I think you've rightly mentioned that six, seven more months is what we need for the complete rationalization, which we've been doing in the past few quarters. Post that, given that gross addition is still decent, we shall be able to continue with converting those gross into actually being net as well.
Okay. In terms of long-term store openings, we should, forgetting about these weak macros, just sustainably, we should easily add 200,000 square footage as a business category, right?
I don't want to give you a particular number, but from a mid to long term, we should definitely grow pretty well in terms of store openings. India has a lot of opportunities. Any location that has more than INR 100,000 actually is a great fit for the brand.
Sorry to interrupt. You are not audible.
Sorry, I was saying that any market that has a catchment of more than 1 lakh is fit for the brand. There are many, many such markets that are left for us to open a store in.
Get that. Secondly, similar question on margins. Assuming that SSGs recover and they sustain 8 %-1 0%, what kind of operating leverage benefit we could see on EBITDA margins? Wherever we are right now, would you say that 8% - 10% SSG, I'm assuming that first-half operating margins are not something which are recurring basis. I'm sure this will recover once SSGs are better. Any op-lay of quantification can you give in terms of if you do 8% - 10% SSG, what is the EBITDA margin flow-through?
Probably I'm misunderstanding. My understanding is, sorry, Vedant, sorry to interrupt, but your network is volatile, hence your voice is not audible intermittently. Sorry for this today. We get our systems changed after this call. Can you hear me now?
Yeah, we're better. We're better.
Yeah. What I was saying is our understanding is doing an SSG of about 4 %- 5% means being flat from an operating leverage perspective. Because rentals, typically, the deals are increasing rents by 15% every three years. Our broad understanding is if SSG is 4 %- 5% at a year level, that means you're flat from an operating leverage standpoint. Anything more means that we'll have operating leverage. Anything less means we'll have operating deleverage.
Perfect. I get that. A smaller question was, because of these entire barcode changes, was there a one-off expense booked as operating expenditure, which will not be a recurring number going forward? Is there anything you can quantify?
No, not really. I mean, the cost of the barcodes would be under a few lakhs, so nothing significant at all.
Okay. Perfect. Thanks for the clarification. Best wishes for the rest of the year. Thank you.
Thank you very much.
Thank you very much. The next question is from the line of Prerna Jhunjhunwala from Elara Securities. Please go ahead.
Thank you for the opportunity. I just wanted to understand the store expansion and performance as well. If I were to see the negative same-store sales growth of 2%, and you have been refurbishing stores over the last six months plus, can you help us understand what is the performance of a mature store versus a refurbished store? How is the traction in new stores? They are coming at a refurbished rate already. Some clarity over there would help us understand the impact of the same.
Thank you for the question. One thing which I want to clarify is, Q2, looking at it from a pure minus-to-SSG perspective, would not be right. Last year, Q2 had wedding dates. This year, Q2 has no wedding dates. It's been by far the best Q2 we've ever had. I think overall, we were quite happy with the performance of Q2. Hence, achieving the numbers we did, even from an SSG standpoint, overall, was in line with what we had thought as a company we will achieve before the financial year had started. To your question, which is how do we look at it, I'll just break it down into three kinds of stores. Typically, any store which has not been five years old sees higher SSG than stores which have been there for more than five years.
Once the stores which have been there for more than five years have a one-time boost once it's renovated. These are broad three-case scenarios that we see.
Okay, just to follow up here. Am I audible?
Yes. Yes.
Yeah, just to follow up here, I'm just trying to understand. If you're saying that there were no wedding dates in this quarter, typically on a like-to-like basis, what would have been the SSG then?
In what sense, sorry?
If there were no wedding dates last year.
I'm sorry. Your voice is not audible.
Sorry to interrupt, sir. Your voice is not audible at all. Hello?
Hello? Yes, can you hear me now?
Yes, sir. Now.
Yes, we can hear you now, sir.
Yeah. What we were trying to say is that, look, in terms of SSG, I think the more relevant way to look at it would be at H1 level at this point of time rather than Q2. Because Q2 of this year is not comparable with Q2 of last year. Answering to your question, I think the more appropriate manner of looking at SSG would be to see at H1, where we are currently at 8.3% SSG.
Okay. That is helpful. Sir, second question is on how do we, wherever we've talked about brands like Twamev is doing well, DIWAS is doing well, Andhra Pradesh and Telangana is doing well, where are the challenges in the system to drive growth? What are the challenges that you're facing, which areas the challenges are, maybe brand-wise or geography-wise, that you can help us understand are dragging the numbers down?
From our perspective, H1 has been decent, and Q2 was pretty good. That is our understanding. If I talk more from a last financial year aspect, broadly, the one big area was footfall in our mens segment was weak, which was the main sort of lag on growth driving.
Okay. Is the challenge at Manyavar level? How should we see it?
No, again, when I say Twamev is doing good, at the end of the day, when it's a Manyavar retail store, and if a customer is buying Twamev, they think of Twamev as luxury Manyavar. From a consumer's aspect, the way we see it internally is Manyavar plus Twamev when it's a Manyavar store. From that angle, when we start seeing, what I would like to say is, if the footfall was slightly better by 5 %- 10%, it would have solved for the majority of the growth-related issues in the past financial year.
Also, one macro question at industry level. Celebration wear earlier was largely going at 20% when we got listed. Now, in your opinion, as the category, what will be the growth for celebration wear?
Unfortunately, this number right now I wouldn't have with me. We haven't sort of done our industry research in the past two years. However, once we do it, I'll be happy to share it with you. My understanding is Indian menswear is still at a very nascent stage. Even though India has so many festivals, one crore weddings annually, the market is hardly anything in terms of overall size. It will absolutely rapidly grow in the upcoming years. As India's middle class grows, there is no reason that this industry will not boom. For that to happen, India's middle class will have to grow in big numbers.
Okay. Understood. Thank you and all the best.
Thank you very much.
Thank you very much. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.
Thank you very much to all the analysts and everyone who had joined this call. It's always great interacting with you. We will see you post a big festival calendar and all the weddings in Q3. Thank you very much.
On behalf of Vedant Fashions Limited and ICICI Securities Limited, thank you for joining us, and you may now disconnect your line.