With Raksha Bandhan the festivities kick off in India, then Diwali will be around the corner along with Ganesh Chaturthi, etc. I want to talk about a bunch of fashion retailers which are listed in India. How are the numbers looking, valuations looking? One of our common friends was just on the show earlier and was talking about starting to dip their feet as far as fashion retailers are concerned. What are your thoughts? There are half a dozen of them which are listed here in India right now and one more will get listed once it demerges, I am talking about Raymond Lifestyle.
Sudip Bandyopadhyay: Well, the most interesting is the one which will get independently listed once the demerger of Raymond is through. Look, the entire traditional wear, wedding wear, festival wear is a very-very large market. It is about a 10 lakh crore market. And overall, wedding is about 10 lakh crore and the apparel part of wedding and festival wear is about one lakh crore. Now, this is rapidly growing and this is much-much, about double the size of US wedding apparel market. And the potential for this market to grow is significant. Even FY20 about 15-20% was branded and rest was unorganised, unbranded. By FY25, I think it is about going to be 30% branded.
So, the transition from unbranded to branded is happening pretty fast. Under the circumstances, I think one needs to look at Raymond Lifestyle, which is going to get listed in the near future, because it is more than double the size of the next player which is Vedant Fashions, Manyavar.
If you compare FY24, Raymond, the lifestyle piece was about 3450 crore top line, whereas Vedant was about 1368 crore top line. And of course, the EBITDA margins were about 20.9% for Raymond’s branded lifestyle piece and do not forget that Vedant, you get, say, about 37-time EBITDA multiple as far as valuation is concerned and it is kind of expanding further. Under the circumstances, I think Raymond Lifestyle will be a stock to really-really watch out for.
Of course, if you talk about the legacy of the brand, it is about a hundred-year-old brand, the only apparel brand in the top 10 brands in India, massive network across the country with thousand plus own stores, about 1400 plus MBO stores. So, you are looking at a behemoth on the lifestyle branded fashion part. So, one needs to look at this.
We are just looking at the Jefferies data occasion where the way unorganised to organise change is happening, especially the way people want to associate with great brands in tier II, tier III as well. I want to understand though it is yet to be listed, I think in the next 10-15 days, what kind of valuations or is it too early to say what kind of valuations can it get listed at? Would it be a good play versus some of the ones which are already listed given the size and scale of their business?
Sudip Bandyopadhyay: Of course, it will be a great play vis-à-vis the ones which are listed because Raymond Lifestyle is significantly larger. As I was saying, it is probably more than double the size of Vedant, which would be the second largest listed player in this segment. So, yes, definitely it will be worthwhile looking into this. There is tremendous scope. The transition which you alluded to is happening at a rapid pace and Raymond was traditionally in the western wear segment and now they have ventured in a big way into the traditional ethnic wear segment as well with ethnics brand.
And I think between the western wear and the Indian traditional wear segment, they will be undisputedly market leader by far and will definitely command a significantly better valuation, that would be the expectation as things stand today.