90 Days. 40 Lakh Weddings. 5 Stocks to Watch Out for

Editor's note: Would you believe us if we said the marriage industry is India's fourth largest industry ahead of cars, steel, and technology?

That's right!

To put things into perspective, data released by official industry body mentions about the massive expenditure of Rs 4.74 trillion in the upcoming wedding season from November 23 to December 15, which is likely to see almost 38 lakh marriages.

It appears Indians do take the process of getting married very seriously.

In fact, if wedding planners and experts are to be believed, the upcoming winter wedding season will be much bigger compared to past couple of years.

To play the wedding theme in the stock market, you need to shortlist sub-segments of the marriage industry as well as a few stocks which would benefit the most.

In April 2022, we wrote to you about some of the wedding stocks which could be big beneficiaries of the wedding season.

Company	CMP (Rs)	3 Month (%)	YTD (%)
Arvind Fashions Ltd.	424	39%	22%
Dixon Technologies (India) Ltd.	5,279	9%	35%
Hero MotoCorp Ltd.	3,547	22%	30%
Kalyan Jewellers India Ltd.	329	56%	160%
Raymond Ltd.	1,649	-16%	12%
Thangamayil Jewellery Ltd.	1,436	14%	162%
The Indian Hotels Company Ltd.	421	7%	32%
Titan Company Ltd.	3,399	11%	31%
Trent Ltd.	2,650	32%	96%
TVS Motor Company Ltd.	1,800	34%	66%
Vedant Fashions Ltd.	1,346	11%	1%
Voltas Ltd.	824	0%	3%

Source: Equitymaster

The above list is still extremely relevant today. Let's take a look at the recent developments of these companies and how they are gearing up for the upcoming wedding season.

Stocks Benefitting from the Wedding Industry in India

Did you know that an estimated 10 million weddings take place in India every year?

10 million! Yes, that's right.

They also generate revenue of over US$ 40 bn.

However, because of the pandemic, the industry's sales fell. Restrictions on movements and large gatherings stalled millions of weddings.

Now as restrictions are being lifted, an estimated 40 lakh weddings are expected to take place from mid-April 2022 to July 2022.

The Confederation of All India Traders (CAIT) said that it expects business worth Rs 5 tn from these weddings.

Here are five companies in the listed space that could benefit from this massive spend.

#1 Titan

The first stock on our list is Titan, one of the largest retailers of watches and jewellery in India.

The company derives almost 80% of its revenue from its jewellery division. It sells jewellery through its brands Tanishq, Zoya, Mia, and Caratlane.

With the number of weddings set to jump manifold in the next few months, the revenue of companies such as Titan are set to increase.

This is because demand for gold and gold jewellery will go up. The precious metal is considered auspicious. It's used extensively to make traditional jewellery. Besides this, it's also a popular wedding gift.

Titan has already started to reap the benefits of this pent-up demand.

The company reported a strong revenue growth of 31% YoY during the December 2021 quarter, riding on robust demand during the festive season.

It also reported a standalone net profit of Rs 9.9 bn for third quarter, up 135% over a year ago.

Update: The obvious choice for most people to play the wedding season led by the huge volume growth would be Titan.

If you just pass by any Titan store, you will see the rush to buy jewelry, both gold and diamonds, during wedding season. After all, in matters of expensive ornaments, trust is the prime factor and who else would you trust more than the Tata's.

Earlier this month, the Tata group company reported a 34% rise in net profit for September 2022 quarter backed by 22% increase in revenues.

The company's jewellery business, excluding bullion, saw an 18% YoY growth in revenue.

The company's CEO for jewellery business has guided for strong quarters going forward on the back of the wedding season.

#2 Thangamayil

Next on our list is Thangamayil, another jewellery retailer.

The company is one of the fastest growing jewellery retailers in the state of Tamil Nadu.

Thangamayil primarily deals with four product lines - gold, silver, diamonds, and platinum. The sale of gold is a predominant source of its revenue.

With a revival in demand from weddings and an uptick in gold prices, the company's revenue is also expected to increase over the medium term.

Its growth will be supported by the expansion of its network as well as opportunities presented by a large share of unorganised players in the industry.

For the December 2021 quarter, Thangamayil reported a 3% YoY increase in revenue. Net profit declined almost 60% as expenses increased.

However, this is set to improve as the company has implemented various cost control measures.

Update: For those investors who find Titan's valuations too high, Thangamayil Jewellery might give you a better opportunity.

However, margins remain a concern for Thangamayil as the company reported lower than expected margin in the September 2022 quarter.

While revenue grew in double digit, profit fell and margin took a hit on the back of higher discounts and lower gold board rates.

The company is currently expanding existing outlets by enhancing store space.

#3 Vedant Fashions

Next on our list is Vedant Fashions.

The company caters to the Indian celebration wear market with a diverse portfolio of brands such as Manyavar, Mohey, and Manthan.

It's well positioned to tap into the large and growing demand for wedding finery over the next few months, with its strong brand franchise.

The Indian wedding and celebration market is relatively less price-sensitive compared to casual wear. Thus the company generates healthy gross margins (over 72%) with no end of season sale or discounts offered on MRP.

For the nine months ended December 2021, Vedant Fashions posted a 165% YoY growth in its consolidated net profit at Rs 2.2 bn. This on back of a strong operational performance. The company's revenue also nearly doubled to Rs 7.5 bn.

The Indian wedding and celebration wear market is pegged at around Rs 1 bn with the branded segment expected to grow at a CAGR of 18-20% by 2025.

Vedant Fashions is well placed to make the most of this demand.

Update: The newly listed company has fared well on the bourses so far, bucking the trend seen in big names like LIC, Zomato, Nykaa, etc.

Branded players like Manyavar have better recognition and they are the preferred choice when it comes to wedding and celebration wear.

With an established market position and a strong brand in the ethnic wear segment, Vedant Fashions could tap the untapped markets and gain market share.

#4 Raymond

Next on our list is Raymond.

The company is one of the leading players in the suiting business with a market share of over 60%. It is also the largest branded fabric player in the organised shirting segment.

Since suits are a wedding staple, the company stands to benefit from the increase in weddings.

Raymond has a track record of over 95 years. It also has a strong brand image assisted by a large retail network. It has a network of 1,420 stores and a dedicated retail space of 2.3 million sq. ft.

For the December 2021 quarter, Raymond reported a multi-fold jump in its net profit at Rs 1 bn. Its revenue from operations also grew by 48.3% YoY.

According to the company, it was the most profitable quarter in the last 10 years. It also generated free cash flows to reduce debt and is progressing towards being a net debt free business.

Update: Earlier this month, Raymond reported a two-fold jump in its net profit on the back of growth seen across various segments.

Despite a surge in cotton prices, Raymond stood tall and did not see major impact on its margins.

Raymond is also a beneficiary of the China plus one megatrend. The company's claims to have a healthy export orderbook till the end of the current year.

No wonder the company's share price has delivered multibagger returns in 2022 and is trading at its 52-week high.

#5 Hero MotoCorp

Last on our list is Hero MotoCorp, the largest two-wheeler manufacturer in the world.

The upcoming wedding season is expected to give rise to demand for two-wheelers in rural areas which are usually given as wedding gifts.

This could boost sales of the company which have otherwise been in a slump as the pandemic hit festive demand.

For the December 2021 quarter, Hero MotoCorp's revenue fell 18.5% YoY on account of a weak festive season and the second Covid-19 wave. The company also reported a 31.6% YoY fall in net profit.

The management has said the underlying demand drivers are intact. This should lead to positive momentum and volume support in the coming quarters, with an improvement in margins.

While Hero MotoCorp's core business still lies in the motorcycle segment, the company believes that scooters will lead the adoption of electric vehicles in the country in the near term.

It has also indicated that its EV product launch plan in 2022 is intact. It will continue to focus on its EV portfolio, supported by new launches/variants at regular intervals.

Should you buy wedding related stocks?

If there is one industry that is not impacted by the highs and lows of the economy, it's the Indian wedding industry. Indians are known to spend lavishly on weddings, come rain or sunshine.

Besides the typical wedding expenses on venues and wedding-related services, a large amount of money is spent on home repairs and paint jobs.

There is also expenditure on jewellery, apparel, footwear, electronics, motor vehicles, and various gift items.

This makes wedding related stocks extremely lucrative for investors.

However, one must realize that demand for these products or services is seasonal.

The revenue of the companies in this space may also depend on other factors other than demand. For example, in November 2021, a jump in gold prices halted orders for the ensuing wedding season.

Therefore, one must view wedding stocks with the same amount of caution as one would view other stocks. Sustained research must not be compromised despite the positive odds.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...