Top 4 Wedding Stocks to Watch Out for

Last year, a news article went viral. It stated that as per the Economist, the Indian marriage industry was expected to cross US$ 130 bn.

Well, this won't be astonishing to someone who knows that 'trying the knot' is the fourth biggest industry in India. In fact, it's bigger than India's auto and IT sectors...growing steadily every year.

This industry has a fascinatingly diverse ecosystem which works harmoniously to bring everything together on a couple's wedding day.

When we think of weddings, we usually think of hotels, food & beverages, jewellery, and apparel. Of course it's much bigger than that but it's true that just three expenses take up most of the wedding budget of a family. These are the venue, the jewellery, and the clothes.

The big fat Indian wedding usually ends up draining even the fattest wallets. And this great news for companies in this industry. After all, tens of millions of people all over the country, across economic strata, will buy everything needed for a perfect wedding.

So it's not surprising that wedding related companies in India listed on the stock market get a lot of attention during the 'wedding season'. This begins around November and extends to April.

In this article, we will look at some of the top wedding stocks in India.

#1 Titan

No surprise here. Titan is usually the first company that comes to everyone's mind when thinking about wedding stocks in India.

The company drives close to 90% of its revenue from it's jewellery division. It sells jewellery through its brands Tanishq, Zoya, Mia, and CaratLane.

The company's watches also see strong demand as a popular gift during the wedding season.

The company is a leading manufacturer of watches, jewellery, and eyewear in India. It has a 60% share in the organised watch market and is the world's fifth-largest integrated watch manufacturer.

In the second quarter of FY24, the company's results are expected to be strong as people begin their holiday season shopping of which wedding related shopping is a part.

In the first quarter of FY24, the company posted better than expected results. Titan delivered 24.4% increase in revenue year-on-year, with notable contributions from various segments: 25.8% growth in jewellery, 13% growth in watches & wearables, and 11% growth in eye care.

However, despite this robust revenue growth, the operating margins settled at 9.9%, declining by 3% compared to the same quarter of the previous year.

The business has done well in the long term. Sales and net profit grew at a 5-year CAGR of 20.2% and 24.3%, respectively. The RoE and RoCE are good at 5-year averages of 23.9% and 23.5%.

#2 Indian Hotels

Hotels with wedding halls or open spaces, can host multiple weddings on a single day. Weddings are generally preceded and followed by customary ceremonies which too, many a times are hosted at the same location.

Elaborate ceremonies can last up to a week translating to confirmed F&B and room revenues. Over the years, weddings have become a significant contributor to total revenues generated by the hotel industry.

The Indian Hotels Company Limited (IHCL) is India's largest hospitality company. It's also considered to be among the best hotel stocks in India.

Its iconic brand Taj Hotels was ranked as the world's strongest hotel brands and India's strongest brand across sectors as per Brand Finance, in 2022.

Indian Hotels is on a roll financially, having completely recovered from the covid phase and having reducing its debt to zero in FY23.

The company earned revenues of Rs 59.5 bn in FY23, which was up 85.2% compared to Rs 32.1 bn reported in FY22. Over the past 5 years, its revenue has grown at a CAGR of 6.6%.

The company earned a net profit of Rs 9.7 bn in FY23, compared to a loss reported in FY22. Over the past 5 years, its net profit has grown at a CAGR of 41.2%.

It's margins are also healthy. In FY23 its operating margin 31.1% and net margin was 16.7%.

#3 Vedant Fashions

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

It's one of the most direct plays on the long term growth of the Indian wedding industry. This is because the company has positioned itself nicely to tap into the large and growing demand for wedding finery over the long term, with its strong brand franchise.

The Indian wedding and celebration market is relatively less price-sensitive compared to casual wear. Thus, the company generates very high gross margins with no end of season sale or discounts offered on the MRP.

It's financials are also solid. In FY23 the company's operating income and net profit grew 30.2% and 36.3% over FY22.

The company's HYPERLINK "https://www.equitymaster.com/glossary/return-on-equity/?utm_source=annual-results-analysis&utm_medium=website&utm_campaign=performance&utm_content=return-on-equity"return on equity (ROE) and return on capital employed stood at 30.8% and 43.6% during FY23.

The company has no long term debt.

#4 Dixon Technologies

Dixon Technologies is not a name that comes to mind immediately when looking for wedding stocks but it should be.

There is no doubt about the contribution of the Indian wedding industry to this company. Smartphones and consumer electronics are among the most popular wedding gifts in India.

Dixon is India's largest contract manufacturer of televisions, washing machines, smartphones, LED bulbs, and CCTV security systems. It's clients are companies such as Samsung, Panasonic, Bajaj, and Philips. It has 17 manufacturing units in India.

Dixon is also the biggest manufacturer of LED TVs in India for the likes of Samsung, Panasonic, Xiaomi, TCL, OnePlus, and more. About 15% of all TVs sold in India are assembled by the company.

The company was also in the news recently regarding the government's revised PLI scheme for IT hardware. Dixon is in talks with IT hardware companies based in the US and China for the production of laptops.

Conclusion

Considering thematic stocks like these can be exciting for some investors. They offer the potential for quick returns during a certain time of the year.

However, it's important to understand that the stock market doesn't provide easy returns to anyone.

Returns from such themes may not match investors' expectations. Therefore, one must view wedding stocks with the same amount of caution as one would view other stocks.

Also be cognizant of the valuations dear reader. You should not end up buying wedding stocks which have already been priced to perfection.

We encourage you to do your own research on Indian wedding stocks using Equitymaster' stock screener: Top Wedding Related Companies in India.

Happy investing.

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...