VIP Industries Ltd. share price target

Revising our FY23/24 estimates adjusting for the new cost environment we revise our recommendation from Buy to HOLD with a revised TP of Rs 596/share (earlier: Rs 600/share) valuing the stock at 47x FY24E EPS.

VIP has, over the years, maintained balance sheet prudence with stringent working capital policy, virtually debt free status and healthy RoCE: 30%+ Company update: We recently interacted with the management to get an insight...

We retain our positive stance on VIP Industries with a fair value of Rs. 775 (Rs.700). The Company posted revenue growth of 71% in line with our estimates. The growth is also in line with the improvement in domestic air passenger traffic which stood at 92% of pre covid levels. The company does not see any disruption in demand and is gearing up for a strong summer led by the reopening of schools/colleges. Focus remains on capacity expansion in India and Bangladesh to cater to rising demand as internal sourcing shifts to 6570% of overall sales. This should enable further margin expansion. Management remains resolutely focused on branding and distribution to increase...

Gross margins for the quarter improved 1050 bps YoY to 48.9% but continues to be below its pre-Covid levels (53-55%) on account of sharp inflation on China imports for both RM and finished goods On the back of significant cost saving measures, the company reported healthy EBITDA margin of 14.4% with absolute EBITDA of | 57.2 crore (vs. | 8 crore in Q3FY21). PAT has nearly reached pre-Covid levels at | 33.5 crore What should investors do? VIP's share price has grown by ~4.9x over the past five years (from ~| 135 in February 2017 to ~| 655 levels in February 2022). Luggage...

Our interaction with management of VIP reveals 1) price hike of 4.5% has been taken from 15th Nov to counter inflationary trends 2) capex plan of ~Rs500mn odd is on the anvil to expand capacity at Bangladesh and Nashik and 3) ocean freight is at abnormally high levels due to scarcity of containers resulting in SKU shortages. However, VIP has tied-up with contract manufacturers to counter this problem temporarily. Anticipating a normal sales season in 1QFY23, inventory stocking is expected in 2HFY22 (out of Rs3.2bn of...

We revise our FY22/23/24 estimates upwards as we raise our target PE multiple to 35x (30x earlier) and maintain our BUY recommendation with a revised TP of Rs 425/share (earlier Rs 415) based on FY24E EPS.

We upgrade VIP to a BUY (earlier under review) and increase our FY22/FY23 EPS estimates by 44%/5% respectively as demand recovery post 2 nd wave is significantly better than our original anticipation (sequential top-line decline of just 15.1% in 1QFY22 despite lockdown-like restrictions). However, bigger surprise was GM expansion to 50.9% (almost similar to pre-COVID levels) resulting in significant earnings upgrade for FY22. In the entire last fiscal, VIP faced headwinds on margin side with a fear that demand recovery will be back-ended and restoring margins to pre-COVID levels can be a tall task given...

VIP reported better than expected revenue and EBIDTA in Q1FY22. Revenue increased 411% YoY to Rs2,062 mn but fell 15.1% QoQ (Safari reported only 9% QoQ fall in sales). Interestingly, its gross margin improved to 60% from 47% in Q4FY21 as it procured nearly 90% of luggage from its captive Bangladesh plants. As per the management, the gross margin is sustainable. Q1FY22 EBITDA jumped up nearly 3x QoQ to Rs129 mn and...

VIP has, over the years, maintained balance sheet prudence with stringent working capital policy, virtually debt free status and healthy RoCE: 30%+ Q1FY22 Results: Second wave significantly disrupted a seasonally strong quarter...