VIP Industries Ltd. share price target

We recently met the management of VIP Clothing (VIP) to understand the business model & outlook, going forward. Incorporated in 1991, VIP (earlier Maxwell Industries) is engaged in marketing & manufacturing innerwear products, mainly catering to men's portfolio (90% of revenues). Over the years, it has created a strong brand legacy with VIP a household name in India. Apart from its flagship brand, the company houses brands under the brands Frenchie and Feelings. VIP has positioned itself as a mass brand with its products priced in the range of | 50-85. To diversify...

VIP has reported second straight strong quarter with significant improvement in revenues, operating margins and earnings. This is on the back of improving luggage penetration in the country and sustained efforts by the company to improve its performance. Sales was reported at Rs 3.09 bn (+8% YoY). EBIDTA margin was reported at 11.3% (+210 bps YoY) with improving volumes and realisations and lower raw material cost. Consequently, PAT was reported at Rs 242 mn (+33% YoY). We estimate the company to be a major beneficiary of increasing penetration of luggage bags and back-packs in the country and...

Company has a global footprint with its products available not just across India but also all over Middle East, UK, USA, Germany, Spain, Italy and African and South East Asian countries. International business has lagged during the year, decline was due to lower brand strength in foreign markets as well as an issue with a distributor. Going forward, the strategy is to...

~ 7.7 % in Q3FY17 despite demonetization, the absence of the Haj institutional tender this fiscal that it won in Q2FY16 partly contributed to the flat yoy growth in 9MFY17. But this absence of any low margin institutional orders together with ~ 182 basis points fall in...

VIP Industries (VIP) reported in-line numbers for Q3FY17 with a revenue and PAT growth of 5.5% & 43.3% YoY. Aided by improved negotiations with suppliers, stable INR and weak Chinese Yuan (vs INR), gross margins expanded by 365bps YoY, which was encouraging.

VIP Industries manufactures moulded luggage (from high-density polyethylene), soft luggage (from nylon, polyester,jupolene, printed polyester) and ABS luggage (from acrylonitrile butadiene styrene plastic) including briefcases, suitcases, handbags, carry bags and vanity cases. The installed capacity for flexible luggage is 3,60,000 pa.

VIP has been able to post an impressive growth at ~ 15.0% yoy to ~ 2.9 bn in its top-line and ~ 33.0% yoy to ~ 113 mn in its bottom-line on the back of growing popularity of its Skybags and Caprese brands. Focused ad campaigns with brand...

Caprese, Skybags and Carlton to boost revenues: The company derives 20%-25% of revenues from Skybags which are growing at 40% YoY. Carlton and Caprese contribute Rs.500 Mn each to the revenues of the company, which are growing at 50% YoY. The company is spending huge amount (5% to 7% of revenues) on advertising which can translate into revenues in the coming years.