VIP Industries shares surge 15%; brokerage suggests more upside

VIP Industries shares surge 15%; brokerage suggests more upside

Shares of VIP Industries Ltd soared 14.71 per cent to hit a high of Rs 534.10 in Thursday’s trade. Brokerage Prabhudas Lilladher (PL) has upgraded its rating on the stock to ‘Buy’ from earlier ‘Hold’. It has also revised its target price to Rs 603 from Rs 589 previously.

“Our upgrade is driven by 30 per cent correction over last six months and the ensuing valuation comfort. VIP has 2 brands, Carlton & Caprese, in the premium category. Carlton is set to unveil its upscale product line, priced between Rs 10,000-18,000 soon. After onboarding inaugural brand head, the plan is to establish 25 exclusive Carlton stores and 16 airport outlets by FY25E. Similarly, new designs for Caprese are also expected to be launched soon while Kiara Advani has been roped-in as brand ambassador. We believe renewed focus on premiumization would not only act as a key margin lever but also drive growth,” PL stated.

“VIP has inventory of around Rs 900 crore with a higher SL share that is expected to be liquidated in near term. This is likely to optimize warehousing and freight cost. Further, larger part of inventory is less than 1-year old and probability of obsolescence is low given SL has fewer design imprints,” the brokerage mentioned.

It also underscored that the company’s revival strategy is likely to result in market share gains while EBITDA margin is likely to improve to 15 per cent from 2HFY25E once warehousing, freight and accelerated spends on e-com stabilize. “We broadly maintain our estimates and expect sales/EBITDA CAGR of 12 per cent/37 per cent over FY24E-FY26E on the back of said revival plan,” it added.

PL, on product launches, said, “A new dedicated wedding set of 5 pieces was unveiled whereas in Dec-23 Skybags debuted with lightweight luggage. In Jan-24, Skybags also launched an innovative backpack product like the biker’s range equipped with a retractable helmet socket. Aristocrat is also targeting tier 2-3 cities with new launches. In addition,102 new SKUs have been launched in backpacks recently.”

VIP, in an investor presentation, highlighted that India’s luggage market is estimated to be around Rs 20,000 crore with branded players to constitute 54 per cent of the market.

Watch Live TV in English

Watch Live TV in Hindi