VIP Industries shares surge 15% on FY25 growth push; Prabhudas Lilladher upgrades to ‘buy’

In an investor presentation, VIP Industries said its key goal would be to achieve double-digit revenue growth from Q4FY24

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VIP Industries shares jumped 15 percent in the trade on March 28, extending its gains from the previous session after the luggage maker shared its growth strategy.

In an investor presentation on March 27, VIP Industries noted said the key goal would be to achieve double-digit revenue growth from Q4FY24. It has an EBDITA ambition of 15 percent growth from H2FY25 onwards.

The company aims to improve its market-share in the luggage space from H1FY25. The luggage major said that it will further its portfolio to include premium options, tapping new customers at various price points. The company is also optimising its inventory with reduced debt and interest cost.

At 1.45 pm, VIP Industries was quoting at Rs 526.85 on the NSE, up 13.18 percent from the the previous session’s close.

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Prabhudas Lilladher said, “On fruition, the revival strategy is likely to result in market share gains while EBITDA margin is likely to improve to 15 percent from H2FY25E, once warehousing, freight and accelerated spends on e-com stabilise.”

VIP has also rejigged its senior management, with 50 percent of the team being new entrants or handling a new portfolio. Most brands under the VIP Industries umbrella now have separate head.

“Decentralisation can lead to improvement in business especially in premium segment (Carlton & Caprese) as customer is not just fixated on price and positioning/branding is equally important,” Prabhudas Lilladher said.

The domestic brokerage has upgraded VIP to a “buy” from “hold” and also raised the target price to Rs 603 from Rs 589. “Our upgrade is driven by 30 percent correction over last 6 months and the ensuing valuation comfort (VIP trades at ~17 percent discount to its LPA history of past 10 years),” the brokerage said. The target price implies a 29.5 percent upside.

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