Prabhudas Lilladher's research report on V.I.P. Industries
We cut our FY24E/FY25E EPS estimates by 6.5%/7.6% respectively as we realign our indirect cost assumptions. VIP posted a record GM of 57.9% in 4QFY23 but reported a loss of Rs43mn at bottom-line level due to an exceptional charge of Rs472mn pertaining to fire incident in Bangladesh. We believe current GM performance is noteworthy despite rising share of low margin value segment and is reflective of rising self-sufficiency in own manufacturing and softening trend in input prices. VIP has outlined a capex of Rs2bn in FY24E to further expand manufacturing capacity which will reduce reliance on China (7% in FY23) and aid margins by eliminating freight cost and currency volatility.
Outlook
We expect sales/PAT CAGR of 13%/31% over FY23-FY25E and retain BUY with a TP of Rs900 (45x Sep-24E EPS; no change in target multiple).
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