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Last Updated : Mar 25, 2019 05:16 PM IST | Source: Moneycontrol.com

Buy VIP Industries; target of Rs 579: Prabhudas Lilladher

Prabhudas Lilladher is bullish on VIP Industries has recommended buy rating on the stock with a target price of Rs 579 in its research report dated March 25, 2019.

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Prabhudas Lilladher's research report on VIP Industries


We initiate coverage on VIP Industries Ltd (VIP) with a BUY rating given market leadership (~50% revenue share) in the organized luggage industry, well-diversified product portfolio (six brands and multiple SKUs exceeding 1,500) and solid brand salience (brand-ex is ~5-7% of sales). Strong distribution network (~11,000 touch points), GST implementation (narrowed pricing gap with unorganized players resulting in up-trading) and entry into the under penetrated ladies hand bags and backpack market is likely to drive sales/PAT at a CAGR of 23.7%/25.1% over FY18-21E. While headwinds from currency & crude volatility prevail, product premiumisation (rising share of Caprese and Carlton) and increase in production from captive facilities at Bangladesh will aid in 40bps EBITDA margin expansion over FY18-21E.


Outlook


We expect premium valuations (32.7x FY20E and 25.3x FY21E) to sustain given strong growth prospects, debt free BS, high return ratios (RoE/RoCE of 25.6%/36.9% in FY18; to expand by 230bps/310bps over FY18-21E), and healthy dividend pay-out (average 41% over last 5 years). Initiate with a BUY and TP of Rs579.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.




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First Published on Mar 25, 2019 05:16 pm
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