Buy VIP Industries; target of Rs 125: LKP

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LKP's reserach report on VIP Industries VIP is the market leader of the organised luggage industry in India with more than 50% market share. It manufactures and supplies a wide range of hard-sided and soft-sided luggage such as trolleys, suitcases, duffel-bags, backpacks, executive cases, overnight travel solutions, handbags, school bags etc. Established in 1971, it is Asia’s largest and the world’s 2nd largest luggage manufacturer and has sold over 60 million pieces of luggage around the world. It is an end to end supplier catering to the needs of a diversified customer mix of value for money as well as mid to high end premium segments. It has 4 plants in Maharashtra and 1 in Uttaranchal and sources most of its soft-sided luggage from China and Bangladesh. It has over 20 offices in India with a corporate presence in England, Dubai and Singapore. Its design lab in Nashik has several international patents and design registrations to its credit. Amongst the most recognized and trusted brands in India with its flagship VIP brand, the company has diversified to other brands as well through green-field and brown-field expansion such as Carlton, Caprese, Skybags, Aristocrat and Alfa. VIP also has a moulded furniture business under the brand name Moderna.Considering its strong brand equity, market leadership position, potential of Skybags and Caprese, distribution strength, forward looking management and low financial risk with a debt free balance sheet, we initiate coverage on VIP with a BUY rating and a one year target price of Rs 125 (47% upside), at which the stock will trade at ~ 24X times FY17E earnings of Rs 5.2. At current levels, the stock is trading at ~ 16X times FY17E earnings.For all recommendations, 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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