Buy V.I.P. Industries; target of Rs 817: Prabhudas Lilladher

Prabhudas Lilladher's research report on V.I.P. Industries

VIP’s FY22 annual report highlights plans to 1) maintain in-house manufacturing share at 75-80% 2) open 120-150 EBOs and 3) incur capex of Rs648mn in FY23E. Additionally, finished goods (FG) and stock-in-trade inventory in FY22 is similar to pre-COVID levels (refer to exhibit 1) indicating a strong 1Q, which is seasonally the best quarter for luggage companies. In terms of new launches, the performance was noteworthy with introduction of 59/43 new products in premium/value segment respectively. Also, opportunity from exports (~3% of revenue in FY22) can turn out to be substantial, as most countries are looking to de-risk their supply chain from China post-pandemic. However, one of the major highlight was meaningful improvement in disclosure levels (refer to exhibit 2 and tables/charts on page 4 for more details).

Outlook

Overall, our EPS estimates are broadly intact, but we re-align our capex assumptions and maintain ‘BUY’ on the stock with a TP of Rs817 (45x FY24 EPS).