Ventura initiates coverage on VIP Industries, sees upside scope of 35%
Ventura Securities has initiated coverage on VIP Industries with a Buy rating and has recommended a price target of Rs 741 with a 24-month view. The target price signals an upside potential of nearly 35% from the current market price of Rs 551.
“Over FY23-27, we are expecting the company’s revenue/ EBITDA/ net earnings to grow at a CAGR of 14.6%/16.4%/18.5% to Rs 3,593 crore/Rs 581 crore/Rs 300 crore, respectively, while EBITDA and net margins are expected to improve by 96 bps to 16.2% and 105 bps to 8.4%, respectively. Return ratios – RoE and RoIC – are expected to improve by 694 bps to 30.7% and 2647 bps to 58.3% by FY27,” the brokerage report states.
Ventura said that despite its revenue growth targets being below the company's guidance, achieving the projected revenue growth of 17% CAGR could lead to a further rerating of the stock and unlock additional upside potential.
Revitalising the product mix, enhancing distribution networks, new horizons in premium bags, boosting e-commerce presence, optimizing supply chains, increasing in-house manufacturing, and driving business performance with top management rejig, VIP is seizing growth opportunities in the luggage industry by rigorously reviewing SKUs, collaborating with dealers, and shifting from unorganized to organized sectors. Ventura has attributed these factors to its optimism for VIP industries.
The brokerage firm believes that the newly refreshed product portfolio and premiumization of product mix in addition to the renewed vigor in tourism and travel is
