₹211 crore vis-à-vis ₹186 crore for VIP. Fairytale finish? Well, not so soon. VIP, seething with wounded pride, has charted a roadmap to claw back lost ground and reassert its dominance.
On 28 March, its shares had soared 13% after its analyst meet turbocharged investor sentiment. Between the only two listed luggage companies in India, VIP clearly has been an underperformer. Over the past year, VIP’s shares have declined 7%, while that of its aggressive rival Safari – led by former VIP honcho Sudhir Jatia – have soared about 70%.
Not without reason. In five years, VIP’s market share has tumbled from 48% to 37%. Not just Safari, Samsonite and a host of unbranded players have nibbled away VIP’s pie.
In 9MFY24, VIP posted revenue growth of just 6% versus 30% for Safari, while Ebitda margins stood at close to 11%, compared with 18% for its rival. But the worst is behind if the company is to be believed. At the analyst meeting, VIP said it is revamping policies, reshuffling management, and launching products to move towards the premium category.
It is eyeing a revenue CAGR of 15-20% for the next three-five years, while margins will likely improve to 14-15% via improved supply chain and operational efficiencies. Analysts were impressed, with the premiumization theme striking a chord. VIP has introduced product ranges across brands, redefining the look-and-feel and price point for each brand.
"Majority of the new collections will be in stores in the first half of FY25. With these new launches, VIP has addressed product relevance issues that consumers faced at stores," Nuvama Institutional Equities said in a note. The macro conditions too look conducive for a comeback.
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