VIP Industries Shares Jump 20% On Analyst Upgrades After Q1 Results
Shares of VIP Industries Ltd. posted their biggest single-day jump in 17 months as analysts upgraded the luggage stock expecting a gradual recovery in travel demand and on improving gross margin aided by cost cuts, lower discounts and price hikes.
The company reported a net profit of Rs 2.53 crore in the quarter ended June compared with a loss of Rs 3.78 crore in the preceding three months, according to its exchange filing.
April-June Quarter FY22 Results (Consolidated, QoQ)
Revenue at Rs 206.21 crore vs Rs 243 crore.
Total costs at Rs 218.73 crore against Rs 265.02 crore.
Other income at Rs 14.37 crore compared with Rs 16.30 crore.
Shares of VIP Industries jumped as much as 19.22% but pared some of the gains to trade 17% higher around noon on Thursday. That’s the most since March 13, 2020.
Of the eight analysts tracking the company, seven have a ‘buy’ and one suggests a ‘sell’, according to Bloomberg data. The overall 12-month consensus price target implies an upside of 5.1%.
Here’s what brokerages have to say about VIP Industries’ June-quarter results...
Upgrades to ‘buy’ from ‘under-review’, with a target price of Rs 457, an upside of 18%.
Better product mix, lower discounts and price hikes aided gross margins.
Better-than-anticipated demand recovery post second wave a positive development.
33% of the planned new product launches will be from value/mass category where demand is expected to be strong in the near to medium term.
Upgrades to ‘buy’ from ‘hold’, with the target price raised to Rs 457, a potential upside of 18%.
Sustainable cost cutting initiatives aided the performance, gross margin improvement commendable and is likely to enhance profitability as travel and tourism resume gradually.
Bangladesh plant is likely to contribute significantly to its Indian raw material requirements as sales normalise.
Company aims to manufacture handbags at Bangladesh plant, none of the competitors have captive procurement of soft luggage, which places VIP Industries at an advantage.
Remains structurally positive on the growth prospects of luggage industry.
Upgrades to ‘buy’ from ‘hold’, with target price increased to Rs 486, a potential upside of 25.97%.
Lower discount, price increases aided improvement in gross margin.
Revival in demand led by vaccination likely to aid sales growth.
Company’s efforts to improve operational efficiencies across supply chains to help in managing demand recovery better.