VIP Industries Q1 Review - Gross Margin Springs A Positive Surprise: Prabhudas Lilladher
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Prabhudas Lilladher Report
We increase our FY22/FY23 earnings per share estimates of VIP Industries Ltd. by 44%/5% respectively as demand recovery post second wave is significantly better than our original anticipation (sequential top-line decline of just 15.1% in Q1 FY22 despite lockdown-like restrictions).
However, bigger surprise was gross margin expansion to 50.9% (almost similar to pre-Covid-19 levels) resulting in significant earnings upgrade for FY22.
In the entire last fiscal, VIP Industries faced headwinds on margin side with a fear that demand recovery will be back-ended and restoring margins to pre-Covid-19 levels can be a tall task given stiff competition and raw material cost inflation.
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