INSUBCONTINENT EXCLUSIVE:
Edelweiss Securities has a buy call on VIP Industries with a target price of Rs 566.
The current market price of VIP Industries is Rs
475.35.
Time period given by the brokerage is one year when VIP Industries price can reach the defined target
Investment rationale by the brokerage-Strong structural growth drivers in place: Management envisages favourable industry dynamics to
support robust volume growth across brands and channels: 1) GST implementation has led to a shift in market share to branded players,
especially in the entry segment
2) The backpack category has been gaining momentum given shorter replacement cycle (two years), leading to 30 per cent-plus growth for VIP
from 0.17mn/month in November 2018 to 0.3mn/month in April 2019 given overall sales volume of 1mn/month
Furthermore, it recently raised prices, which were held back due to intense competition in the entry segment
valuation: We believe VIP is lodged in a strong position to cash in on industry tailwinds with sharpening focus on scaling up
At the current market price the stock trades at 36.4FY20E.
