Leading manufacturer of luggage and travel accessories
VIP Industries on Tuesday said it might take a 50 per cent hit on its top line in FY21 due to a
bleak demand environment for its products following the Covid disruption.
The Covid-19 pandemic has brought the travel & tourism industry to a grinding halt, denting VIP Industries’
March quarter sales by Rs 120 crore. The company reported a 28.4 per cent YoY drop in consolidated net sales at Rs 311.30 crore against Rs 435 crore in the year-ago quarter. Profit for the quarter fell 72.2 per cent to Rs 9.5 crore from Rs 26 crore in the year-ago quarter.
The company believes the negative impact on sales will continue all through FY21. “We expect sales for 2020-21 to be around 50 per cent of FY20 topline. We are trying to reduce fixed overheads to the best possible extent to protect the bottom line,” the company said.
For the financial year ended March 31, the company posted net sales of Rs 1,718 crore and net profit at Rs 112 crore.
Prabhudas Lilladher said discretionary spending post-Covid is expected to remain weak, resulting in a prolonged demand slump.
VIP Industries’ manufacturing facilities remain shut since March 22 due to the nationwide lockdown. They are yet to resume operations.
The company’s stock is widely tracked by investors on Dalal Street, as ace stock picker
Rakesh Jhunjhunwala holds over 5 per cent stake in it.
Latest shareholding data available on exchanges showed Jhunjhunwala bought an additional 2.85 lakh shares in the company in March quarter, taking his total stake to 5.31 per cent from 5.11 per cent earlier.
The scrip is down 47 per cent on a year-to-date basis till June 1, while the benchmark
BSE Sensex is down 19 per cent for the same period.
Analysts say there is a strong correlation between growth in the travel and tourism sector and demand for luggage bags. The loss of three months of global travel in 2020 would directly hurt the airline industry, cruise ships and hotel industry and indirectly the luggage industry.
There’s always a bull market: Jim Cramer’s 25 lessons to grow money, and not lose it
Mad Money
2 Jun, 2020
Jim Cramer is to Wall Street what peppy songs are to Bollywood movies. The renowned American television personality and host of the popular show 'Mad Money', who can shoot holes in the most robust corporate balance sheets, recommends defensive play when it comes to stock investing. Here is a list of Cramer’s own 25 rules of investing, which he says can help investors avoid big losses and keep their money safe and amass solid wealth.
Rule No. 1: Bulls & bears make money; pigs get slaughtered
2 Jun, 2020
Cramer says investors often get intoxicated with their gains in a bull market and tend to not book profits and never take anything off the table. This, Cramer feels, is a big mistake that investors make and they often end up getting slaughtered by their own greed. He said less greedy investors manage to cut their losses and stay in the game. One of the hardest things about investing is holding on in the face of big declines or market chaos, he says, adding that short-term pain often translates into long-term gains.“Being cautious and ringing the register near tops ends up keeping you in the game. Because you never know when stocks you own are going to really get crushed. You never know when the market could be just annihilated. You can’t have certainty. If you assume stocks will keep going up forever in a straight line, I think you’re going to be in for a world of hurt,” he wrote in his book, Real Money: Sane Investing in an Insane World.
Rule No. 2: It's ok to pay the taxes
2 Jun, 2020
Cramer says it is a universally accepted truth that no one has ever liked to pay taxes and as long as there have been taxes, investors have hated paying them. But he says it is best to make peace with the tax man as, like death, taxes are inevitable and unavoidable. “It's important to remember that gains, any gains, can be ephemeral. It is better to stop worrying about the tax man and take the gains when those gains appear unsustainable than to ride things back to a loss. Stop fearing the tax man; start fearing the loss man. You won't regret it,” said the Mad Money host.
Rule No. 3: Don’t buy all at once
2 Jun, 2020
Cramer said investors should not buy everything or sell everything at one go. It is best to buy and sell stocks in stages so that an investor can get the overall best prices over time. "It’s just plain hubris to buy a big chunk of anything (relative to your net worth) all at once. Who knows if the stock will crater soon after? You must resist feeling like you are making a “statement” with your purchase. Resist the arrogance, buy slowly. It’s humbling … and it’s right," says he.
Rule No. 4: Buy damaged stocks, not damaged companies
2 Jun, 2020
Cramer says when there is a selloff in the market, the first thing to do is to look for the companies that caused it. There’s a big difference between a broken company and a broken stock, and being able to gain handsome returns in a selloff requires knowing the difference between the two. “When the market suffers huge losses, investors have an opportunity to buy good stocks that have taken an unfair beating. If you’re looking at a company that is part of the reason for the correction, you’re looking at a broken company. Those are directly in the blast zone and certain to be obliterated,” says he.
“This impact would depend on how long the epidemic lasts and could be exacerbated by measures to restrict travel. Once the outbreak is under control, it would take up to one year for the tourism sector to return to normal levels. This is a big downside risk to our estimates for VIP’s FY21 and FY22 numbers,”
Kotak Securities said.
The brokerage, however, maintaining a ‘buy’ rating on the stock with a price target of Rs 295.
Mumbai brokerage
IDBI Capital last month came out with a ‘buy’ rating on the stock with a price target of Rs 275. It projected a 29 per cent drop in sales for VIP Industries in FY21.