Prabhudas Lilladher's research report on V.I.P. Industries
We attended the analyst meet of VIP industries (VIP) wherein management unveiled plans on product innovation (new launches were on display; check exhibit 5 and 6), premiumization, leadership and supply chain management. On fruition, the revival strategy is likely to result in market share gains while EBITDA margin is likely to improve to 15% from 2HFY25E once warehousing, freight and accelerated spends on e-com stabilize. We broadly maintain our estimates and expect sales/EBITDA CAGR of 12%/37% over FY24E-FY26E on the back of said revival plan.
Outlook
We upgrade VIP to a BUY (earlier HOLD) with a revised TP of Rs603 (earlier Rs589) after assigning a multiple of 33x (earlier 38x) as we roll forward to FY26E. Our upgrade is driven by 30% correction over last 6 months and the ensuing valuation comfort (VIP trades at ~17% discount to its LPA history of past 10 years).
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