India’s top two luggage makers have lost ground in 2026 amid concerns over margin pressure from rising input costs and intensifying competition. Yet analysts remain bullish on one stock while turning cautious about the other.
While Safari Industries India Ltd is down nearly 29% year-to-date, VIP Industries Ltd has declined 21%. However, Safari has won analyst confidence after its March-quarter performance, with expectations of a faster margin recovery as raw material costs ease. It commands overwhelming bullishness with 11 ‘buy’ calls and just one ‘sell’, shows Bloomberg data.
On VIP Industries Ltd, the Street remains divided. While some analysts see the delayed recovery in growth as a concern, others view the correction as a buying opportunity, leading to five ‘buy’, one ‘hold’ and five ‘sell’ ratings.
Contrasting sentiments
The sentiment is deeply negative for VIP due to consecutive quarters of net losses, bloated inventory, and a drop in market share from around 47% to approximately 29%, said Shobit Singhal, research analyst, Anand Rathi Institutional Broking Ltd.
Though the takeover by Multiples Alternate Asset Management Pvt. Ltd is expected to address supply chain and branding issues, Singhal believes the turnaround will take time.
Even as Safari has consistently outperformed VIP, Singhal noted that rising competition is putting pressure on its margins. He added that the stock remains vulnerable to corrections as lofty expectations leave little room for misses on growth targets.
Anand Rathi has also upgraded its rating on Safari’s stock post fourth-quarter results to ‘buy’ in its 19 May report.
VIP Industries Ltd’s Q4 results suggest a prolonged “repair and stabilization” phase, with the outlook likely to remain uncertain until the new leadership delivers a credible turnaround.
In Q4FY26, VIP reported a nearly 12% year-on-year drop in revenue from operations to ₹436.23 crore, while its net loss widened to ₹128.9 crore from ₹27.4 crore a year ago.
For Safari, however, Singhal believes the outlook remains stable to positive, albeit tempered by valuations. “Crossing the ₹2,000 crore annual revenue mark shows the brand is winning market share, but investors are cautious about short-term margin stagnation.”
Safari saw an over 12% on-year rise in revenue from operations to ₹473.3 crore with net profit largely unchanged at ₹37.47 crore versus ₹37.59 crore a year ago.
“Safari stands out as the safer bet, backed by its consistent execution and expectations that its execution capabilities will continue to outpace the industry," said Prerna Jhunjhunwala, vice president at Elara Capital.
VIP, in contrast, remains a high-risk, high-reward play, though she believes the worst may now be behind the company, leaving room for an upside.
In a post-earnings note, Elara Capital upgraded its rating on VIP Industries to ‘buy’ from ‘accumulate’, citing the sharp correction in the stock over the past three months.
While making a case for strong upside in VIP, Jhunjhunwala also quickly pointed out that the brokerage’s target price of ₹361 still remains well below the stock’s 52-week high of ₹492.30 touched in July 2025 and below its private equity acquisition price at ₹388.
“So, we trim our revenue estimates by 3.0%/5.0% for FY27E/28E and introduce FY29E. Expect VIP to turn Ebitda positive in FY27E and achieve net profit of ₹25.5 crore in FY28E,” read the Elara report. Ebitda is short for earnings before interest, taxes, depreciation and amortization.
Safe bet
Jhunjhunwala believes Safari’s leadership in the mass segment gives it a strong edge, especially as competition remains limited, with most new entrants being small- to mid-sized players focused on premium and mid-premium segments, making its market position difficult to disrupt.
Another brokerage, PL Capital, has upgraded its rating on Safari Industries to ‘buy’ from ‘hold’, saying the latest quarterly numbers indicate that “margin revival is on the cards”. It had cut the stock to ‘hold’ after Q3FY26 amid concerns over weak margin recovery and intensifying competition. Since then, the stock has corrected 34% as rising raw material costs worsened margin worries.
But Safari’s Q4FY26 gross margin of 49.3% and Ebitda margin of 13.1% suggest profitability can bounce back quickly once raw material inflation eases, PL Capital said in its 20 May note.
“Our projections factor in a modest recovery in Ebitda margin of 50 basis points over FY26-FY28E (13.2% in FY26 to 13.7% in FY28E), indicating limited earnings downside risk over a two-year timeframe.”
PL Capital downgraded VIP Industries to ‘sell’ from ‘reduce’ after Q4FY26 earnings and cut FY27-28 earnings per share (EPS) estimates by 8% in its 18 May note.
The brokerage said the turnaround gains are largely priced in and warned that recovery could be delayed amid intense competition and sharp raw material inflation. While VIP’s balance sheet clean-up is largely complete with no further inventory provisions expected, it noted the adjusted FY26 gross margin of 42.5% still reflects sustained competitive pressure.
VIP’s management has laid out a three-phase roadmap, with 2026-27 centred on reviving growth through product launches, price hikes, and a brand reset. From 2027-28 onwards, it expects market share gains and operating leverage benefits to kick in.
From a valuation standpoint, Singhal said VIP trades at a price-to-book (P/BV) of roughly 9.3x. Because VIP is currently loss-making, it does not have a meaningful price-to-earnings (P/E) ratio, making its current premium valuation difficult to justify on fundamental metrics alone, he said.
“Safari trades at a premium, with a trailing twelve-month P/E ratio, generally hovering between 45x and 55x, depending on broader market corrections. While elevated, this is supported by a more stable return on equity of around 16-18%.”