VIP Industries shares extend gains for second day, jump over 8.5%; here’s why

Extending their winning streak for the second straight day, shares of VIP Industries, a prominent Indian luggage brand, surged by 8.73% in today's morning trade, reaching ₹506.25 apiece. This uptick follows the company's March investor presentation, wherein it outlined key targets for FY25. 

These include achieving a double-digit revenue growth starting from Q4FY24, bolstering market share from H1FY25 onwards, and venturing into premium segments by tapping into new price points. 

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Additionally, VIP Industries aims for a 15% EBITDA margin from H2 FY25 onwards, coupled with an initiative to optimise inventory and reduce debt and interest costs. 

Brokerage firm Nuvama Institutional Equities said the company has introduced product ranges across brands and redefined the look and feel and the price point for each brand. 

The majority of the new collections will be in stores in the first half of FY25. With these new launches, VIP has addressed product relevance issues that consumers faced in stores. Along with the design refresh, VIP has introduced a process for a monthly review of SKUs’ movement. 

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The company has also discontinued approximately 50 product ranges that were not meeting the sales threshold of 5k units per month. In addition, the company is making dedicated efforts to grow the Carlton and Caprese brands via new launches and initiatives, the brokerage added. 

The brokerage valued the stock at 30x FY26E earnings and continued with its ‘HOLD’ rating with a price target of ₹517 apiece.

The Indian luggage market is valued at approximately ₹20,000 crore, with branded players accounting for about 54% of the market share. The burgeoning middle class, with its growing inclination towards spending, is expected to propel discretionary spending industries, including the luggage sector. 

Furthermore, the increasing frequency of travel has transformed luggage into lifestyle products, further boosting demand. Luggage is no longer confined to travel necessities; it has expanded to cater to diverse customer segments, driven by event-based consumption patterns. 

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Moreover, macroeconomic pressures and a shift in customer preferences towards branded products are driving growth for the organised sector within the luggage industry.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.