Ace investor Rakesh Jhunjhunwala lost Rs 249 crore in a month with VIP Industries share as coronavirus crisis roiled Indian markets. At the end of March quarter this year, Jhunjhunwala held 75 lakh shares or 5.31% stake in the luggage and travel accessories firm. On February 12, 2020, VIP Industries share price hit 52-week high of Rs 520 on BSE. The value of Jhunjhunwala's shareholding on February 12 stood at Rs 390 crore.
On March 24, VIP Industries stock hit 52-week low of Rs 188 valuing his shareholding in the Mumbai-based company at Rs 141 crore. The ace investor took a Rs 249-crore hit on his portfolio with VIP Industries stock in a month. This translates into loss of Rs 8.89 crore on an average per trading session during the period.
Jhunjhunwala was bullish on the stock in the beginning of this year as he raised stake in VIP Industries during March quarter of FY20. The stake was increased by 2.85 lakh shares. Jhunjhunwala held a total of 75,00,400 shares in the January-March quarter as against 72,15,400 shares of the company in Q3FY20.
The small cap share has gained 44.14% from its 52-week low till date. The stock hit an intra day high of Rs 271.05 today, up 3.08% against previous close of Rs 262.95 on BSE. Market cap of the firm rose to Rs 3,766 crore on BSE. It trades higher than 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages. The stock closed 2.05% higher at Rs 268.35 on BSE.
VIP Industries share has lost 40% in one year and fallen 38.17% since the beginning of this year. In one month, the share has gained 23.59% against 8.67% rise in Sensex. In a week, the stock has climbed 22.85% on BSE. Total 0.28 crore shares of the firm changed amounting to turnover of Rs 75.91 lakh on BSE.
VIP Industries share took a hit as coronavirus cases rose across the world including India and hit the travel and tourism industry badly during last four months. Business of the firm engaged in manufacture and sale of luggage and travel accessories was also affected in last quarter after Modi government announced nationwide lockdown to contain rising number of coronavirus cases.
The firm suspended operations across its plants effective from March 22, 2020 which are not resumed till date, it said on June 2. The Covid-19 pandemic hit operations substantially from mid of March, 2020 due to closure of factories of the company, disruption of supply chain, closure of malls and shops across the country, which impacted sales in Q4 of last fiscal. The Mumbai-based firm estimated a sales loss of approximately Rs 120 crore in Q4.
VIP Industries projected the negative impact to continue in FY 20-21with sales to remain around 50% of FY19-20 sales. Management has guided for sales contraction of 13-55% for FY21 and sales in April-May at merely 5-10% of normal.
Apart from the share price, the coronavirus disruption affected the fourth quarter earnings too. VIP Industries reported a 62.34% fall in Q4 net profit to Rs 9.52 crore compared to Rs 25.28 crore net profit in corresponding quarter of 2018-19. On a quarter on quarter basis, net profit fell 72.17%. Sales declined 28.42% in Q4 to Rs 311. 34 crore against Rs 434.98 crore in corresponding quarter of previous fiscal. On a quarter on quarter basis, sales were down 27.69%.
VIP Industries, the flagship company of DG Piramal Group, was established in 1968. It began manufacturing suitcases in 1971. The company operates in luggage and moulded furniture segments. VIP is the second-largest player in the world and largest in Asia commanding a 50% market share in luggage market in India, followed by Samsonite and Safari. The company has six brands and has products across entire price point range and customer segments.