Multibagger VIP Industries stock likely to hit Rs 900 in a year? Five factors that can trigger the rally

Shares of multibagger firm VIP Industries are likely to hit Rs 900 mark in a year, said brokerage Prabhudas Lilladher in its Q4 earnings review of the luggage maker. The fresh target amounts to an upside of 40% over the current market price.  

The mid cap stock was trading 1.11% higher at Rs 640.15 in the afternoon session today. VIP Industries shares opened higher at Rs 635.05 against the previous close of Rs 633.10 on BSE. Later, they zoomed 2.04% to Rs 646 on BSE. Total 0.13 lakh shares of the firm changed hands amounting to a turnover of Rs 84.18 lakh on BSE. Market cap of VIP Industries rose to Rs 9112.92 crore.    

In terms of technicals, the relative strength index (RSI) of VIP Industries stands at 67.1, signaling it’s trading neither in the oversold nor in the overbought zone. VIP Industries stock has a one-year beta of 0.4, indicating very low volatility during the period. VIP Industries shares are trading higher than the 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages.  

On the other hand, shares of VIP Industries lost 3.68% this year and rose 0.34% in a year. VIP Industries shares have risen 188% in the last three years and zoomed 803% in 10 years, delivering multibagger returns for shareholders.   

IDBI Capital has assigned a target of Rs 836 post Q4 earnings of the firm. The fresh target amounts to a 35% upside over the market price of Rs 620 on May 8, 2023.  Earnings of the firm were announced on May 8, 2023.  

"We remain structurally positive on the growth prospects of luggage industry and softening of inflationary pressure. Captive operations in Bangladesh give VIP a strong advantage on raw material front compared to its peers. Also, its leadership in luggage industry and brand positioning remains unmatched. The industry tailwinds remain strong. Hence, we have a positive view on the stock," said the brokerage. 

Jinesh Joshi - Research Analyst, Prabhudas Lilladher has assigned a buy call on the stock with a target price of Rs 900.  

Prabhudas Lilladher listed out the positives, which could trigger a  rally on the VIP counter.  

 1. Other expenses included provision on doubtful debt of Rs 12 crore pertaining to the Future Group. No further provisioning is expected henceforth, the firm said in a concall with analysts.  

2. The count of Exclusive Brand Outlets (EBOs) breached the 500 mark in FY23. The firm has set a target of 800 in FY24. Majority of the new openings will be on franchise route.  

3. VIP has tied up with BCG to fast track growth in the e-com channel.  

4. Working capital cycle is expected to reduce by 15 days in 18-24 months. 

5. Manufacturing capacity is expected to be at 2.15 mn units per month in FY24.     

Nuvama has assigned a target price of Rs 861 on the VIP Industries stock.  

“We value VIP at 40 times FY25E PE, higher than its last three-year pre-covid average of 35 times as the company has reclaimed growth. This yields a target price of Rs 861; maintain ‘BUY/SO’. The slight adjustment versus our earlier TP of Rs 872 primarily stems from higher depreciation given the scaled-up capex expectations,” said the brokerage.  

The luggage maker reported a consolidated net loss of 4.26 crore for the fourth quarter ended March 2023, hit by an exceptional loss. The company had posted a net profit of Rs 12.39 crore in the January-March quarter a year ago. However, revenue from operations increased 26.6 per cent to Rs 450.57 crore in Q4 against Rs 355.90 crore in the year-ago period. 

In Q4, VIP Industries reported a loss of Rs 47.21 as an exception item. This was related to a loss of property, plant and equipment and inventories that were destroyed due to a major fire at a plant of the company’s subsidiary in Bangladesh on January 31, 2023.VIL’s profit before exceptional items stood at Rs 40.79 crore. 

Also read: Asian Paints Q4 results: PAT rises 45% to Rs 1,234 crore, declares Rs 21.25 dividend