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Stock Tales are concise, holistic stock reports across wider spectrum of sectors. Updates will not be periodical but based on significant events or change in price.
Stock_____
TALES
October 18, 2019
ICIC
I S
ecurit
ies –
Retail E
quit
y R
esearch
Stock T
ale
s
October 18, 2019
CMP: | 465 Target: | 540 ( 16%) Target Period: 12 months
months
VIP Industries (VIPIND)
BUY
Balanced product portfolio to usher sustained growth
VIP Industries is one of Asia’s leading seller/manufacturer of various types
of luggage’s, backpacks, and handbags. Predominately into luggage space
(~75% of revenues), we believe VIP is well poised to capture high trajectory
growth opportunities in the ‘backpack’ (~18% of revenues) and ‘handbag’
(~7% of revenues) segments through its brands; ‘Skybags’ and ‘Caprese’.
Also, given its leadership position in the organised market (50%+ market
share), structural changes such as GST are expected to provide growth
impetus to its entry level brand, ‘Aristocrat’ (priced < | 3000). VIP Industries
appears well placed to play on the huge domestic luggage opportunity.
Backpacks segment acting as revenue growth catalyst
The backpacks industry is pegged at ~| 8000 crore and is growing at a much
faster clip than the luggage industry. Furthermore, the unorganised pie is
much larger as compared to luggage industry (~80% vs. 60%), which gives
immense opportunity to players like VIP to enhance its market share.
Backpacks currently contributes ~18% of the revenues for VIP and is
growing at a swift pace of 30%+ annually. We expect healthy trajectory to
sustain going forward owing to faster replacement cycle as compared to
luggage and shift from unbranded to branded products. We expect
backpacks category to contribute ~20% by FY21E.
Bangladesh facility to reduce dependence on china
China is the largest sourcing hub for soft luggage category, given the
abundant availability of labour. Labour cost in China has been on an uptrend
leading to input cost pressure. Also depreciating rupee (vs. dollar rate)
brings in high volatility to gross margins. To address the issue, company
over the years has reduced its dependency on sourcing soft luggage from
China by setting up a manufacturing plant in Bangladesh through its wholly
owned subsidiaries. VIP currently sources 70% from China (down from
~90%) with management expecting to take the share further down. The new
facility in Bangladesh will aid in partially replacing the traded goods with
manufactured goods, thus enabling better margins.
Valuation & Outlook
VIP has a capital efficient business model, generating 32%+ RoCE and
having virtually debt free status. Owing to its market leadership and strong
brand patronage among consumers, VIP’s business model has the inherent
ability to tide over tough market conditions and continue its profitable
growth journey. We expect VIP revenue’s to grow at a CAGR of 16% over
FY19-FY21E on a high base of FY19 (revenue growth of 27%). On the
profitability front, healthy EBITDA margins in Q1FY20 and reduction in
taxation rate for FY20 is expected to aid PAT growth. We model in 23% PAT
CAGR in FY19-21E and expect RoCE to improve by 230 bps to 35.0% in
FY21E. We ascribe BUY rating on the stock with a target price of | 540,
valuing at 35x FY21E EPS of | 15.4.
Key Financial Summary
Particulars
Particulars Amount
Market Capitalisation (| crore) 6,570.5
Total Debt (FY19) (| crore) 86.2
Cash (FY19) (| crore) 14.2
EV (| crore) 6,642.4
52 Week H / L 567 /342
Equity Capital (| crore) 28.3
Face Value (|) 2.0
Price Chart
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Price (R.H.S) Nifty (L.H.S)
Research Analyst
Bharat Chhoda
Cheragh Sidhwa
| crore FY18 FY19 FY20E* FY21E CAGR (FY19-21E)
Net Sales 1,409.6 1,784.7 1,991.8 2,391.3 15.8%
EBITDA 193.4 224.7 253.0 310.9 17.6%
Adjusted PAT 126.8 145.3 141.7 218.3 22.6%
P/E (x) 51.8 45.2 46.4 30.1
EV/Sales (x) 4.6 3.7 3.3 2.7
EV/EBITDA (x) 33.5 29.6 26.0 21.0
RoCE (%) 38.8 32.4 33.3 34.7
RoE (%) 25.9 25.0 21.1 26.9
Source: ICICI Direct Research, Company. In Q1FY20, company reported and exceptional loss of | 48.0 crore pertaining to fire at Ghaziabad warehouse. Management has indicated that the loss is
adequately insured. We expect Adjusted PAT to be | 178.0 crore
ICICI Securities | Retail Research 2
ICICI Direct Research
Stock Tales | VIP Industries
Company Background
Incorporated in 1971, VIP is Asia’s leading manufacturer/seller of hard and
soft luggage, backpacks, suitcases, shoulder bags, office bags and duffel
trolleys. VIP has range of leading brands, positioned across entire price
range, catering to value, mid and premium price points. Apart from its
flagship brand, ‘VIP’, it has various other popular brands such as Alpha,
Aristocrat, Skybags, Carlton and Caprese. VIP has a robust distribution
network having 11000+ point of sales, comprising of 500+ exclusive
branded outlets. Hypermarket and e-commerce channels have been among
the fastest growing distribution vehicle for VIP in the recent times.
Exhibit 1: Product portfolio catering across segments
Value segment;
Luggage, backpacks
Positioned as youth centric
brand;
Luggage, backpacks
Company's flagship brand;
Luggage, backpacks
One of leading brands for
ladies handbags;
Handbags, accessories
Caters to young business
traveler in super-premium
category;
Luggage
Source: Company, ICICI Direct Research
VIP over the years has made sturdy inroads to fortify its presence in mid-
priced segments (| 3000- | 5000) in which the company has ~70% market
share. As for the other segments are concerned, the low priced SKU’s (< |
3000) were dominated by unorganised players, whereas the premium
segment (> | 5000) were catered by players such as Samsonite. Over the
last few quarters, VIP has outlined significant opportunities to capture the
segments in which it does not have a strong foothold through investments
in marketing spends and new trendy product launches.
Over the years, the company has consistently invested towards spreading
its product awareness and creating a brand value. While revenues increased
at a CAGR of ~13% during FY13-19, the advertising and promotional spends
increased by a CAGR of ~15%. In Q1FY20, the management had to tone
down its promotional spends in order to maintain the profitability. We
expect the company to increase its advertisement spends, amid the recent
corporate tax rate cut ahead of the upcoming wedding and festive season.
Exhibit 2: Advertisement spends as a percentage to sales
44.64 44.1
57.0662.97
70.776.78
89.53
99.36
5.2 5.0
5.96.0
5.8 6.0
6.4
5.6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0
20
40
60
80
100
120
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
%
| crore
Ad expenses % to sales
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 3
ICICI Direct Research
Stock Tales | VIP Industries
Investment Rationale
Organised Luggage Industry poised to gain market share
Luggage industry in India is gradually shifting from being a utility based
product to a fashion statement. Increasing fashion consciousness and
aspirational levels are driving robust demand towards branded players.
Previously there used to be one luggage per family of 4-5 people but
nowadays each one has his own luggage.
The recent implementation of GST has been instrumental in nudging the
buyers to shift from unorganised players to the branded ones. The luggage
and backpack industry is dominated by unorganised players having more
than 60% market share. Introduction of GST turned out to be a big boost for
players such as VIP and Samsonite as it is expected bring a level playing
field vis-à-vis the unorganised industry by reducing the possibility of tax
evasion. Furthermore, the government reduced the GST rate on luggage
from 28% to 18% in Q3FY18. We believe the shift is structural in nature with
robust revenue growth visible across all major luggage players, especially
in value category.
Exhibit 3: FY19 revenue growth vs. FY13-18 CAGR
Company FY13-18 FY19
Revenue CAGR Growth
VIP Industries 11% 29%
Safari Industries 26% 38%
Samsonite (India) 6% 18%
Source: Company, ICICI Direct Research. For Samsonite period of comparison in CY12-17 vs. CY18
Post implementation of GST, VIP’s entry level brand, ‘Aristocrat’, has
witnessed significant traction with the brand reporting growth as high as
70% in FY18. Robust growth can be also attributed to aggressive
investments in marketing spends to enhance the brand profile. The gross
margins for the Aristocrat brand is significantly lower as compared to
company’s average (lower by ~500 bps). To address the same, the
management has undertaken several efforts such as negotiating with the
Chinese suppliers and value engineering the products to bring down the
product cost. While the efforts would take some time to materialize, the
management is confident of sustaining healthy revenue trajectory driven by
market share gains mainly from unorganised players.
Company’s flagship brand ‘VIP’ yields healthy gross margins, however the
brand has struggled to maintain healthy revenue trajectory. Subsequently,
the revenue contribution from the VIP brand has declined from ~ 50% in
FY14 to ~ 40% in FY19. In a bid to revive the brand, the management has
undertaken several initiatives, such as; a) relaunched VIP brand with a new
logo, b) launched new trendy product lines, c) repositioned as a holiday
theme luggage, d) spent aggressively on promotional expenses (invested in
IPL and appointed new brand ambassadors). The efforts were visible as
management indicated that the brand performed relatively better in Q1FY20.
ICICI Securities | Retail Research 4
ICICI Direct Research
Stock Tales | VIP Industries
Backpacks to provide sustained impetus to revenue growth….
Backpacks has been one of the fastest growing category for VIP since its
inception (was launched in FY11). Backpacks are mainly marketed through
its youth oriented brand, Skybags (backpacks contribution increased from
~15% in FY14 to ~40% of Skybags brand revenue). As per our estimates,
revenues for backpacks have grown at a CAGR of 35% over the last five
years to ~| 330 crore in FY19. Subsequently, contribution to overall
revenues grew 2.5x to 18% in FY19. Company has sold over three million
backpacks in FY19 majorly through its Skybags brand.
The backpacks industry is pegged at ~| 8000 crore and is growing at faster
pace than the luggage industry. The unorganised pie is much larger as
compared to luggage industry (~80% vs. 60%), which gives immense
opportunity to players like VIP to enhance its market share gains.
Furthermore, unlike luggage, repeat purchases are more frequent in
backpacks resulting in better inventory turns. The growth is fuelled by
number of factors such as increase in workforce, higher enrollment of school
and college students and sale of 2W automobiles. We expect the backpack
segment to continue outpacing the luggage space on the back of favorable
tailwinds. As far as competition is concerned, VIP has an upper hand given
the robust distribution network across all channels.
Exhibit 4: Backpacks growth trend…
245
331
377
483
-
100
200
300
400
500
600
FY18 FY19 FY20E FY21E
| crore
Source: Company, ICICI Direct Research. The company does not publish segmental data. The numbers are based on
management interviews and our assumptions
Change in pricing strategy elevates revenue growth in
handbags….
VIP forayed into ladies handbag market in 2013 through its brand Caprese.
Though the brand did not yield satisfactory results at the beginning, change
in pricing profile (VIP introduced lower range products priced at | 1000) and
significant investment in branding and ad spends (roped in Alia Bhatt as
brand ambassador) have resulted in healthy traction in the brand in recent
times. The brand achieved turnover of ~ | 100 crore in FY18, translating into
CAGR of ~47%, albeit on a small base.
According to the management, Caprese has made quite inroads with the
brand capturing the third spot (in the price range in which it operates) in
India. The current market size for ladies handbag is pegged at ~| 5000 crore
and is expected to double in the next five years, on the back of increase
number of working women and healthy growth in e-commerce space (since
~40% of revenues are derived from e-commerce channel). We model in
30% CAGR for the handbags segment in FY19-21E. Handbags are high
margin yielding product category with gross margins ~500 bps superior
than company’s average margins.
ICICI Securities | Retail Research 5
ICICI Direct Research
Stock Tales | VIP Industries
Reduced dependency on China to improve margin profile
China over the years has turned out to be one of the largest sourcing hub
globally for the soft luggage category. Since manufacturing of soft luggage
is characterized as being labour intensive, majority of the players prefer
importing goods from China (given the abundant labour availability) rather
than producing it indigenously. Given the huge scale in which China
(supplier) operates, the bargaining power of the buyers gets restricted.
Labour cost in China have been on an uptrend in the recent times leading to
input cost pressure. Furthermore, since payment is made in dollar terms to
the Chinese suppliers, depreciating rupee (vs. dollar) negatively impacts the
gross margins for the company. To address the issues, company over the
years has reduced its dependency on sourcing soft luggage from China by
setting up a manufacturing plant in Bangladesh through its wholly owned
subsidiary.
Advantages of setting up manufacturing facility in Bangladesh are as
follows:
A) Shrinks over dependency on Chinese players in case of rising wage
inflation. The labour cost in Bangladesh is ~ 1/4th of that in China.
B) Better control over inventory sourcing, whereas currently the
company directly sources finished goods in which it has limited
control.
C) The new facility in Bangladesh will aid in partially replacing the
traded goods with manufactured goods, thus enabling better
margins.
D) GOI recently, hiked the import duty rates on luggage from 10% to
15%. Bangladesh however is exempted from the duty bracket.
Exhibit 5: Revenue trend for Bangladesh subsidiaries
1115.9
49
13.8
5
18.4 19.8
57
25.2 25.9
38.9 39.2
129.2
0
20
40
60
80
100
120
140
Q3FY17
Q4FY17
FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Source: Company, ICICI Direct Research
Exhibit 6: Average PAT margin for Bangladesh operations have always been
superior than standalone PAT margin of the company
0.0
5.0
10.0
15.0
20.0
25.0
Q3FY17
Q4FY17
FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Bangladesh PAT Margin (%) Standalone PAT Margin (%)
Source: Company, ICICI Direct Research. Disruption in production facilities resulted in weak performance in Q2FY18
ICICI Securities | Retail Research 6
ICICI Direct Research
Stock Tales | VIP Industries
Financials
Diverse product profile to enable capturing category growth
opportunity
We pencil in revenue CAGR of 16% in FY19-21E, with backpacks and
handbags category expected to continue to grow at a faster clip. We expect
share of revenue from backpacks to increase by ~ 200 bps by FY21E to
~20%. In the luggage space, repositioning of its flagship brand, ‘VIP’ and
healthy demand for entry level priced brand, ‘Aristocrat’ are expected to be
the key growth levers. The revenue growth trajectory is expected to
decelerate in FY20 owing to tough market conditions and muted air traffic
growth (discontinuation of Jet Airways services), however, VIP could be a
beneficiary as and when the market scenario improves. We expect growth
momentum to pick up pace from H2FY20 onwards.
Exhibit 7: Revenue trend
972.81047.7
1216.51275.2
1409.6
1784.7
1991.8
2391.3
0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E
| crore
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 7
ICICI Direct Research
Stock Tales | VIP Industries
Launch of better margin products and sourcing from
Bangladesh to prop EBITDA margin
Q1 generally tends to be one of the strongest quarters in terms of revenue
(~30%) and profitability (~45%), since the peak travel season occurs in
April-June. Despite moderate revenue growth in Q1FY20 (9% YoY), VIP
clocked in one of its highest ever EBITDA margin of 19.1%.
Rupee depreciation and increase in custom duty hike (from 10% to 15%)
had impacted the gross margins negatively in Q3FY19 (down 430 bps YoY
to 46.7%) and Q4FY19 (down 710 bps YoY to 47.5%). Despite high cost
inventory, sustained efforts by the management translated into healthy
gross margin expansion of 290 bps QoQ to 50.4% in Q1FY20. The triggers
for improvement in margins were as follows; a) took gradual price increase,
b) better price negotiations with the Chinese dealers owing to US-China
trade war, c) deprecation of Yuan vs. dollar and c) launching of new products
at a better margin profile.
We expect EBITDA margins to remain range bound in FY20E to 12.7% owing
to certain existing high cost inventory and moderate revenue growth. We
model in 30 bps YoY EBITDA margin expansion to 13.0% in FY21E and
expect EBITDA to grow at a CAGR of 18% in FY19-21E. Increase in share of
Bangladesh imports and enhanced product mix to assist margin expansion.
Exhibit 8: EBITDA margin trend
80.3 77.5
107.9
131.8
193.4
224.7 253.0
310.9
8.37.4
8.9
10.3
13.7
12.6 12.7
13.0
0
2
4
6
8
10
12
14
16
0
50
100
150
200
250
300
350
FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E
%
| crore
EBITDA EBITDA Margin
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 8
ICICI Direct Research
Stock Tales | VIP Industries
Improved operational performance and lower tax to aid PAT
growth
PAT has grown at a superior 33% CAGR in FY15-19 to | 145.3 crore, led by
healthy revenue growth (15% CAGR) and robust EBITDA margin expansion
of 520 bps to 12.6%. The company follows an asset light business model
(Gross block asset T/O: 11.4x) with capex expected to be in the range of |
40-50 crore. Interest and depreciation component is likely to stay low, which
would lead to PBT growth being in sync with EBITDA growth. The recent cut
in corporate tax rate is a big positive for VIP Industries as it was hitherto a
full tax paying company. This would directly have a positive impact on
cashflow generation and return ratios. We expect PAT to grow at a CAGR of
23% in FY19-21E to | 218.3 crore.
Exhibit 9: PAT expected to be aided by lower tax rate
57.646.6
66.5
83.9
126.8
145.3141.7
218.3
0
50
100
150
200
250
FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E
| crore
Source: Company, ICICI Direct Research
Working capital to improve in FY20E
VIP has a capital efficient business model having stringent working capital
cycle and generating healthy return ratios (RoCE: 32%). For the last five
years, company on an average has had working capital requirements of
~20% of net sales with average payable days being 40, followed by
inventory and receivable days of 75 and 45 respectively. However, in FY19,
NWC/sales ratio bloated to 28% majorly owing to higher inventory days (up
from 82 to 108) and debtor days (up from 46 to 61). Higher receivable days
were on account of delay in collections from CSD, whereas high inventory
stocking in anticipation of strong demand resulted in high cost inventory in
the books. We expect working capital position to improve in FY20/FY21 with
gradual reduction in inventory level and collection of dues from CSD.
Exhibit 10: Working capital trend
79.0
86.2
80.9
82.0
107.9
95.0
92.0
38.7
44.8
34.6 45.7
61.1
50.0
49.0
41.5
48.2
41.6 5
5.0 65.1
56.0
55.0
76.3
82.9
73.9
72.7
103.8
89.0
86.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
FY15 FY16 FY17 FY18 FY19 FY20E FY21E
Inventory Days Debtor Days Creditor Days Cash cycle
Source: Company, ICICI Direct Research
In FY20E, the company reported an exceptional loss
worth | 48.5 crore, pertaining to fire accident in one
of its warehouses in Ghaziabad. Management has
indicated that the loss is adequately insured. We
expect Adjusted PAT to be | 178.0 crore
ICICI Securities | Retail Research 9
ICICI Direct Research
Stock Tales | VIP Industries
Exhibit 11: Return ratio trend
20.1
15.2
18.4 20.6
25.9 25.0
21.1
26.9
21.7
18.5
25.6
30.4
38.8
32.4 33.3 34.7
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
FY14 FY15 FY16 FY17 FY18 FY19 FY20E* FY21E
%
RoE RoCE
Source: Company, ICICI Direct Research
Exhibit 12: D/E ratio trend
0.1
0.1
0.0
0.0 0.0
0.1
0.1
0.1
0.0
0.0
0.0
0.1
0.1
0.1
0.1
0.1
0.2
FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E
(x)
Source: Company, ICICI Direct Research
Key Risks & concerns
Foreign currency volatility: Over the years VIP’s gross margins have
been volatile owing to its significant co-relation to foreign exchange
currency movements. VIP majorly imports its requirements of soft
luggage (~ 70% of its overall revenues) from China which imparts
volatility to its margin profile owing to fluctuation in exchange rate. VIP
deals with Chinese vendors in terms of USD. If USD/INR is weak while
USD/Yuan is relatively stronger, then VIP’s gross margins can be
negatively impacted in the short to medium term.
Stiff competition from other organized players: Post reduction in GST
from 28% to 18%, there has been strong growth in the value segment
with all players eyeing growth in the segment. Heightened competition
from other organized players can impact the revenue growth and
profitability of VIP Industries.
ICICI Securities | Retail Research 10
ICICI Direct Research
Stock Tales | VIP Industries
Financial Summary
Exhibit 13: Profit & loss statement
(Year-end March) FY18 FY19 FY20E FY21E
Net Sales 1,409.6 1,784.7 1,991.8 2,391.3
Growth (%) 10.5 26.6 11.6 20.1
Total Raw Material Cost 711.7 904.4 1,015.8 1,214.8
Gross Margins (%) 49.5 49.3 49.0 49.2
Employee Expenses 159.4 201.1 219.1 260.7
Other Expenses 345.2 454.5 503.9 605.0
Total Operating Expenditure 1,216.2 1,559.9 1,738.8 2,080.4
EBITDA 193.4 224.7 253.0 310.9
EBITDA Margin 13.7 12.6 12.7 13.0
Interest 0.3 1.5 0.8 0.5
Depreciation 12.9 16.6 22.2 26.6
Other Income 9.3 8.3 8.0 8.0
Exceptional Expense - - (48.5) -
PBT 189.5 214.9 189.4 291.8
Total Tax 62.8 69.7 47.7 73.5
Profit After Tax 126.8 145.3 141.7 218.3
Source: Company, ICICI Direct Research
Exhibit 14: Cash flow statement
(Year-end March) FY18 FY19 FY20E FY21E
Profit/(Loss) after taxation 126.8 145.3 141.7 218.3
Add: Depreciation 12.9 16.6 22.2 26.6
Net Increase in Current Assets -127.4 -330.9 33.7 -133.6
Net Increase in Current Liabilities 82.7 118.1 -20.9 55.1
CF from operating activities 94.9 -50.9 176.7 166.4
(Inc)/dec in Investments -3.1 69.9 -18.5 -10.0
(Inc)/dec in Fixed Assets -31.9 -57.7 -53.0 -44.3
Others -1.1 -6.0 -0.8 -0.8
CF from investing activities -36.2 6.3 -72.3 -55.1
Inc / (Dec) in Equity Capital 0.0 0.0 0.0 0.0
Inc / (Dec) in Loan 0.0 86.2 -41.2 -15.0
Others -45.5 -51.1 -52.9 -78.6
CF from financing activities -45.5 35.0 -94.0 -93.6
Net Cash flow 13.2 -9.6 10.4 17.7
Opening Cash 10.6 23.8 14.2 24.6
Closing Cash 23.8 14.2 24.6 42.3
Source: Company, ICICI Direct Research
Exhibit 15: Balance Sheet
(Year-end March) FY18 FY19 FY20E FY21E
Equity Capital 28.3 28.3 28.3 28.3
Reserve and Surplus 460.8 553.1 643.8 783.5
Total Shareholders funds 489.1 581.4 672.1 811.8
Total Debt - 86.2 45.0 30.0
Non Current Liabilities 0.7 2.6 0.7 0.7
Source of Funds 489.8 670.1 717.8 842.5
Gross block 99.4 155.9 205.9 245.9
Less: Accum depreciation 24.4 44.3 60.9 83.1
Net Fixed Assets 75.0 111.6 145.0 162.8
Capital WIP 2.7 5.7 3.0 3.0
Intangible assets 1.6 3.0 3.1 3.1
Investments 72.9 3.0 21.5 31.5
Inventory 316.5 527.4 518.4 602.7
Cash 23.8 14.2 24.6 42.3
Debtors 176.6 298.6 272.8 321.0
Loans & Advances & Other CA 90.5 88.5 89.5 90.6
Total Current Assets 607.4 928.7 905.4 1,056.7
Creditors 212.5 318.4 305.6 360.3
Provisions & Other CL 70.4 82.6 74.5 74.9
Total Current Liabilities 282.9 401.0 380.1 435.2
Net Current Assets 324.5 527.7 525.3 621.5
LT L& A, Other Assets 13.1 19.1 19.9 20.6
Other Assets 0.0 0.0 0.0 0.0
Application of Funds 489.8 670.1 717.8 842.5
Source: Company, ICICI Direct Research
Exhibit 16: Key ratios
(Year-end March) FY18 FY19 FY20E FY21E
Per share data (|)
EPS 9.0 10.3 10.0 15.4
Cash EPS 9.9 11.5 11.6 17.3
BV 34.6 41.1 47.6 57.5
DPS 3.1 3.8 3.6 5.6
Cash Per Share 1.7 1.0 1.7 3.0
Operating Ratios (%)
EBITDA margins 13.7 12.6 12.7 13.0
PBT margins 13.4 12.0 9.5 12.2
Net Profit margins 9.0 8.1 7.1 9.1
Inventory days 82.0 107.9 95.0 92.0
Debtor days 45.7 61.1 50.0 49.0
Creditor days 55.0 65.1 56.0 55.0
Return Ratios (%)
RoE 25.9 25.0 21.1 26.9
RoCE 38.8 32.4 33.3 34.7
Valuation Ratios (x)
P/E 51.8 45.2 46.4 30.1
EV / EBITDA 33.5 29.6 26.0 21.0
EV / Sales 4.6 3.7 3.3 2.7
Market Cap / Revenues 4.7 3.7 3.3 2.7
Price to Book Value 13.4 11.3 9.8 8.1
Solvency Ratios
Debt / Equity 0.0 0.1 0.1 0.0
Debt/EBITDA 0.0 0.4 0.2 0.1
Current Ratio 2.1 2.3 2.3 2.3
Quick Ratio 0.9 1.0 1.0 0.9
Source: Company, ICICI Direct Research
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RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as
the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
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ICICI Direct Research
Stock Tales | VIP Industries
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I/We, Bharat Chhoda, MBA; Cheragh Sidhwa MBA , Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the
subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned
Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report
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