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VIP Industries: Buy; PT Rs925
VIP Industries continues to see robust growth in soft luggage segment
compared to hard luggage. Soft luggage is more profitable compared to hard
luggage. Contribution margins of soft luggage are 10-12% higher than hard
luggage and hence mix shift will continue to drive margin expansion.
Business bags, backpacks, duffels are doing well and growing rapidly.
Women's handbag launch -- the company will spend Rs100-120mn on
advertising annually. VIP will leverage its strengths in design, sourcing,
distribution to launch women's handbags. Once the product succeeds VIP
may engage separate retail channel for the product.
Trade margins are close to 25% for VIP. These margins are comparable to
Samsonite's dealer margins.
Tax rate to increase from 20% in FY11 to 28% in FY12 driven by expiration
of tax benefit in Haridwar plant.
Debtor days in Q4FY11 were higher than normal as CSD (Canteen Store
Dept) paid late. This is a government owned distribution channel and hence
it is difficult to enforce collection policies.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
VIP Industries: Buy; PT Rs925
VIP Industries continues to see robust growth in soft luggage segment
compared to hard luggage. Soft luggage is more profitable compared to hard
luggage. Contribution margins of soft luggage are 10-12% higher than hard
luggage and hence mix shift will continue to drive margin expansion.
Business bags, backpacks, duffels are doing well and growing rapidly.
Women's handbag launch -- the company will spend Rs100-120mn on
advertising annually. VIP will leverage its strengths in design, sourcing,
distribution to launch women's handbags. Once the product succeeds VIP
may engage separate retail channel for the product.
Trade margins are close to 25% for VIP. These margins are comparable to
Samsonite's dealer margins.
Tax rate to increase from 20% in FY11 to 28% in FY12 driven by expiration
of tax benefit in Haridwar plant.
Debtor days in Q4FY11 were higher than normal as CSD (Canteen Store
Dept) paid late. This is a government owned distribution channel and hence
it is difficult to enforce collection policies.
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