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• Leading luggage manufacturer in Indian with 58% domestic
market share in terms of revenue.
• Strong brand presence, broadest product portfolio and
distribution network. Present in ~10000 POS in 550+ cities
and towns in India. Covers most cities with 500,000+
population.
• We forecast a 22% revenue and net income. CAGR over
FY11-16E for VIPI’s luggage segment – key beneficiary of
India’s secular growth story. High ROE supported by high
barriers to entry.
• Revenue upside from new brands- Carlton and Women’s
handbags and new advertising campaigns for Skybags.
Key assumptions: 1) Soft luggage revenue to continue to
grow at faster pace than hard luggage driving margin
expansion 2) Incremental new product launch costs for
women’s handbags to be restricted to advertizing costs.
• Shareholding: Promoter 52%
• Valuation: DCF using VCAM (assume WACC of 13% and
terminal sales growth rate of 5%). Implied FY13E PE of 20.2x
•We assume 30% revenue CAGR in soft luggage and
5% revenue CAGR in hard luggage.
•We assume EBITDA margins to expand 180 bps in
FY12E driven by price increase and increased mix of
higher margin soft luggage.
•We do not model revenues from new brand launch
(Carlton) and new product launch (women's handbag
launch in Q4FY12).
• VIP leadership is driven by continued focus of branding, product
launches and widespread distribution network
• Present in EBO (~24% of revenue), MBO (~42% of
revenue), CSD (~25% of revenue), Hypermarket (~7% of
revenue) channels.
• Present in 550+ cities and towns in ~10,000 POS.
• Products in Rs500-15,000 price point.– provides
consumers wide choice across multiple brand portfolios.
• Potential revenue and margin upside to our estimates –
• Soft luggage – is growing at 30-35% CAGR. Soft luggage
has shorter life span and can lead to revenue growth
acceleration.
• Carlton and Women’s handbag launches can driver faster
revenue growth.
•Soft luggage has higher margins compared to hard
luggage. This can lead to margin expansion.
• Advertising is driving accelerated growth in more
profitable Skybag brand.
• Barriers to entry driven by difficulty in creating distribution
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