Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
VIP Industries
Strong revenue growth and margin
e xpansion
�� Event: Strong Q1FY12 results in revenue and margin terms
VIP Industries reported 20% YY revenue growth and 140 bps margin expansion.
Margin expansion was driven by price increases despite RM cost increases. 20%
revenue growth can be attributed to 10-12% volume growth and 8-10% price
increases VIP has taken. Margin expansion demonstrates the company’s pricing
power.
�� Action: We have increased our margin estimates
We have increased our EBITDA margin estimates by 150 bps to 18.4% for FY12
(from 16.6% for FY11). We believe that further margin expansion will be driven
by benefits of lower RM costs as well as improved mix of soft luggage.
�� Impact: We have increased our price target to Rs1000 from Rs925
We recently revised our price target upward to Rs 1000 from earlier Rs 925.
Higher price target is result of higher margin estimate.
�� Valuation
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. At our price target, VIPI
would trade at FY12/FY13E PE of 26.8/21, which should be supported by strong
growth, high ROE and its continued market leadership.
�� VIP Industries
VIPI is the leading luggage company in India. It has factories manufacturing
hard luggage. It sources soft luggage from China. VIPI now operates three
factories in Nasik, Sinner and Haridwar. It is also entering the business of
contract manufacturing hard luggage for various global brands.
�� Statement of Risk
Downside risks include – macroeconomic slowdown, raw material price
inflation and RMB appreciation, and expenses involved in launch of new brand.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
VIP Industries
Strong revenue growth and margin
e xpansion
�� Event: Strong Q1FY12 results in revenue and margin terms
VIP Industries reported 20% YY revenue growth and 140 bps margin expansion.
Margin expansion was driven by price increases despite RM cost increases. 20%
revenue growth can be attributed to 10-12% volume growth and 8-10% price
increases VIP has taken. Margin expansion demonstrates the company’s pricing
power.
�� Action: We have increased our margin estimates
We have increased our EBITDA margin estimates by 150 bps to 18.4% for FY12
(from 16.6% for FY11). We believe that further margin expansion will be driven
by benefits of lower RM costs as well as improved mix of soft luggage.
�� Impact: We have increased our price target to Rs1000 from Rs925
We recently revised our price target upward to Rs 1000 from earlier Rs 925.
Higher price target is result of higher margin estimate.
�� Valuation
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. At our price target, VIPI
would trade at FY12/FY13E PE of 26.8/21, which should be supported by strong
growth, high ROE and its continued market leadership.
�� VIP Industries
VIPI is the leading luggage company in India. It has factories manufacturing
hard luggage. It sources soft luggage from China. VIPI now operates three
factories in Nasik, Sinner and Haridwar. It is also entering the business of
contract manufacturing hard luggage for various global brands.
�� Statement of Risk
Downside risks include – macroeconomic slowdown, raw material price
inflation and RMB appreciation, and expenses involved in launch of new brand.
No comments:
Post a Comment