Buy VIP Industries Ltd. For Target Rs.741 By Sushil Financial Services
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Highlights from the Quarter (Q4FY24):
VIP Industries Ltd (VIPIL) reported a stable quarterly net revenue of Rs.520.2 cr for Q4FY24, higher by 14.3% YoY and marginally lower 5.3% on a QoQ basis. The company reported a weak EBITDA of Rs.11.7 cr for the quarter vs Rs.68.8 cr for the same quarter in the previous year, and Rs.54.9 cr in the preceding quarter. Subsequently, the company posted a net loss of Rs.23.9 cr for the quarter. The profitability in the quarter was hit due to reduced utilisation at the Bangladesh site, as well as one-time expenses for advertising, employee settlements, and ecommerce. Despite certain setbacks, the management believes margins and profitability will increase in the second half of this financial year. However, on a positive note, Q4 reported double digit growth for the first time since the past 3 quarters. Additionally, e-commerce continued its growth trajectory with a YoY increase of 143% in Q4.
On a full year basis, VIPIL reported a robust revenue of Rs.2257 cr for FY24, as against Rs.2099 in FY23. The management has delivered on its revenue target, and is extremely confident of maintaining the growth in the coming years. The company anticipates increased sales growth and improved margins in the second half of the year, thereby, targeting an EBITDA margin of 15% for FY25, which is a 5% jump from FY24.
In terms of the company’s value segment, Aristocrat touched a revenue of Rs.1000 cr in FY24, contributing over 40% of the revenues. VIPIL continues to focus on the growth and expansion of their women’s brand, Caprese, as it crossed the 100 cr mark in FY24 for the first time. In order to gain further traction for the brand, the company signed Kiara Advani as the brand ambassador.
Overall penetration has increased in FY24, however, VIP continues to focus on increasing their presence in smaller towns due to the growth of aspirational consumers in Tier 2 and Tier 3 cities. Supplementing the spurt in e-commerce growth, general trade and modern trade too experienced a jump in numbers. The company enhanced their presence by almost 50% in FY24 in towns with “less than 50k” population strata, as evident from the table on the right.
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