Scripscan:V I P Industries Ltd
cmp:165
Code:507880
Story:V.I.P Industries Limited engages in the manufacture and sale of luggage products and accessories in India and internationally. It provides travel products, hard and soft-sided luggage, bags, backpacks, duffels, shoulder bags, waist pouches, sling bags, duffel trolleys, vanity cases, office bags and satchels, suitcases, and briefcases. The company offers its products primarily under the VIP, Carlton, Delsey, Footloose, Alfa, Aristocrat, Skybags, and Buddy brands. It also manufactures molded furniture under the Moderna brand. Management highlighted that top line growth can be in the 23-25% range going forward against earlier guidance of 20-22%.VIP Industries (VIP) has increased its distribution network significantly from 6,194 in 2007-08 to 9,700 outlets currently.The company is planning television branding for 3 brands viz., VIP, Skybags and Alfa and print media branding for Carlton in the same year.Management highlighted that there will be 150-200bps of margin expansion for FY12E due to strong traction from the soft luggage segment and high operating leverage playing out due to increase in overall sales growth.The ladies handbags segment is expected to be launched by January 2012 with full fledged launch by Q1FY13.I feel VIP is poised for aggressive growth over the next few years primarily driven by increased focus and spending on A&P which is expected to be at 5.5% of sales for FY12E, increase in distribution network and margins expansion due to increase in revenue contribution from soft luggage.I believe at current market price the stock is attractively poised.I have valued the company at 19x FY12E earnings and arrive at a target price of Rs 185 for the stock.
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