VIP Industries Q3 Results Review - Weak Sales, Margins; Maintain 'Hold': IDBI Capital

IDBI Capital Report

VIP Industries Ltd.'s Q3 FY24 profitability were below our and street expectations. Net sales increased only by 4% YoY to Rs 5.4 billion (lower by 10.7% of our estimates) due to demand slowdown and international business was impacted due to rising supplies from China.

Nevertheless, gross margin recovered by 639 basis points YoY to 55.5% led by higher realisations and decrease in raw material prices. However, Ebitda margin contracted 430 bps YoY to 9.6%. Ebitda fell 28.4% YoY to Rs 523 million. Losing market share to other players remains key concern for VIP Industries.

We lower our FY24/FY25 Ebitda by 20%/5% and introduce FY26 forecast in this report. We now the stock at a price to earnings ratio of 32 times (earlier 38 times FY25) FY26 to derive a target price of Rs 525 (earlier Rs 612) and maintain our 'Hold' rating on the stock.

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