VIP Industries: Investec Positive On VIP Turnaround After Ownership Change

VIP Industries Ltd. has entered a new phase as a consortium led by private equity firm Multiples, alongside Samvibhag Securities and entrepreneurs Mithun and Siddhartha Sacheti, acquired a 32% stake in the company.

The stake was bought at Rs 388 per share, totalling Rs 1,440 crore, and has triggered a mandatory 26% open offer. This deal not only marks a significant ownership change but also opens the door for a potential revival of the luggage manufacturer.

According to Investec, Multiples PE holds the majority within the consortium, though key strategic decisions will likely require alignment with co-investors, particularly Samvibhag.

The consortium will also enjoy strong governance rights, including the right of first refusal on remaining promoter holdings and the ability to nominate a majority of VIP's board. While it's uncertain whether the remaining promoters will exit, the control shift clearly signals a transformation in the company's strategic direction.

The new backers bring strong credentials. Renuka Ramnath's Multiples has a proven record in turning around mid-sized firms, while Samvibhag is believed to be linked to the financially savvy Enam family. Mithun Sacheti, the founder of CaratLane, exited successfully through a Rs 17,000 crore deal with Titan, adding entrepreneurial strength to the mix.

Investec believes VIP's current challenges are largely fixable. These include a flawed pricing strategy, poor sales velocity, weak store and distributor economics, inefficient inventory and warehouse management, unauthorised low-cost supplies and a weakened business-to-business presence.

These operational inefficiencies had led to aggressive discounting and a Rs 700-crore inventory build-up for financial year 2025, impacting the entire industry as competitors were forced to follow suit to defend market share.

The brokerage views the new ownership positively for both VIP and the broader industry. A potential course correction at VIP — including better inventory rationalisation and a more disciplined marketing approach — could help stabilise sector-wide pricing pressures. Investec continues to maintain a 'buy' rating on Safari, which it sees as a key beneficiary of these developments.

On the valuation front, VIP is trading at 47x FY27E PE based on modest growth expectations. Investec has set a target price of Rs 375, applying a 40x multiple. In comparison, Safari trades at 45x FY27E PE with a stronger growth outlook and a higher target price of Rs 2,530.