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Prabhudas Lilladher Report
We attended the analyst meet of VIP industries Ltd. wherein management unveiled plans on product innovation (new launches were on display; premiumisation, leadership and supply chain management.
On fruition, the revival strategy is likely to result in market share gains while Ebitda margin is likely to improve to 15% from H2 FY25E once warehousing, freight and accelerated spends on e-com stabilize.
We broadly maintain our estimates and expect sales/Ebitda compound annual growth rate of 12%/37% over FY24E-FY26E on the back of said revival plan.
We upgrade VIP Industries to a Buy (earlier Hold) with a revised target price of Rs 603 (earlier Rs 589) after assigning a multiple of 33 times (earlier 38 times) as we roll forward to FY26E.
Our upgrade is driven by 30% correction over last six months and the ensuing valuation comfort (VIP trades at ~17% discount to its LPA history of past 10 years).
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