VIP Industries
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=3402
Printed Date: 21/Apr/2025 at 4:26pm
Topic: VIP Industries
Posted By: Catalyst
Subject: VIP Industries
Date Posted: 08/Sep/2011 at 11:34am
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I was wondering why we don’t have a thread on VIP Industries, after all it’s a type of company which we teddies generally prefer, a consumer centric company.
So I just though in addition to discussing the company where lot of us can add value as the products of VIP are sold at similar places where the teddies are generally found
 while researching cookers and underwears.Lets also discuss the reasons/observations why and how people at large (that’s my feeling) missed or ignored this stock or those who actually bought this stock, can also share their reasons.
Market Size: Like cookers and underwears, It is difficult to determine a market size for this company. Since there is a huge unorganized/unbranded market and in addition to that there is an even bigger market which can’t be ascertained, those who have traveled on Indian Railways or State Transport buses would know what I am talking about, home-made cloth bags, which makes it a classic case of uptrading from home-made bags to unbranded bags to branded bags, which in a county of 1.2 bn people represents a fairly big opportunity.
Below is a brief synopsis about the company:
Leading luggage manufacturer in India: VIP Industries is the leading luggage manufacturer in India with a 58% share of the domestic branded luggage market in terms of revenue.
Key growth drivers: brands, broad distribution, and product strategy: VIP Industries has strong brands as well as the broadest product portfolio and distribution among India’s branded luggage companies. VIP ranks highly on both reach and quality—two key attributes that drive consumer purchase decisions. Additionally, rising revenue contribution from its more profitable ‘soft luggage’ segment (currently at 60%) and an advertising campaign aimed at encouraging a consumer shift to higher-margin products should drive a margin expansion.
New products to drive growth: In 2010, VIP launched a premium luggage brand called Carlton in India. It plans to launch a line of women’s handbags in H112. VIP’s business model will give it a strong advantage in the women’s handbag segment. Its Carlton brand and the handbag business could accelerate growth.
Strong brands: VIP has successfully launched multiple brands. It launched Skybag branded soft luggage through the hypermarkets (Big Bazaar, Metro stores). Skybag contributed to 9% of its luggage revenue in FY11. VIP also launched the Delsey brand in India in 2005, but it subsequently terminated distribution and launched the Carlton brand in 2010 to invest in brand
creation. The company expects revenues from Skybag will record a 50% CAGR over the next one to two years, driven by its new advertising initiative. It intends to position the Carlton brand to compete with the Samsonite and American Tourister brands.
Competitive Strengths: VIP has a strong product portfolio that stretches across a spectrum of price points, with: 1) the Alfa and Aristocrat brands at the lower-end; 2) the Skybag in the mid-end for soft luggage; 3) the traditional VIP brand for mid- to high-end soft/hard luggage and business
bags; and 4) the Carlton brand for premium luggage. VIP’s prices range Rs.500-15,000. As a result, it has been able to create a product portfolio suitable for various touch points. VIP has also invested in advertising/brand creation and signed up renowned personalities to advertise its products. VIP’s strong product portfolio and brands are supported by its wide and expanding distribution network.
Company Background: VIP Industries has historically been India’s leading luggage company that sold hard luggage. At one point, it had nine factories manufacturing hard luggage. However, as consumer preferences shifted to soft luggage, VIP restructured its manufacturing operations by shutting down factories and cutting its workforce.
As China is a global hub for soft luggage manufacturing, VIP outsourced the production of its soft luggage to Chinese suppliers to be competitive (it has eight Chinese suppliers). However, VIP continues to manufacture hard luggage. It is also entering the hard luggage contract manufacturing business for various global brands. VIP now operates three factories in Nasik, Sinner and Haridwar. Its workforce has fallen from around 5,000 employees to around 900 currently.
Valuations: The company can do an EPS in the range of Rs.35-40 for FY12, At the price of Rs.980, the stock is trading at a P/E of around 28x to 25x. ------------- What’s Euphoria, think of it as obscenity. Though its probably impossible to formulate a test for Obscenity but you know when you see it. |
Replies:
Posted By: basant
Date Posted: 08/Sep/2011 at 11:55am
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One big reason why I avoided/missed VIP was because I heard from the market grapevine that the promoters were approached by a big investor around two years back to improve corporate governance and they were further assured that by setting their books and accounts more transparently they will make more money in terms of market cap expansion.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Catalyst
Date Posted: 09/Sep/2011 at 3:11pm
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Just trying to understand, why did you construed that as negative, if you did (while your statement avoided/missed doesn't suggest that you construed that as hugely negative).
My question is shouldn't that have been taken as positive as here is a company which is willing to improve on their corporate governance part.
And whats your view on the company now, its products, valuations and as a long-term investment bet. ------------- What’s Euphoria, think of it as obscenity. Though its probably impossible to formulate a test for Obscenity but you know when you see it. |
Posted By: basant
Date Posted: 09/Sep/2011 at 3:24pm
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Normally I like to be with people who are spotless rather then people who promise to change though more money is made in the latter because I believe that human nature seldom changes also at that time there was no guarantee that these guys will change because all the info that we get is hearsay!
Also this stock at that time had done nothing for years and personally I like to see companies doing something before buying them because otherwise we are simply betting on change. Maybe because of that I could not understand this company as I have my own biases against companies that are doing nothing so it was like not paying much attention just because the management was mediocre. I think these guys have a great future like all other consumer centric businesses.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Monkey
Date Posted: 09/Sep/2011 at 9:52pm
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Basantji,
I am sensing bit change lately. first, you acknowledged Gruh finance, then came gitanjali and now VIP. Seems you are focusing more and more on just consumption plays. Does that mean TED-XI reshuffle is on card making it all star consumption play?
Also, I am curious to know that, apart from consumption plays, do you like any other sector / opportunities. Say capital goods & infrastructure plays are down and out. But, there could be plays which are suppliers / supporters of capital goods / infrastructure companies. One example is Ador Fontech with good return ratios, reasonable growth and reasonable valuations. May be it can not grow at 35% plus rate but less sales growth could be compensated by P/E expansion as far as returns in hand of investor is concerned.
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Posted By: subu76
Date Posted: 09/Sep/2011 at 9:59pm
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I've actively checked out VIP show rooms in various areas in Hyderabad. I've invariably found them empty. Offcourse, I've never checked out multi brand sellers.
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Posted By: basant
Date Posted: 09/Sep/2011 at 10:16pm
I am not bullish on Gitanjali at all for years. Normally I buy the old holdings rather then try and search for new gems in the dust. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Ravenrage
Date Posted: 09/Sep/2011 at 11:09pm
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Basantji , have you ever burnt fingers buying something and later repenting about it ? ( edit : regarding corporate governance issues ?)
Which are the companies that should be clear AVOIDs ? Regards . ------------- Risk does not reside in price changes, but in miscalculations of intrinsic value . |
Posted By: srisaurabh2000
Date Posted: 12/Sep/2011 at 1:12am
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Interesting development in this sector: http://www.vccircle.com/500/news/former-vip-industries-md-sudhir-jatia-buying-5655-in-safari-inds |
Posted By: srisaurabh2000
Date Posted: 13/Sep/2011 at 1:52am
| http://www.business-standard.com/india/news/vips-4-yearsshare-disclosure-error/447511/ |
Posted By: commnman
Date Posted: 24/Oct/2011 at 9:21pm
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Q2/Fy-12 Results out...
Total Income up 16.3% to 174 Cr from 149.6 Cr. EBIDTA up 1.5% to 19.7 Cr from 19.4 Cr. Net Profit DOWN 13.5% to 10.9 Cr from 12.6 Cr. EBIDTA margin is 11.3% V/s 20.9% (JQ-11) and 13% (SQ-10) NET Pr margin is 6.3% V/s 13.6% (JQ-11) and 8.4% (SQ-10) Total Raw material costs as a %ge to Income is 46.6% V/s 46% (JQ-11) and 45% (SQ-10) Employee costs to sales is 12.3% V/s 7.8% (JQ-11) and 12.8% (SQ-10) Discounts given to sales is 7.6% V/s 8.4% (JQ-11) and 7.9% (SQ-10) Other expenses to sales is 22.2% V/s 16.9% (JQ-11) and 21.4% (SQ-10) Tax Rate is 28.3% V/s 30.2% (JQ-11) and 16% (SQ-10) H1/Fy-12 v/s H1/Fy-11: Total Income up 16.4% to 456 Cr from 391.8 Cr. EBIDTA up 23.5% to 78.8 Cr from 63.8 Cr. Net up 15.2% to 49.2 Cr from 42.7 Cr. Steep 83% increase in Tax incidence of 20.8 Cr v/s 11.4 Cr with an effective Tax Rate of 29.7% v/s 21.1% dented net profits. Reported Half Year EPS is 17.4 V/s 15.1 - ------------- main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon |
Posted By: shontou
Date Posted: 24/Oct/2011 at 9:28pm
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OPM % 11.35 12.24 -7 ------------- Every day, self-proclaimed stock market "experts" tell us why the market just went up or down, as if they really knew. So where were they yesterday? |
Posted By: Crazy Horse
Date Posted: 24/Oct/2011 at 11:56pm
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This article along with the previous article about the ex-ceo taking control of a smaller co would seriously make me consider selling VIP if i had owned any!!
ps: i have neither owned VIP in the past or currently; but warning signals are flashing!
------------- The bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding, go out and meet it (Thucydides, Circa 460 BC - 400 BC) |
Posted By: master
Date Posted: 24/Oct/2011 at 12:07pm
What kind of an irresponsible statement is this? First, you have faulty disclosures for 4 years and then say you don't need a competent CFO. ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: rohit1889
Date Posted: 16/Nov/2011 at 11:07am
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Developments of past few days has butchered this stock 30% in last 1 month
------------- If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored. |
Posted By: conservativeinv
Date Posted: 23/Nov/2011 at 12:41pm
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Master, in the Harshad Mehta days, there were unconfirmed rumours (these kind of rumours are always unconfirmed) that Harshad Mehta was hand-in-glove with this management.
Also, this promoter and promoter of PHL is from the same family, so can we expect much?
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Posted By: subu76
Date Posted: 23/Nov/2011 at 7:41am
They seperated 25 years back and have nothing in common....  I mentioned some difference in another thread...one more..onewas known not to have confidence in his own company a few years back till the time the current resurgence in stock prices happen...on the other worth was built up with small steps with time
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Posted By: conservativeinv
Date Posted: 24/Nov/2011 at 5:28pm
| You could say something similar of the Ambani brothers... or the Modis, or the Jindals...... or even the Mittals...... or can you? |
Posted By: baba
Date Posted: 04/May/2012 at 2:40pm
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Hitesh bhai ,
How about vip for 3 -4 yr s ... I bought some vip yesterday .. ------------- A monthly investment of Rs 500 (Rs 17 per day) for 30 years @21%CAGR can create a wealth of Rs 1.5 crores. !!! |