Vip Ltd. Industry : Moulded Luggage

JV pileus SERVICES PVT. LTD www. sh atomic number 18trading. in dignitary LTD. INDUSTRY MOULDED baggage NSE Symbol high muckamuckIND CMP 115 insecurity PROFILE MEDIUM BUY localise 210 Key Data 52 week H/L grocery store Cap (Rs Cr. ) Face Value Beta P/E Div % BV PBV (Source Company) 294/32 314 10 0. 92 26 0. 87 48. 9 2. 3 high muckamuck Industries is engaged in the travel product business. The Company operates in dickens business fragments baggage &038 accessories and furniture. The products manufactured by the Company admits tractile moulded suitcase, plastic moulded briefcase and vanity case.The Companys portfolio of brands includes V. I. P. , Carlton, Delsey, Footloose, Alfa, Aristocrat and Skybags. The Companys subsidiaries include Carlton Travel Goods Ltd. and Blow Plast Retail Ltd. INVESTMENT RATIONALE Despite the slowing in the global trends of economy, the luggage food marts performed flat. VIP Industries is the largest player in Indian luggage groc ery store. One of the large segment of Indian luggage grocery store is the canteen Store Department (CSD). VIP luggage continues to enjoy a prominent position and is one of the most respected brands in CSD.Apart from the domestic help market, the fraternity also exportings size sufficient quantity of luggage to Europe &038 disconnection and has presence in Africa &038 many other countries. With a view to boom and to access the international markets, the company during FY09 has set up a all told owned subsidiary in UK. The company has also acquired the well know international luggage brand CARLTON. These developments are necessitateed to augment export sales of the company significantly. The company has been focusing on creating exclusive outlets to sum up market share.Share Holding Pattern (%) 35. 73 % 43. 44 % VALUATION 12. 90 % 0. 97% 6. 96% Promoters DIIs Others FIIs corporates Relative Performance Analysis SENSEX VIP IND We are cautiously optimistic for the moulded fur niture segment of the company. In case of luggage segment the management of VIP is very positive. The product portfolio of the company has been widened by introducing new products which offers good sustainth prospects. In FY08, earnings of the company check decreased. Revenues reflect a decrease in income from operation.Net loss reflects higher administrative, inter miscellanea and other expenses with increased extraordinary items expenses. shortly the company is trading at a P/E 14. 14x of CY09 EPS. Albeit the toll earning ratio of the company is high, we allege a BUY on the stock as it is in an blowup mode with a promising business model. (Rs cr) Financial Summary course of study Net Sales Total Expenses PAT EPS FYcc5 FY2006 FY2007 FY2008 (Source JVCS RESEARCH) 297 329 557 544 272 303 404 504 7. 27 7. 9 22 14 4. 73 4. 94 5. 20 6. 60 SEPTEMBER 022009 JV CAPITAL SERVICES VIP LTD. INDUSTRY PROFILEIndian Luggage industry is presently undergoing a consolidation phase. The lugg age market comprises of three segments the premium segment with 15% of total market share, the popular segment and the standard segment. VIP Industries is the most dominant player in the premium segment with a market share of 44% in popular segment The luggage market is dominated by the unorganized sector with 5% market share. Northern &038 western India are the biggest markets in the industry. The organized sector (8%) is evolution at lesser pace when compared to the unorganized sector (25%) 50 200 150 100 50 0 I nde x e d Sa l e s Tr e nds BUSINESS UPDATES In the moulded furniture segment, VIP industries enjoys a small market share, where the company has a huge potential to grow in this business. The company is now able to remove the orders from Pune and is able to successfully execute the same in time. During the year, VIP industries has strengthened its distribution hold by significantly increasing its market presence through opening of new shops for Aristocrat &038 Alfa Brand s across the countries. This testament significantly contribute in the balance sheets of the company.J u n 08 M a r 08 D e c 08 M a r 09 S e p 08 J u n 09 FINANCIAL FORECAST (Rs cr) Earning Estimates Particulars Mar 09 June09 117 118 8. 5 3. 6 4. 30 -0. 3 1. 0 0. 34 205 172 32 4. 2 29. 9 5. 6 20. 1 7. 10 Sep09E 112 102 11 4. 0 10 -. 7 4. 9 1. 6 Dec09E 151 129 24 3. 0 25 4. 8 12. 8 5. 1 25 20 15 10 5 0 I nd e x e d Pr o fi t Tr e nds Net Sales Total cost PBIDT Depreciation PBT 08 08 ar -0 -0 ar -0 n- p- D ec Ju M Se M Ju n- 09 -5 Tax PAT EPS (Source JVCS RESEARCH) 8 20 10 0 8 9 08 08 ar -0 -0 ar -0 n- p- D ec JuSe Ju n- 09 10 8 8 9 In Q1FY10, the company has posted a turnaround result for the quarter. Net profit for the quarter under revue clocked at Rs20cr compared to Rs 1cr only. Healthy performance was due to spurted growth in operational profit by 640bps to 10. 4% % 33% fall in interestingness cost. During H1CY09, the company has launched school bags section priced range between Rs 300 &038 Rs 900 and it aims to cover 70000 bags by the end of FY10. The company is planning to expand its retail communicate in FY10 as the rentals have touched almost bottom.To grab the change in consumer trend, the company has launched two models with different ranges in hard luggage system. VIP has slashed prices following the decline in prices of raw materials. operational Margin Net Margin M M JV CAPITAL SERVICES VIP LTD. OUTLOOK The luggage industry is expected to grow in the current scenario with the factors like Improved travels on month on month basis, passengers carried by various domestic airlines grew by 27% launching of new lighter hard luggage with using polycarbonate as basal input. RISK &038 CONCERNSA major area of concern for the company is its dependence on mainland China to produce most of the soft luggage. The recent changes in the sparing scenario in the world along with the new labour regulations in China and the slow mastered of produ ction in China poses a mix of fortune in terms of reduction of rates but also the little terror of rate increases. For hard luggage, the prices of major raw materials have come down in the last quarter thereby the company whitethorn get the cost advantage with more scope of better margins. RECOMMENDATION Currently the stock is trading at a P/E of 14. 9x with an EPS of 8. 10, we fend for a buy on the stock. EPS for CY09 is expected to Rs 14. 19 as company returns back to profitability. Taking the historical P/E of 15x, we arrive at a price target of Rs 212 for a time horizon of 610 months. The price volume trend analysis depicts that the stock is moving in rough strong hands. Increasing volumes by major institutional investors gives a despoil picture of their keen interest in VIP Industries hence we expect the stock to give handsome returns of more than 80% in succeeding(prenominal) 6 months. JV CAPITAL SERVICES VIP LTD. seek Desk Sajiv Dhawan Ashit Suri Sanjeev Kapoor Narendra Singh Rajeev Kumar Satyendra Singh Bijaya Swain ecumenic Enquiries Managing Director Head of Research Trading Desk Trading Desk Trading Desk patronize Office Accounts Dept Tel 011- 41654860 email&160protected com email&160protected com 011-41654860 011-41654861 011-41654862 email&160protected com 011-41654874 / 75 email&160protected com RISK PROFILE Low run a risk Fundamentally Sound companies, with low beta. pass judgment market out-performance is 010% Medium Risk Expected market out-performance is 10-20%. instead for the Investors with a maximum time frame of 6 months. High Risk High Beta Stocks, expected market out-performance is more than 20%, Preferably for the investors willing to take advantage of market momentum and are self-assertive in nature. Disclaimer Appendix This document has been prepared by the Research Desk of M/s JV Capital Services Pvt. Ltd and is meant for use of the liquidator Ltd. only and is not for circulation. This document is not to be reported or c opied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to expect any security.The information contained herein is obtained and collated from sources believed reliable and we do not exist it as accurate or complete and it should not be relied upon as such. The opinion expressed or estimates made are as per the crush judgment as applicable at that point of time and are subject to change without any notice. JVCS Pvt. Ltd. along with its associated companies/ officers/employees may or may not, have positions in, or support and sell securities referred to herein. Investors are advised to prolong strict stop loss. JV CAPITAL SERVICES