Overall, while demand momentum is strong volatility in FX, freight and RM poses near term risks. In addition, focus on the mass/value segment (contribution has increased from 25% in 1QFY20 to 35% in 1QFY23) with a string of new launches will help VIP compete better with Safari. Opportunity from exports (~5% of sales in 1QFY23) can also turn out to be sizeable as most countries are looking to de-risk their supply chain from China post-pandemic. We believe upstream transformation with reduced reliance on China (~11% of sales in 1QFY23) is a structural shift that can emerge as a key margin lever and surprise positively once RM inflation stabilizes. While our GM assumptions are broadly intact at 51.7%/53.2% for FY23/FY24 respectively, EPS estimates have been revised upwards by ~4-5% due to re-alignment in tax forecast. However, EBITDA margin of 17.4% was lower than our estimate due to unfavorable FX impact (Rs87mn) and higher A&P spends (5.4% of sales). It s the official site for CNBC TV18, and provides news, Share Market Live, views, and analysis on equity / stock markets, sensex, nifty, commodities.
VIP posted strong recovery with top-line breaching the pre-pandemic base by 4.7% with a satisfactory GM of 49.9% (PLe of 50.2%) despite persistent RM cost inflation. Industries has recommended buy rating on the stock with a target price of Rs 857 in its research report dated July 28, 2022. Prabhudas Lilladher's research report on V.I.P. Unlocking opportunities in Metal and Mining.
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