VIP Industries hits record high on heavy volumes

Thus far in August, the stock outperformed the market by surging 26%, against 3% decline in Sensex.

VIP Industries has rallied 11% to Rs 217, also its record high on BSE in intra-day trade, on back of an over 10-fold jump in trading volumes.

Till 11:13 am; a combined 1.54 million equity shares representing 1% of total equity of VIP Industries changed hands on the BSE and NSE.

Thus far in August, the stock outperformed the market by surging 26%, as compared to 3% decline in the S&P BSE Sensex.

VIP Industries had reported 30% year on year (YoY) growth in its consolidated net profit at Rs 40.98 crore, and significantly better than expected operating performance in June quarter.

Operational revenue during the quarter grew 8.8% to Rs 407 crore on YoY basis. Earnings before interest, taxation, depreciation and amortisation (EBITDA) margin expanded 170 bps to 15.3% from 13.6%.

According to market analysts, a favourable rupee alongside continued premiumisation is expected to aid margin expansion sustaining in near future.

While continued weakness in canteen stores department (CSD) channel (which accounts for significant portion of company’s revenues) is expected to persist for Q2FY18 too, volume growth can be impacted in near term also on account of price increases affected to cope with higher Goods and Service Tax (GST) rates, according to analysts at Spark Capital.

While new age brands viz. Skybags, Carlton & Caprese are expected to sustain their healthy growth trajectory, continued stagnation in flagship brand VIP’s revenues to be partially offset by revival of Aristocrat & Alfa brands post revamped marketing strategy in the last two quarters. Doubling of manufacturing capacity in Bangladesh subsidiary to add further impetus to profitability over the near to medium term, the brokerage firm said in report, and retain ‘buy’ rating on the stock with target price of Rs 225.