VIP Industries Q4 Results Review - Poor Bangladesh Operation Impede Performance: IDBI Capital

IDBI Capital Report

VIP Industries Ltd.'s Q4 FY24 profitability were below our and street expectations. Net sales increased by 14% YoY to Rs 5.1 billion, exceeding our estimates by 2.3%. This growth was propelled by volume growth of 14% YoY, new launches and continued e-commerce growth trajectory.

This is despite revenue decline of 49% YoY in Bangladesh operations. Nevertheless gross margins took a hit by 780 bps YoY to 50.1%, mainly due to underutilisation of Bangladesh facility. However, Ebitda margin contracted 1,275 bps YoY to 1.5%, mainly due to increased advertising expenses, one-time retrenchment cost and wage hike in Bangladesh operations.

As a result, Ebitda fell 87.8% YoY to Rs 78 million and net loss came in at Rs 239 million. We lower our FY25/FY26 EPS by 21%/9% and value the stock at a PER of 35 times FY26 EPS to derive a target price of Rs 525 (earlier Rs 525) and maintain our Hold rating on the stock.

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