VIP Industries rally 15%: Five takeaways from company's investor presentation

VIP Industries shares rallied nearly 15% higher after the company announced its guidance for FY25 business updates. The investor presentation provided a comprehensive view of India's travel and tourism industry and its impact on the luggage industry.

Here are the five takeaways from the investor presentation

• Optimistic guidance for FY25

The key and foremost reason for today's rally in VIP industries shares is their optimistic guidance for FY25. The company expects to clock double-digit revenue growth from Q4FY24. Increased geographical presence and diversified product portfolio are expected to provide market share gains. The company aims to achieve 15% EBITDA margins from the second half of FY25.In addition, company also aims at optimising inventory levels with reduced debt and interest costs.

• Robust industry growth outlook

According to the company's internal estimates, Indian luggage industry market is estimated to be around ₹20,000 crore, with branded players constituting 54% market share. India's luggage industry is highly correlated with the travel and tourism sector as it provides significant business opportunities for companies in the luggage industry.

The travel and tourism industry has seen an exponential growth in the past few years as more and more Indians are willing to travel across the country and abroad. This growth has provided immense opportunities to the luggage industry, which is expected to clock 12% growth in FY25.

• Premiumisation theme in play in India's luggage industry.

The share of branded players is estimated to reach 60% by CY2027 as the premiumisation theme grips the luggage industry. As discretionary spending is rising, customers are shifting their preferences to organised and branded players. In addition, the frequency of travel has turned baggage into lifestyle products.

• Diversified product portfolio

The company caters to all categories and cohorts of customers through its diversified product portfolio. The upright category drives 76% of the company's revenue, followed by backpacks (12%), duffel bags (8%), and ladies' handbags (4%) as of Q3FY24. As a result, VIP Industries commands significant market share in the organised luggage category.

• Strong geographical presence

The company was successful in reaching a wide set of customers across the country as it increased its presence from 820 towns in FY20 to 1361 in 9MFY24; through these 1361 towns and 13,000 points of sales, it serves a large section of Indian travellers across the country. Moreover, the business from the e-commerce platform also aids in expanding its footprint across the country's tier 2/3 towns.