VIPIND - V.I.P. Industries Ltd. Share Price

Management provided an optimistic outlook for VIP Industries, projecting a robust demand environment moving into FY26. Notably, the company highlighted that it reduced inventory by over Rs. 200 crore, totaling approximately 25 lakh pieces, and achieved a positive cash flow from operating activities of Rs. 292 crore, compared to a negative Rs. 131 crore the previous year. They decreased debt by Rs. 118 crore and dismissed a significant contingent liability of Rs. 357 crore from their balance sheet.

Management noted macroeconomic factors favoring the luggage industry, emphasizing a notable increase in wedding dates this year, the highest in a decade, alongside improved results from hotels and travel portals. They aim for double-digit volume growth, stating a 10% volume increase for the quarter and an 11% increase for the full year. The forthcoming quarters are expected to witness an uptick in profitability aided by inventory management and effective cost controls, including a 16% year-on-year reduction in workforce costs.

Future initiatives include focusing on premium product offerings and entering new markets with exclusive Carlton stores to enhance revenue. Management anticipates the e-commerce sector will continue to grow rapidly, citing a 40% increase in this channel.

In terms of financial targets, management is aiming to further reduce inventory by an additional Rs. 150 crore and decrease debt equivalently. They are also optimistic about restoring gross margins to the 50% benchmark, emphasizing a strategic shift towards premiumization and improved product mix. Moreover, management cautioned about the ongoing competitive landscape but expressed confidence in offsetting these pressures through brand investment and strategic marketing initiatives.

1. Question: "Can you let us know what is the quantum of slow moving stock that is now left with us, and also out of this Rs.700 crore of inventory that we have with us, can you tell us what is the quantum of RM and WIP inventory?"

Answer: "We won't specify an absolute value for slow-moving inventories, but it has decreased significantly over the last year. The raw material inventory stands at approximately Rs.215 crore."

2. Question: "On the other expense side, can you share what is the total quantum of these expenses in this quarter?"

Answer: "These expenses contribute significantly to our other expenses, but we prefer not to quantify them during the call. However, details can be found in our annual report."

3. Question: "Can you explain the inventory provision of Rs.5 crore, and what is the total quantum of inventory that warrants future provision?"

Answer: "The provision comprises both raw materials and slow-moving finished goods. While there may be a need for future provisions, our current focus is on liquidating slow-moving inventory efficiently."

4. Question: "Can you provide more details on the closure of stores by modern trade partners?"

Answer: "We closed 133 stores and opened 32, mainly in tier one cities, where we aim for higher revenue. Our focus is on top cities to ensure better profitability."

5. Question: "What's the strategy behind opening Carlton exclusive stores?"

Answer: "The idea is to enhance revenue by concentrating in premium areas where we've seen higher sales from Carlton. We're targeting to open 50 stores this year to capitalize on demand."

6. Question: "What was the reduction in market share and how are you addressing this?"

Answer: "The offline salience for revenue reduced; we aim to increase brand visibility through marketing investments while efficiently growing our market share in a balanced manner."

7. Question: "What growth do you anticipate for this year, and do you expect it to be double-digit?"

Answer: "We anticipate our volume and value growth to match, achieving approximately 12% growth if the category growth is around 10%. We are focusing equally on both volume and value."

8. Question: "What impact do we expect in EBITDA margin moving forward?"

Answer: "While we won't provide specific guidelines, our cost optimization efforts should positively affect our EBITDA margin from Quarter 1 onwards."

9. Question: "What's the expected debt reduction for FY'26?"

Answer: "We are planning to reduce our debt by Rs.125 crore this fiscal year, as part of our commitment to maintaining a healthy balance sheet."

10. Question: "Are your advertisement expenditures expected to increase this year?"

Answer: "We anticipate an increase, but it will be aligned with what we've earned, roughly additional 2%, ensuring that spending is strategic and performance-driven."