- 17 May 2022
- ICICIdirect Research
Trade disruptions in January impact VIP's performance in Q4FY22
VIPIND - 487 Change: 8.35 (1.75 %)News: Despite initial hiccups in January (omicron variant), demand for luggage has been decent in Q4FY22 with revenue recovery rate coming in at 86% (Q3FY22: 92%). On a favourable base, revenue grew 46% YoY to Rs. 355.9 crore (down 10% QoQ). Gross margins surprisingly came in at eight quarter high at 53.3% (up 436 bps QoQ and 950 bps YoY) despite pressure on RM. We believe low cost inventory and better product mix to have supported gross margins. Higher other expenses (up 16% QoQ and 57% YoY) and employee cost (up 12% QoQ and 45% YoY) offset the positive impact of gross margins. Subsequently, EBITDA margins declined 520 bps QoQ to 9.2% (Q4FY21: 1.3%). Absolute EBITDA declined 43% QoQ to Rs. 32.6 crore (Q4FY21: Rs. 3.2 crore)
Views: Gradual reopening of economy and higher push towards domestic travel had perked up demand for luggage during FY22 with sales recovering ~75% of pre-Covid levels. April-June is the main quarter for the company owing to it being the peak travelling season. The management is hopeful of a strong Q1FY23 and is expecting to surpass the pre-Covid revenue level owing to a pick-up in travel & tourism and opening of schools, which should provide thrust to its revenues. Also, there are ~ 60 wedding dates in Q1FY23, which would provide further traction to revenues. The company is geared up and has sufficient inventory to meet the enhanced demand
Impact: Neutral