Recommendation From Plastics & Hosiery & Knitwear sector

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations

VIP INDUSTRIES 

CMP - Rs.467.75
BSE CODE 507880
Volume 94,199
Face Value Rs.2
Target Rs.525
Stoploss Rs.430 (CLS)

VIP Industries is engaged in the manufacturing and marketing of hard and soft luggage. The company operates in two segments, namely, luggage, bags and accessories and furniture. The company has a range of brands including VIP, Sky bags, Caprese, etc. The company’s product range includes trolleys, rucksacks, backpacks etc. It has approximately 8000 retail outlets with a network of 1300 retailers and 30 countries. The company reported revenues of Rs.430 crore, up 27 per cent YoY for the quarter ended December 2018, led by 30-35 per cent volume growth. The company is garnering market share from the unorganised space, which is driving the strong topline growth. The company reported a PAT of Rs.24 crore, down 12 per cent from Rs.27 crore last year. The company is in a sweet spot in the fast-growing luggage industry. By virtue of these factors, we recommend a BUY.

 

RUPA 

CMP - Rs.358.55
BSE CODE 533552
Volume 10,549
Face Value Rs.1
Target Rs.400
Stoploss Rs.327 (CLS) 

Rupa is engaged in manufacturing of knitted apparels, including hosiery. The company offers textiles, leather and other apparel products. The company offers products from innerwear to casual wear. The company offers men’s, women’s and kid's innerwear. The company is the owner of some popular brands like Frontline, Torrido and Macroman. The company has approximately four central warehouses with over 8000 stock-keeping units. The company has six exclusive business outlets, over 20 branch offices and 118,000 retailers. The company reported revenues of Rs 283.3 crore, up 2.1 per cent YoY for the quarter ended December 2018 from Rs 278 crore last year. The PAT for the company stood at Rs 22.6 crore, down 5.4 per cent YoY. Despite moderate revenue growth, the company reported EBITDA margin expansion by 140 bps YoY driven by cost-efficiency. The company is expected to deliver a high ROCE of 22 per cent for FY19. Thus, we recommend a BUY.