VIP Industries reported better than expected revenue and EBIDTA in Q1FY22. Revenue increased 411% YoY to Rs 2,062 million but fell 15.1% QoQ (Safari reported only 9% QoQ fall in sales). Interestingly, its gross margin improved to 60% from 47% in Q4FY21 as it procured nearly 90% of luggage from its captive Bangladesh plants.

As per the management, the gross margin is sustainable. Q1FY22 EBITDA jumped up nearly 3x QoQ to Rs 129 million and it reported net profit of Rs 25 million compared to loss of Rs 38 million in Q4FY21.

Commenting on the result review, IDBI Capital Equity Research said, "We raise our sales/EBITDA/EPS estimates by 19-29% for FY22 to factor stronger than expected Q1FY22 results. Also, our FY23 sales, EBITDA and EPS forecasts are higher by 13-22% respectively as we foresee recovery in travel and tourism sector. We continue to value the stock at a PER of 38x FY23 EPS to derive a target price of Rs 457 (earlier Rs 359) and upgrade the stock to a Buy from a Hold earlier." 

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