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Anand Rathi Report
The Indian luggage sector is oligopolistic, especially in branded space. VIP Industries Ltd. had a 43.8% market share in nine months FY23, Safari Industries India Ltd. ~24.1% and Samsonite ~32%, collectively contributing most of the branded Indian luggage.
The sector, which in the past was dominated by non-branded luggage has shifted markedly to branded luggage (45% in FY20, 56% now). Hence, we initiate coverage on VIP Industries and Safari Industries on a positive note.
Safari Industries has returned 30% year-to-date due to its highest Ebitda margins in Q3 and nine months-FY23 (higher than VIP Industries) and continuous market-share gains, whereas VIP Industries was down 13%.
We believe VIP Industries should catch up and can offer better returns (46%) than Safari Industries (25%) since its renewed focus on the mass category, doubling of its international business, further growth from Caprese and self-sufficiency in its own manufacturing would boost its revenue growth and margins.
Risks- Recessionary pressure, slowdown in travelling and any external pandemic like event could curb sales of luggage.
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