The luggage industry in India is witnessing a huge demand in tourism which can benefit two leading players, VIP Industries and Safari Industries. With projected market growth fueled by increasing travel demands and changing consumer preferences, investors need to assess these companies based on their analysis. However, the Ace Investor Vijay Kedia has bet on VIP Industries and Ashish Kacholia has a stake in Safari Industries. This article looks into the company, shareholding pattern, financials, and plans.
Company Overview
VIP Industries
VIP Industries Limited was established in 1968. It is based in Mumbai and is India’s largest luggage manufacturer. They specialize in producing a wide range of travel products, including hard and soft luggage, handbags, and backpacks, which are prominent brands like VIP, Carlton, Skybags, and Caprese.
They have a huge presence in retail outlet stores in India and in around 50 countries across the world, VIP Industries focuses on innovation and quality. Their business model focuses on catering to diverse customer segments through various price points while leveraging advanced manufacturing technologies.
Safari Industries (India)
Safari Industries (India) Limited was established in 1974 and they are headquartered in Mumbai. It is one of the leading luggage manufacturers in India. They offer a diverse range of products which includes hard and soft luggage, laptop bags, and backpacks that cater to various consumer segments.
Their business model focuses on innovation while expanding into premium markets and leveraging e-commerce channels for sales.
Price Movement
VIP Industries
With a market capitalization of Rs. 7,067 Crores, the shares of VIP Industries closed at Rs. 497.65 on Friday which was down by 0.80 percent from the previous closing price of Rs. 501.65 per share.
Safari Industries (India)
With a market capitalization of Rs. 13,014.92 Crores, the shares of Safari Industries (India) closed at Rs. 2,662.30 on Friday which was down by 0.44 percent from the previous closing price of Rs. 2,674.05 per share.
Shareholding Pattern
VIP Industries
As of September 2024, the shareholding pattern with the promoter’s stake holding a share of 51.74 percent in VIP Industries, Foreign Institutional Investors (FII) holding around 7.81 percent, Domestic Institutional Investors holding around 12.26 percent, and public holdings
standing at 28.19 percent. (Vijay Kedia bought around 0.5 percent stake which is 7.25 lakh shares at Rs. 545.97 per share recently)
Safari Industries (India)
As of September 2024, the shareholding pattern with the promoter’s stake holding a share of 45.41 percent in Safari Industries (India), Foreign Institutional Investors (FII) holding around 12.24 percent, Domestic Institutional Investors holding around 22.73 percent, Government holding 0.01 percent, and public holdings standing at 19.60 percent. (Ashish Kacholia holds around 1.84 percent or 9 lakh shares and has been invested in the company for more than 2 years)
Financials Comparison – Q2FY25
VIP Industries’ revenue from operations stood at Rs. 2,256.71 crore in FY24 compared to Safari’s Rs. 1,564 crore. The Net profit of VIP stood at Rs. 54.30 crore lower than Safari’s Rs. 175.81 crore showcases Safari’s higher net profit margin in comparison to VIP Industries. The RoE in FY24 of VIP Industries stood at 5.25 percent as compared to Safari’s 28.15 percent. In terms of debt to equity ratio, VIP Industries was 0.93 times while compared to Safari’s 0.23. Despite lower revenues compared to VIP Industries, Safari fares better in terms of financial strength. However, the VIP Industries hold a higher market share and have a wider presence.
Recent Future Plans
VIP Industries
The company has plans for the future while focusing on market expansion and product innovation. The company aims to increase its market share by 40 percent as per the recent quarter improve e-commerce strategies and improve offline performance. VIP Industries upcoming product launches include particularly with backpack segment and the Kiara collection of ladies handbags which are expected by the company to drive growth.
They plan to reduce inventory holding costs and gross margin improvement through pricing plans. VIP Industries in its international business, the company have faced challenges, especially in key Asian markets and Gulf Cooperation countries. Due to political challenges in Bangladesh, the company has reduced its capacities and from Q3 they expect it to show profits.
Safari Industries (India)
The company has recently announced the wholly-owned subsidiary of the Company with the completion of trial runs. It successfully commenced its commercial production or luggage manufacturing on December 2, 2024, at its newly set up greenfield manufacturing facility located in Jaipur.
Conclusion
Overall, both companies are leveraging the opportunity through tourism boost as well as customer change need preferences. Over the period, we can watch which company can acquire market share.
Written by – Santosh
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