V.I.P. Industries (VIP IN) – Q3FY26 Result Update – Recovery priced in – Downgrade to ‘Reduce’
Published on 16 Feb 2026
Adjusting for inventory provision of ~Rs543mn, GM compressed 510 bps YoY to 41.4%.
We cut our FY27E/FY28E EPS estimates by 31%/19% as we fine-tune our revenue and GM assumptions given rising competitive pressure and downgrade VIP IN to REDUCE (earlier HOLD) with a TP of Rs352 (36x FY28E EPS; ~10% discount to SII IN). VIP IN reported weak set of results with topline declining 9.4% YoY to Rs4,541mn (PLe of Rs4,259mn) while GM succumbed to 29.5% amid inventory provision of Rs543mn. VIP IN has been facing a problem of slow-moving inventory and provision of ~Rs1,219mn has been taken so far in 9MFY26. While large scale provisioning exercise is over, GM of 44.3% in 9MFY26, adjusting for inventory write-offs, indicates elevated competitive pressure. After assuming a recovery in GM to 48%/50% with an EBITDA margin of 12.4%/14.4% in FY27E/FY28E respectively, the stock trades at 40x FY28E EPS. We believe turnaround benefit from change of guard at top-level is priced in. Downgrade to REDUCE (36x FY28E EPS; ~10% discount to SII IN).
