V.I.P. Industries (VIP IN) – Q4FY26 Result Update – BS cleansing over – Downgrade to ‘SELL’
Published on 18 May 2026
We cut our FY27E/FY28E EPS estimates by 8% and downgrade VIP IN to a SELL (earlier REDUCE) with a TP of INR245 (36x FY28E EPS; no change in target multiple) as we fine-tune our interest expense assumptions given a debt of INR4,108mn (D/E 1.4x) on the BS. Adjusting for exceptional cost of INR530mn, VIP IN’s operating performance was better than our estimates with EBITDA loss of INR292mn (PLe EBITDA loss of INR445mn). While BS cleansing is over with no inventory provisions expected from here on, adjusted GM of 42.5% in FY26 indicates elevated competitive pressure. After assuming a recovery in GM to 47.5%/49.0% with an EBITDA margin of 10.7%/13.4% in FY27E/FY28E respectively, the stock trades at 45x FY28E EPS. We believe turnaround benefit is already priced in and anticipate a delay in recovery given heightened competitive environment and sharp inflation in RM prices. Downgrade to SELL.
