VIP Industries stock can rally up to 18% from here, technical charts show

Shares of VIP Industries have under-performed its benchmark NSE 250, with a fall of nearly 29 per cent as against a rally of 67 per cent in the last 18 months.

VIP Industries stock has been a stark underperformer among the SmallCap stocks over the last one-and-half year. It is down nearly 29 per cent since October 2022, and 11.3 per cent so far this calendar year. In comparison, its benchmark NSE SmallCap 250 index has rallied 61.8 per cent in the last 18 months, and is up 8 per cent so far in 2024.

VIP Industries stock's underperformance has been mainly because of increased freight, accelerated investments in e-commerce channels, marketplace activation and professional fees for accelerating e-commerce growth.

For the quarter ended December 2023, VIP Industries reported a subdued performance. VIP Industries reported a net loss of Rs 0.49 crore as against a net profit of Rs 5.72 crore in the corresponding quarter a year ago. Total income of VIP Industries in December 2023 quarter was down 2.7 per cent year-on-year (YoY) at Rs 54.63 crore from Rs 56.17 crore.

VIP Industries is engaged in the business of manufacturing and marketing of luggage, bags and accessories. VIP Industries has been a household name in India for over 50 years. VIP Industries has over 10,000 retail outlets across India, and is well-known for brands like Skybags, Aristocrat, and Alfa apart from its flagship brand VIP.

Meanwhile, the management of VIP Industries has now unveiled plans on product innovation, premiumization, leadership and supply chain management. On fruition, the revival strategy is likely to result in market share gains while EBITDA margin is likely to improve to 15 per cent from H2FY25E once warehousing, freight and accelerated spends on e-com stabilize. READ MORE

In March, brokerage firm Prabhudas Lilladher upgraded its rating on VIP Industries stock to 'Buy' from 'Hold', and also revised its target price on the VIP Industries stock upwards by 2.4 per cent to Rs 603 per share.

In the report, Prabhudas Lilladher stated that the upgrade was driven by 30 per cent price correction over the last six months, and ensuing valuation comfort.

 

VIP Industries' renewed focus on premiumisation is expected to not only act as a key margin lever, but also drive growth, the report added.

Technically, even as the VIP Industries' stock trades below its key moving averages on the daily scale, it seems to be favourably placed in terms of risk-reward ratio. 
 

ON the technical charts, VIP Industries stock is seen testing key moving averages on the long-term charts.

Key technical levels to watch out for in VIP Industries

Current Price: Rs 527

Upside Potential: 17.7%

Support: Rs 527; Rs 505

Resistance: Rs 550; Rs 580

The stock is seen testing support at its 200-WMA (Weekly Moving Average) which stands at Rs 527. Towards March-end VIP Industries stock had briefly cracked below the same, but soon recovered ground. CLICK HERE FOR THE CHART

Further, the monthly chart shows presence of another major support - its 50-MMA (Monthly Moving Average) at Rs 505. The stock has held its head high above this key moving average since June 2021, despite the underperformance in the last 18 months.

That said, VIP Industries stock needs to trade consistently above Rs 550 in order to gain upside momentum. As such, the stock can potentially rally to Rs 620, which is where the 100-WMA and 20-MMA coincide. In the interim, resistance can be expected around Rs 580.