Iran-US War To Hit Your Travel Bag! VIP Industries Eyes Price Hike: Time To Bet On Luggage Stocks? Check TP

The luggage industry is at the forefront of a major price uptick, with key players like VIP Industries planning a double-digit price hike due to rising inflation stemming from the Iran-US war. Crude derivatives like PP, PC, nylon and polyester have seen a sharp uptick in their cost since the beginning of Iran-US war.

VIP Industries is planning a double-digit price hike amid challenges related to product inventory and supply chain issues, as per a PL Capital report released on Wednesday, April 1. The report indicates that rising input cost because of crude byproducts shortage may bring a wider shift in pricing across the luggage industry.

"Traditional thinking suggests price hike by one player should eventually lead to an industry wide price reset with other players following suit. In fact, this could have been an apt opportunity for SII IN (Safari Industries) to take a price hike amid sharp RM inflation. If everyone takes a price hike, the base/floor gets reset and entire industry could benefit once crude prices stabilize," stated a PL Capital expert in the report.

"However, our checks reveal SII IN is not too keen on taking a price hike at the moment. This brings a completely new angle to competition," the report added.

Safari To Focus On Market Share

VIP Industries may reportedly plan for a double digit price hike, Safari Industries will focus on increasing its market share. "This implies no one benefits in the near term - SII IN would witness margin deterioration while VIP IN would witness erosion in market share," noted the brokerage in its report.

Luggage Sector Stocks Recommendation

PL Capital has maintained a 'Reduce' rating on VIP Industries with a target price of Rs 352 per share. The brokerage maintained a 'Hold' rating on Safari Industries, with a target price of Rs 2,191 per share.

"We maintain our view that luggage industry is in for a structural derating given stiff competition amongst incumbents (VIP, Safari and Samsonite) and emergence of new age D2C brands. Maintain REDUCE on VIP IN with a TP of Rs352 and retain HOLD on SII IN with a TP of Rs2,191. Despite recent correction in stock price, we would avoid bottom fishing in SII IN as we foresee downside risk to our existing EBITDA margin estimates of 13.3%/13.7%/14.3% for FY26E/FY27E/FY28E respectively."

VIP Industries share price closed 0.92% higher at Rs 313.7 per share on BSE on Thursday, April 2. Safari Industries share price ended 0.97% lower at Rs 1502.85 per share.

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