Time To Buy Undervalued Luggage Stocks, As Travel & Tourism Is Back

Travel and tourism is seeing a sharp rebound as covid seems all but ending. Luggage stocks have the potential for good gains. Prabudhas Lilladher has recommended buying the stocks of VIP Industries and Safari Industries in its latest report.

Luggage Industry: Good growth potential

"As far as luggage sector is concerned, demand environment continues to remain robust and VIP and Safari are likely to report top-line growth of 20.1% and 48.6% respectively over pre-COVID base. Raw materials inflation has also subsided but full benefit is likely to be seen with a lag and we expect VIP and Safari to report gross margins of 50.3% and 38.5% respectively," Prabhudas Lilladher has said in its report.

VIP industries: Buy with a price target of Rs 1020

Prabhudas Lilladher has set a price target of Rs 1020 on the stock of VIP Industries, as against the current market price of Rs 703.

"VIP's top-line is expected to be 20% higher than pre-COVID base as demand momentum continues to remain strong. However, we expect gross margin of 50.3% (49.9% in 1QFY23 and 47.1% in 2QFY22) despite falling raw material prices as full benefit will be evident with a lag of one quarter. We expect EBITDA margin of 16.8% for the quarter," the brokerage has said in its report.

Safari Industries: Buy with a price target of Rs 2062

Prabhudas Lilladher also has a buy call on the stock of Safari Industries, with a target price of Rs 2062 on the stock, as against the current market price of Rs 1880.

Current market price: Rs 1880

Target price: Rs 2062

"Safari's top-line is expected to be 49% higher than pre-COVID base as demand momentum continues to remain strong. However, we expect gross margins of 38.5% (38.4% in 1QFY23 and 37.6% in 2QFY22) despite falling raw material prices as full benefit will be evident with a lag of one quarter. We expect EBITDA margin of 12.0% for the quarter," the brokerage has said.