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News: VIP Industries Q1FY24 operational performance was weak on all fronts. Revenue grew by 8% YoY to Rs 636.1 crore (four-year CAGR: 3%). The growth rate appears to be on the softer side. Gross margins remained flattish YoY at 49.5% (down 840 bps QoQ). Despite significant decline in RM prices (crude based RM) gross margins profile did not witness improvement (managements guidance: 53-55%). Furthermore, owing sharp rise in operating overheads (employee & other expenses up 10% and 27% YoY, respectively), EBITDA margins declined by 470 bps YoY to 12.7%. Absolute EBITDA declined 21% YoY to Rs 80.6 crore.
Views: Q1 generally sets the tone for the entire year as the quarter contributes 33% to revenues and ~40% to EBITDA. With a subdued start to the financial year, we expect FY24E to remain challenging for the company.
Impact: Negative