Shares of VIP Industries Limited hit a fresh 52-week low of ₹279 on the NSE on May 18, 2026, falling ₹10 or 3.42% from the previous close of ₹292.05 to trade at ₹282.05 in early session, as the luggage maker reported its worst full-year financial performance in recent memory — a net loss of ₹338.01 crore for FY26 against a loss of ₹68.79 crore in FY25, on revenue that fell 14.70% year on year to ₹1,858.13 crore from ₹2,178.43 crore. The stock’s 52-week range of ₹279 to ₹492.30 places today’s intraday low at the absolute bottom of the past year, with the P/E ratio showing a dash — reflecting the company’s loss-making status.
For Q4FY26 specifically, consolidated revenue declined 11.7% year on year to ₹436.23 crore from ₹494.21 crore in Q4FY25. EBITDA loss for the quarter was ₹82.20 crore with an EBITDA margin of -18.84% against a positive 1.32% in Q4FY25 — a swing of over 2,000 basis points. Net loss for Q4FY26 widened sharply to ₹128.90 crore from ₹27.36 crore in the year-ago quarter, a deterioration of 371%.
The numbers are bad. But Motilal Oswal Securities, which published a note on the results, argues that they are bad in a specific and largely intentional way — and that the worst is now behind the company.
What caused the collapse
VIP Industries has been executing a deliberate and painful strategic reset since new management took over following a change of control at the promoter level. The core problem the company inherited was a bloated inventory of slow-moving, obsolete, and dead stock — referred to internally and by analysts as SLOB inventory — that had accumulated across channel partners and the company’s own books over several years of weak execution and poor SKU discipline. Total inventory units fell from 4.5 million to 2.8 million during FY26, with channel inventory reduced from approximately 90 days to below 60 days.
To move this inventory, VIP extended ₹30 crore of channel inventory liquidation support to distributors in Q4FY26 alone — effectively subsidising discounting at the channel level — and incurred ₹23 crore in one-time restructuring costs. These two items together contributed ₹53 crore to the Q4 EBITDA loss. Additionally, gross margins contracted to 37.2% — down 956 basis points year on year — reflecting elevated discounting on old stock. The revenue decline was driven by three factors: the sharp reduction in SLOB inventory flowing through the system, weak channel partner engagement during the clean-up phase, and lower online sales as the company rationalised its SKU mix and pricing structure.
More than 65 new products were launched in Q4FY26 alone as VIP moved to replenish cleared shelf space with premium, trend-aligned SKUs across its four core brands — VIP, Skybags, Aristocrat, and Alfa. Manufacturing facility utilisation at Bangladesh and Nashik improved significantly to approximately 95%, indicating that production capacity is ready to serve the recovering demand pipeline.
Why Motilal Oswal is still a buyer
Motilal Oswal reiterated a Buy rating on VIP Industries with a revised target price of ₹430 — implying 52.5% upside from the current level of ₹282.05 and valuing the stock at 41x FY28 estimated earnings. The brokerage’s thesis rests on four pillars.
First, the inventory clean-up is now substantially complete. Management confirmed that the strategic restructuring across system inventory and management capabilities has largely concluded. The ₹1.3 billion cumulative impact from old stock liquidation that has weighed on FY26 margins is a one-time drag that does not recur. Second, VIP has implemented a 6-7% price hike effective May 2026 — the first meaningful price increase in several quarters — which will directly support margin recovery from Q1FY27 onwards if volume holds. Third, secondary sales — actual sell-through at the consumer level — registered double-digit growth even during Q4FY26 despite the inventory and channel disruption, indicating that underlying consumer demand for VIP’s brands has not been structurally impaired. Fourth, the channel re-energisation programme — with tighter inventory control, fewer SKUs, and better sell-through monitoring — is expected to restore distributor confidence and improve primary sales from Q2FY27 onwards.
Motilal Oswal projects a 16% revenue CAGR for VIP Industries over FY26-28, with EBITDA recovery beginning in FY27 and a full turnaround expected by the second half of FY27. The key risks cited are intensifying local competition in the branded luggage segment and a significant rise in input costs — particularly relevant given that polycarbonate and ABS resin prices, the primary raw materials for hard luggage, are sensitive to crude oil price movements. With Brent at $109 per barrel and the West Asia crisis unresolved, input cost pressure is a live risk for VIP’s FY27 margin recovery trajectory.
At ₹282.05 and a market cap of approximately ₹400.70 crore, VIP Industries is trading at a significant discount to its historical valuation multiples — but with losses still being reported, any re-rating is contingent on the company demonstrating positive EBITDA in Q1 or Q2FY27.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.