It is difficult to comment on valuations as the promoter and potential acquirers may have different expectations and I cannot predict something very uncertain. Who will acquire it (may be conglomerates like Tata/Reliance or PE funds) and whether he will be able to change VIP’s fortune, is another uncertain variable. I prefer track record and certainty to the extent possible and I’m a happy shareholder of VIP’s competitor.
Planned exit by VIP’s promoter is due to succession issue and not due to industry prospects. Also, Investcorp selling small stake in Safari is a non-event as most of the PE funds have time frames and the quantity was absorbed by domestic funds. While there is significant increase in number of Safari’s shareholders holding share capital upto Rs.2 lakh, but change in percentage shares held by them is not significant.
As per the few research reports published in July or August, managements of both Safari and VIP indicated slowdown in growth at the beginning of Q2. I do not have any idea about growth rates in subsequent months. No industry is immune to short term fluctuations and luggage industry has also witnessed it in the past. However, I see long run way for growth in this industry with probably double-digit growth rate for a long period and not concerned about short term events in between.
Our investment horizons and view points might be totally different. Hence, please do your own due diligence and research accordingly.
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