In my view huge inventory built-up is a big issue for VIP, which will be difficult to resolve. On one side they have hard luggage capacity constrain, on the other side there is soft luggage inventory pile-up. Even if they are able to liquidate part of inventory over next few quarters, it will hit margins. They seems to have messed up in building soft luggage capacity when demand is mainly in hard luggage segment. This also impacts financial flexibility and management bandwidth, which would get diverted from growth to resolving issues.
In such situation, Safari should get dual benefit of industry growth and significant capturing of VIP’s market share. While Q1FY25 might be soft due to adverse weather and lesser weddings, Safari seems to be in advantageous position from medium to long term perspective.
Disc: I am not SEBI registered Advisor/Analyst. Invested is Safari; hence, my view may be biased. I am not suggesting any investment action. The information provided above is for education purpose only.
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