PL Sector Update: Luggage - Sector Update – Samsonite India's market share is on a rise

Luggage - Jinesh Joshi - Research Analyst, Prabhudas Lilladher Pvt Ltd

Sector Update – Samsonite India's market share is on a rise

Samsonite Global announced 2QCY23 results yesterday. Brief highlights are as follows:-

♦ Net sales increased 33% YoY to US$924mn.

♦ GM stood at 59.4%.

♦ Adjusted EBITDA increased 45% YoY to US$178mn with a margin of 19.3%.

♦ Adjusted PAT increased 50% YoY to US$90mn with a margin of 9.7%.

How did Samsonite India perform in 2QCY23 versus peers?

Samsonite’s India business reported 30.6% YoY growth on constant currency basis in 2QCY23. In comparison, VIP reported a growth of 7.7% YoY. However, after excluding one-time institutional order in base quarter, sales were up 12% YoY. Safari has clearly outperformed peers with sales growth of 45.6% YoY.

Our view: In CY22, Samsonite India reported revenues of US$218mn (Rs17.1bn assuming an average conversion rate of Rs78.6 per US$). In comparison, VIP reported revenues of Rs19.8bn in CY22 (Jan-Dec 2022) resulting in a slender lead of Rs2.7bn over Samsonite India. However, given the growth differential since last 2 quarters VIP’s lead has narrowed. In 1HCY23, Samsonite India reported revenues of US$126mn (Rs10.3bn assuming an average conversion rate of Rs82.1 per US$) while VIP reported revenues of Rs10.8bn over the same comparable period leaving marginal difference between the two players. We believe the new MD designate at VIP Industries is going to have its task cut out to address concerns over fall in market share. On the other hand, Safari has been consistently gaining share and is posing a credible threat to other players thereby intensifying competition within the industry.

Safari Industries (India) (SII IN)

Rating: BUY | CMP: Rs3,570 | TP: Rs3,728

V.I.P. Industries (VIP IN)

Rating: ACCUMULATE | CMP: Rs707 | TP: Rs707