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INVESTMENT INSIGHTS

Check Before You Invest : VIP Clothing Ltd

BSE: 532613 NSE: VIPCLOTHNG ISIN: INE450G01024
  |   Sector:  Textiles & Apparels   |   Industry:  Textile

Snapshot

Q.1 Which industry/sub-sector does VIP Clothing Ltd belong to?
VIP Clothing Ltd belongs to the Textiles & Apparels sector, operating specifically within the Textile segment.
Q.2 Is VIP Clothing Ltd a good quality company?
VIP Clothing Ltd is a weak quality company, based on a inconsistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is VIP Clothing Ltd undervalued or overvalued?
VIP Clothing Ltd appears Overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 26.18 -
Price to Book 1.08 2.05
Price to Sales 0.83 1.59
EV to EBITDA 11.52 31.65
Q.4 Is VIP Clothing Ltd a good buy now?
VIP Clothing Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of VIP Clothing Ltd?
VIP Clothing Ltd revenue growth is 29.3% for FY-2025, which is above its 5-year CAGR of 6.52%, indicating faster growth.

Q.2 Gross Profit margin of VIP Clothing Ltd?
VIP Clothing Ltd Gross profit margin which is the profit after deduction of direct costs, is 3.5% for FY-2025, which is above its 5-year median of -0.1%, indicating increasing margins.

Q.3 Operating Profit Margin of VIP Clothing Ltd?
VIP Clothing Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 7.22% for FY-2025, which is above its 5-year median of 4.31% indicating increasing margins.

Q.4 Net Profit Margin of VIP Clothing Ltd?
VIP Clothing Ltd Net Profit Margin is 2.3% for FY-2025, is above its 5-year median of -0.73%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 3.5 -0.1
Operating Profit Margin (%) 7.22 4.31
Net Profit Margin (%) 2.3 -0.73

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of VIP Clothing Ltd?
VIP Clothing Ltd Return on Asset is 1.82%, which is above its 5-year historical median of -0.39%, indicating improved asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of VIP Clothing Ltd?
VIP Clothing Ltd Return on capital employed is 6.34% for FY-2025, which is above its 5-year historical median of 2.35%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 14%, indicating value preservation.

Q.7 Return on Equity (ROE) of VIP Clothing Ltd?
VIP Clothing Ltd Return on equity is 3.65% for FY-2025, which is above its 5-year historical median of -0.77%, indicating the business is making better use of its shareholders capital.

Q.8 Cash conversion cycle of VIP Clothing Ltd?
VIP Clothing Ltd Cash conversion cycle is 142 days, below its 5-year historical median of 157 days, indicating improved working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.95 0.85
ROE (%) 3.65 -0.77
ROCE (%) 6.34 2.35
Cash Conversion Cycle 142 days 157 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of VIP Clothing Ltd?
VIP Clothing Ltd Debt-to-Equity ratio is 0.45, which is above the industry average of 0.42, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of VIP Clothing Ltd?
VIP Clothing Ltd Debt to cash flow from operations is -2.08, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of VIP Clothing Ltd?

Q.1 Promoter shareholding and pledge status of VIP Clothing Ltd?
Promoters hold 46.55% of the VIP Clothing Ltd, with 18.48% of their stake pledged, indicating high pledge risk.

Peer comparison (industry-wise, mcap)

E: How does VIP Clothing Ltd performance compare with that of its Peers?

Q.1 Revenue growth of VIP Clothing Ltd vs industry peers?
VIP Clothing Ltd revenue CAGR is 6.52%, compared to the industry median CAGR of 0.00%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 29.3 0
Gross Profit Growth (%) 0 9.1
Operating Profit Growth (%) 0 8.5
Net Profit Growth (%) 0 13
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.95 0.95
ROE (%) 3.65 4.25
ROCE (%) 6.34 7.55
Cash Conversion Cycle (days) 142.47 102

Valuation & price assessment

Q.1 Stock return of VIP Clothing Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of -6.9% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 -6.9% 10.1% -21.4% -36.7%
Q.2 Valuation ratios of VIP Clothing Ltd vs historical?
The current P/E ratio of 26.18 is higher than its historical median of , indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 26.18 - 20.16
Price to Book 1.08 2.05 1.32
Price to Sales 0.83 1.59 1.06
EV to EBITDA 11.52 31.65 9.31

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