Rakesh Jhunjhunwala hikes stake in VIP Industries, shares rally 10%

NEW DELHI: Shares of VIP Industries climbed 10 per cent in Monday’s trade after Rakesh Jhunjhunwala increased stake in the company to 5.31 per cent.

As per the latest shareholding data available on exchanges, Jhunjhunwala bought an additional 2.85 lakh shares of the company during the quarter ended March 2020, taking his total stake to 5.31 per cent (from 5.11 per cent earlier).

Besides, mutual fund houses also hiked their stake to 10.40 per cent during the January-March quarter, BSE data showed. They had 9.13 per cent stake in the company as of December 31 last year.

The scrip traded 10.46 per cent at Rs 234.80 on BSE, while the benchmark Sensex traded 2 per cent higher at 32,275.

On the other hand, foreign portfolio investors reduced their stake to 4.76 per cent from 6.68 per cent during the same period.

VIP is India’s leading luggage brand. It sells and manufactures bags and accessories in India and internationally.

Luggage is a proxy to travel and tourism growth, with coronavirus hitting the tourism sector hardest owing to its dependence on discretionary spends. VIP Industries too has seen the impact of this as is reflected in its stock price correction of over 55 per cent from its 52 week high, scaled in February 2020.

“In post Covid-19 era, competition would intensify as there could be aggressive discounting and downtrading that cannot be ruled out. It will thus be difficult for VIP Industries to regain lost market share. The company could thus prioritise its growth strategy in favour of volumes over profitability to maintain its leadership position,” Axis Securities said.