Key Insights:

  1. Revenue grew 3% YoY to Rs4.1bn due to consumption demand slowdown.
  2. However, rate negotiations with Chinese vendors and lower RM prices led to 2ppt/3ppt YoY/QoQ GM expansion to 53.3%
  3. Higher employee cost and other expenses led to adjusted EBITDAM contraction YoY to 12.1%

Valuation and view: Slowdown in consumption demand should continue in near term.

VIP is trading at 28x FY21 P/E; given secular industry tailwinds, premiumisation, operating leverage and captive manufacturing should drive meaningful earnings growth over the next 3-4 years.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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