Tale of the Tape 

Good evening y’all and welcome back to another week in the markets!

Markets closed down for a fourth straight day! Weakness in largecap IT stocks + muted global cues kept investors on the edge. On the other hand, Midcaps (+0.7%) and Smallcaps (+1%) outperformed. PS - the Nifty Midcap Index snapped its 6-day losing streak! Most sectors ended in the green. Real Estate (+1.4%) stocks were in high demand. Meanwhile, IT stocks (-1.1%) hit their lowest level since June 6.

Today’s issue covers ownership change at VIP Industries, Anthem Biosciences IPO review, Ola Electric’s big jump decoded and more.

Check out the NSE500 heatmap:

Stock
Sold! (Finally)

VIP Industries was volatile AF after its promoters agreed to sell their majority 32% stake. This marks the end of an era for VIP and has the potential to shake up India’s luggage market. Here’s what you need to know.

Deal deets: Multiples PE Fund IV and a group of other investors will acquire the 32% stake for around Rs 1,763 cr (at Rs 388 p/sh, that’s a ~15% discount to Friday’s close). This will naturally trigger an open offer for another 26% stake, which means the PE consortium will acquire 58% ownership for Rs 3,200-cr. PS - at the end of this, the promoter Piramal family’s stake will go from 51.7% → 19.7%.

Why did they sell? Mostly because VIP Industries has been in trouble for a long time now.  It missed the bus on key products like ‘soft’ luggage’. From FY19 to FY24, its market share dropped to 37% from 48%, and margins nosedived to 9% from ~16%. The Piramal family clearly has no idea how to turn the ship around and has been wanting to exit for AGES.

What’s less clear is what happens now. Experts say there are two outcomes. First, the new owners actually make VIP competitive again and restore it to its former glory. PE firms don’t always have intimate knowledge of the sector, but hey, anyone’s better than the Primals at this point. Secondly, the new owners could just be looking to slap on a new coat of paint, and make it an attractive acquisition target.

Either way, this spells greater competition for the luggage sector. Which isn’t great news for companies like Safari Industries who have stolen a lot of market share from VIP. For long-time investors in luggage stocks, keep a careful eye on how this all pans out.

Specials
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