The call and the levels

First, the trade. Motilal Oswal values VIP at 41 times its estimated FY28 earnings, deriving a target of Rs 430 — roughly 39 percent above the ruling Rs 311. The scrip has swung between Rs 278 and Rs 473 over the past year. This is unmistakably a recovery bet: the multiple is meaningless against depressed near-term earnings, so the case rests on the profit line crossing back above zero.

The turnaround in one chart

Nothing tells the story like the EBITDA margin. It plunged deep into loss through most of FY26, then leapt back toward breakeven in the June quarter — a swing of roughly 1,700 basis points in a single quarter.

The quarter: revenue steadies, losses shrink

The top line stabilised after a long slide. Consolidated revenue rose 3 percent to about Rs 578 crore — the offline channel flat and e-commerce up mid-single digits — with April and May soft on subdued wedding-season demand before June rebounded strongly. Newly launched products, spanning more than 80 stock-keeping units, already account for roughly half of sales. The operating loss narrowed to about Rs 11 crore, an EBITDA margin of minus 1.9 percent that, while still negative, marks a dramatic sequential repair. The quarter also carried a one-time gain from the reversal of an inventory provision of about Rs 12 crore, a signal that the balance-sheet clean-up is bearing fruit.

The reset, step by step

Management's fingerprints are on a methodical clean-up. The brokerage counts the heavy lifting as largely done.

The next leg: what drives the recovery

With the foundation laid, Motilal Oswal points to three levers for industry-beating growth and share gains. The first is a celebrity-led marketing campaign to rebuild brand recall. The second is product upgrades with distinctive features, such as a smart Bag-Tag, to sharpen differentiation and ride the premiumisation trend. The third is store rationalisation — shuttering low-return exclusive outlets to lift network productivity. The brokerage expects conditions to stabilise in the second half of FY27, supporting revenue growth above 14 percent in FY28 as these initiatives compound.

Margins and the path back to profit

Gross margin remains the near-term pressure point, dipping to 41.4 percent — down 360 basis points on the year as polypropylene and polycarbonate prices firmed, though up a healthy 420 basis points sequentially. Higher employee costs and other expenses kept the quarter in the red. But the direction of travel is clear: from a full-year EBITDA loss of roughly Rs 240 crore in FY26, the brokerage models a swing to a profit of about Rs 240 crore in FY27 and Rs 350 crore in FY28, with adjusted profit turning positive and the balance sheet deleveraging as net debt-to-equity falls from 2.4 times toward 0.9. Management expects EBITDA to turn around within the first half of FY27.

Earnings trajectory and the valuation case

The estimates chart the recovery starkly — from deep losses in FY26 to profit in FY27 and a near-tripling of earnings by FY28. Return on equity, a chastening minus 92 percent in FY26, is modelled to rebound toward 36 percent by FY28 as the operating leverage of a fixed cost base reasserts itself. On the target multiple of 41 times FY28 earnings, Motilal Oswal arrives at its Rs 430 objective.

Risks to weigh