Luggage stocks in focus: Safari, VIP Inds surge up to 7% on demand revival

Shares of luggage companies were in focus as they surged up to 7 per cent on the BSE in Monday’s intra-day trade on hopes of upbeat demand post resurgence in travel sector.

Safari Industries hit a record high of Rs 1,110, as the stock rallied 7 per cent on the BSE in intra-day trade. Meanwhile, VIP Industries gained 5 per cent to Rs 666.70. Earlier, the stock had hit a 52-week high of Rs 774.50 on March 31, 2022. In comparison, the S&P BSE Sensex was up 0.72 per cent at 54,207 points at 10:14 am.

In the past one month, Safari Industries and VIP Industries have surged 25 per cent and 12 per cent, respectively, as against 5 per cent rise in the benchmark index.

Analysts expect that the travel sector is poised for a resurgence on the back of demand revival and increase in consumers confidence. That apart, the demand for backpacks, ladies’ handbags, and school bags is also expected to rebound strongly as normalcy resumes.

"The medium and long-term growth drivers, nonetheless, remain intact. The luggage industry has witnessed a shift towards branded goods with rising income and rapid urbanisation. The change in behavioural patterns of consumers also augurs well for the industry," VIP Industries said in a FY22 annual report.

That said, the management foresees new trends that will help expand the market - growth in casual luggage to meet varied requirements, increased spends towards wedding, and travel for education. They expect the industry to expand horizontally with new customer cohorts.

"However, the road ahead does have some speed breakers. Rising travel fares due to high oil prices, geopolitical strife, and inflationary pressures may erode some demand for air travel and luggage. Also, the return of corporate travel is expected to be slow with the continued use of conferencing technology replacing some of the need to travel for work," VIP Industries added.