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Rupa & Company Limited Earnings Call Summary
Earnings Call Overview • Date: May 31, 2024 • Discussion of Q4 and FY24 financial results • Key management: Vikash Agarwal (Whole-Time Director), Sumit Khowala (CFO)
Financial Performance • Q4 Revenue: INR 400 crores • Net Profit Increase: 29% • FY24 Revenue: INR 1,217 crores • Profit After Tax Increase: 30% • Volume Growth: 17% across segments • Revenue Growth: 6.4% year-over-year due to pricing challenges • Premium Segment Growth: 20% value growth
Strategic Initiatives • Significant investment in branding and marketing • Launch of new products • Plans for additional store openings • Introduction of a new loyalty scheme for retailers
Subsidiary Performance • Rupa Bangladesh and Rupa Fashion: Operations not yet started, negligible negative EBITDA
Market Insights • Revenue contributions for Q4 FY24: • Economy Segment: 45% • Mid-Premium Segment: 50% • Premium Segment: 5% • Early stages of exclusive brand outlet (EBO) expansion • Low channel inventory levels attributed to subdued demand and raw material prices
Future Projections • FY25 Revenue Growth Target: 13% to 15% • Q1 FY25 Growth Target: 18-20% • Focus on high-potential areas, including women's wear and winter wear
Margin and Pricing Strategy • Current EBITDA margins: 10%-11%, with a goal to return to 14%-15% • Potential for a 3-5% price hike based on raw material costs • Emphasis on launching premium products to enhance margins
Demand and Market Conditions • Acknowledgment of recent softness in rural demand • Anticipated improvement in demand in upcoming quarters
Capital Allocation and Sustainability • No major expansion plans for FY25; routine capex will continue • Management confirmed sustainability of gross margins contingent on raw material prices • Focus on reducing working capital to around 180 days through various initiatives
Competitor Landscape • Acknowledgment of major competitors, primarily listed brands like Dollar and Lux • Uncertainty regarding performance of unlisted competitors
Conclusion • Management optimistic about future opportunities and growth, with a focus on high-margin products and strategic initiatives to enhance performance.
Rupa & Company Limited Earnings Call Summary
Financial Performance • Q3 Results (Ending December 31, 2023) • Revenue: INR 319 crores (35% YoY increase) • EBITDA Margin: 10.3% • PAT Margin: 6.5%
• Nine-Month Results • Revenue: INR 816 crores (11% YoY increase) • PAT: INR 46 crores (31% YoY increase)
Management Insights • Demand and Growth • Strong demand in innerwear and athleisure segments. • Confidence in continued double-digit revenue growth.
• Working Capital and Debt • Improvements in working capital management. • Reduction in net debt.
Market Segment Performance • Volume Growth • Economic segment: 20% • Mid-premium segment: 22% • Premium segment: 40%
• Value Growth • Economic segment: 9% • Mid-premium segment: 14% • Premium segment: 30%
Capital Expenditure and Margins • Capital Expenditure Plans • Annual budget: INR 15-20 crores. • Plans to open 4-5 new Exclusive Brand Outlets (EBOs) in Q4.
• Gross Margins • Decline due to product mix and dealer incentives. • No immediate price hikes anticipated; future adjustments depend on raw material costs.
Strategic Focus • Core Product Lines and Exports • Focus on core products, exports, and modern trade as growth drivers. • Targeting EBITDA margins of 13-15% in the coming years.
• Channel Inventory • Significant decrease in current stock levels due to price volatility. • Expectations for normalization as prices stabilize.
Leadership and Team Development • Management Team • Actively searching for a new CEO. • Emphasis on building a strong management team.
• Second-Level Team • Clarification on existing positions and challenges in filling them during COVID.
Sales Performance • Thermal Sales • Contributed 8% to total sales; INR 68 crores reported vs. INR 100 crores expected. • Cautious optimism for 20-25% growth in thermal sales next year.
Future Projections • Revenue and EBITDA Growth • Projected 15% revenue growth with EBITDA margin of 10-12%. • Targeting 20% ROE through improved product mix and inventory management.
• Regional Sales and Market Focus • Strong presence in the East; efforts to expand in the West and South. • Need to increase focus on women's and children's segments.
Overall Company Outlook • Year-on-Year Growth • Acknowledged year-on-year growth but noted lack of quarter-on-quarter growth. • Optimism for achieving EBITDA of 14-15% in upcoming quarters.
• Retail Reach • Current reach: 125,000 to 135,000 outlets. • Plans to add 5,000 to 10,000 retailers annually.
• Debt Position • Gross debt: INR 222 crores; net debt: INR 13 crores, indicating a strong cash position.
Conclusion • The call concluded with thanks from management and the investor relations team.
Rupa & Company Limited Earnings Call Summary (November 7, 2023)
Financial Results • Q2 FY24: • Revenue: INR 302 crores (6% YoY increase) • Sales Volume Growth: 15% • EBITDA: INR 32 crores (11% growth) • Net Profit: INR 21 crores (22% increase)
• H1 FY24: • Revenue: INR 498 crores (slight decrease) • Net Profit: INR 25 crores (15% YoY decrease)
Management Insights • Challenges: • Export demand issues noted. • Inauguration of a dedicated export unit to enhance capabilities.
• Focus Areas: • Digital opportunities and maintaining EBITDA margins of 11-12%.
Q&A Highlights • Demand and Orders: • Strong Q2 performance; Q3 dependent on seasonal factors. • Normalization of exports expected in Q4 with global economic improvement.
• Branding and Subsidiaries: • Branding costs expected to remain at 7% YoY. • Subsidiaries: Oban, Imoogi, Euro are PAT positive; Rupa Fashion and Rupa Bangladesh facing negligible losses.
• Financial Guidance: • Revenue guidance of 18-20% for FY24, contingent on yarn prices. • Target to reduce working capital days from 270 to 220-225.
Segment Performance • Revenue Contributions: • Economy: 32% • Mid-Premium: 58% • Premium: 10%
• Growth Potential: • Women's segment expected to grow from 11% to 20% of revenue in coming years. • Volume growth opportunities identified across all segments, especially in the economy segment.
Margin Outlook • Current Margins: • Around 10-11%, with a goal to revive to 15-18% based on yarn price stability.
• Future Expectations: • Annual improvement of 1-1.5% in margins expected in FY25 and FY26.
Strategic Initiatives • Investments: • Focus on branding, marketing, and establishing a new export unit.
• Product Development: • Emphasis on premiumization and new product ranges in thermal wear and athleisure.
Conclusion • Management expressed confidence in stabilizing conditions and achieving targeted margins in the second half of the year, with a focus on expanding distribution and enhancing product offerings.
Rupa & Company Limited Q1 FY '24 Earnings Call Summary
Financial Performance • Revenue: INR 195 crores, 9% decline year-on-year. • Volume Growth: 5% increase in volume. • Gross Margin: Decreased to 35.1%. • Net Profit: Fell by 66% to INR 4.2 crores. • Advertising Expenses: Increased to 12% of revenue, expected to normalize to 7-8%.
Segment Performance • Athleisure Segment: Remained flat. • Economy and Mid-Economy Segments: 19% volume growth. • Revenue Contribution: Economy (35%), Mid-Premium (54-55%), Premium (10%).
Future Projections • Turnover Target: INR 2,000 crores in three years. • Revenue Growth Projection: 18-20% for FY '24, with a target of 24-25%. • EBITDA Margin: Expected to be 10-11%.
Operational Insights • Yarn Prices: Stabilization expected to improve gross margins. • Capital Expenditure: Light spending of INR 15-20 crores annually. • New Export Unit: Anticipated to double exports in two years. • New Cutting Plant: Aimed at enhancing margins through quality control.
Pricing Strategy • Price Adjustments: No price cuts in Q1 FY '24; potential price increases in Q2.
Growth Drivers • Product Launches: New casual wear and increased advertising for the economy brand Jon. • Women's Segment Expansion: Currently 9-10% of revenue, plans to strengthen Femorra brand online.
Working Capital Management • Reduction: From INR 789 crores to INR 700 crores. • Inventory Days: 203 days. • Receivable Days: 101 days. • Payable Days: 50 days.
Retail Expansion Plans • Marketing Agency: Conducting pilot tests in Kanpur, Calcutta, and Mumbai. • Exclusive Brand Outlet (EBO): Average monthly sales projected at INR 3 lakh.
Conclusion • Management expressed optimism about future growth and encouraged further inquiries through their Investor Relations partner.
Rupa & Company Limited Earnings Call Summary (May 25, 2023)
Financial Performance • Fiscal Year Results: Revenue of INR 1,143 Crores for FY2023, down 22% year-on-year. • Gross Margin: Reported at 28.6%. • Cash Flow: Positive cash flow of INR 185 Crores. • Net Debt: Significant reduction achieved.
Challenges and Outlook • Challenges: Volatility in raw material prices led to destocking and impacted operating margins. • FY2024 Expectations: Optimism for improved margins and a turnover target of INR 2,000 Crores over the next three years.
Management Insights • Growth Projections: Vikash Agarwal projected 25-30% growth to reach FY2022's top line; 18% operating margins challenging due to increased marketing investments. • EBITDA Margin: Expected to be 11-12%, influenced by yarn price fluctuations.
Inventory and Working Capital • High-Cost Inventory: Some high-cost inventory will remain for another quarter. • Inventory Levels: Stable demand for essential products; maintaining inventory despite cotton price drops. • Working Capital: Targeting 150-160 days net working capital, aiming for 40% of net sales by FY2024.
Brand and Market Strategy • Dealer Network: Primary visibility for 1,200 dealers; secondary for 70-80 dealers. • Brand Performance: Decline in Fruit of the Loom and FC UK brands; focus on organic growth through exclusive brand licenses. • Revenue Split: Balanced between urban and rural markets (50% each).
Product Segments and Growth • Athleisure and Thermal Wear: Contributed 8% and 5% to revenue, with higher margins. • CAGR Growth: Optimistic about achieving 20-30% CAGR over the next few years. • Export Unit: Expected to be operational by June 2023.
Premiumization and Women's Segment • Premiumization Strategy: Opening exclusive brand outlets (EBOs) and launching higher-priced products. • Women's Segment: Currently 11-12% of revenue; aiming for 15-20% through investments and marketing campaigns.
Distribution and Marketing Plans • Distributor Network Expansion: Increasing from 1,500 to 2,000 distributors, focusing on South India. • EBO Network: Total of 28 stores; plans to open more as market conditions improve. • Marketing Budget: Expected return to 7-8% spend; projected volume growth of 15-18% for the current year.
Conclusion • Management expressed optimism about growth and brand investments while addressing challenges related to margins and inventory management.
Rupa & Company Limited Earnings Call Summary
Earnings Call Overview • Date: February 11, 2023 • Transcript Release: February 16, 2023 • Focus: Unaudited financial results for Q3 and nine months ending December 31, 2022
Financial Performance • Q3 FY'23 Revenue: INR 236 crores (46% decline year-on-year) • Gross Margin: 27.7% • EBITDA Margin: 6% • Net Debt: Significant reduction noted • Exports: Grew by 51% year-on-year
Market Conditions • Textile Industry Challenges: High raw material and energy costs affecting sales and margins • Domestic Demand: Currently weak but expected to improve with low stock levels and peak season approaching • Yarn Prices: Anticipated improvements may boost demand
Future Outlook • Q4 Expectations: Anticipated to be better than Q3 • FY '24 Growth Target: 15%-20% growth contingent on market conditions • Strategic Initiatives: New product lines, aggressive marketing, and channel financing
Export and Manufacturing Insights • New Export-Oriented Hub: Expected to improve margins; currently operating at 70% capacity • Export Contribution: Projected to be 10-12% of revenue in coming years • Internalization of Cutting Operations: Aimed at enhancing margins and efficiency
Investor Concerns • Transparency in Disclosures: Suggested improvements regarding declining profits • Online Sales Growth: Acknowledged as flat across channels
Specific Sales Figures • Softline Brand: Generated INR 11 crores in the last quarter and INR 33 crores in exports over nine months • Working Capital: 110 days for receivables and 170 days for inventory
Closing Remarks • Management expressed cautious optimism for improved performance in future quarters despite current challenges.