- 09 Feb 2022
- ICICIdirect Research
RUPA’S STRONG REVENUE GROWTH MOMENTUM CONTINUES
News: Rupa and Company reported a YoY growth of 25% in revenues to Rs.433 crore in Q3FY22. Gross margins declined 145 bps to 32.9%. However, EBITDA margin was flattish at at 18.7% owing to other expense to sales ratio declining by 176 bps YoY to 10.56%. Absolute EBITDA increased by 26% YoY to Rs.81 crore. Lower tax rate (22.5% in Q3FY22 vs 26.3% in Q3FY21) aided the company to register YoY PAT growth of 34% YoY to Rs.58.3 crore.
Views:Rupa has been focusing on increasing sales volumes with changes in product mix. It plans to increase its share in the premium and super premium category, enhance focus on women wear, casual wear and foray in newer markets along with higher penetration in existing markets. The company is planning to aggressively expand its retail reach through doubling of modern retail trade outlets (from 150 to 300 outlets over next two years) and scale up its EBOs (through franchisee model) from 17 outlets to 150 outlets by FY24. The company through its pan India network and consistent investment in brand building (average branding and investment cost of 6-8%) would be able to capture the growth opportunity and benefit from the increased demand for its product categories.
Impact: Positive