CMP:
Rs. 229.10; Market Cap: Rs. 1,821.90 Cr; 52 Week High/Low: Rs. 253.75 /
Rs. 192.70;
Total
Shares: 7,95,24,560 shares; Promoters : 5,95,86,390 shares –74.93 %; Total Public
holding : 1,99,38,170 shares – 25.07 %; Book
Value: Rs. 34.30; Face Value: Rs. 1.00; EPS: Rs. 8.34; Dividend: 250 % ; P/E: 27.47 times; Ind. P/E: 12.03;
EV/EBITDA: 14.40.
Total
Debt: 180.77 Cr; Enterprise Value:
Rs. 1,998.08 Cr.
RUPA & COMAPNY LTD: Rupa
was incorporated in 1985 by the Agarwala brothers. In 1995, they took over the
business of Binod Hosiery, a partnership firm incorporated in 1979. They have
emerged, over the years, as the largest hosiery manufacturer in India. The
company produces and markets knitted garments such as innerwear, casuals wear
and also footwear. The company came with an IPO at Rs. 10 in the year 1995 and was initialy listed on Culcutta Stock Exchange & Jaipur Stock Exchange. And it got itself listed in BSE in 2010 & at Rs. 200 on NSE in 2011. The company launched Thermocot, the first branded winter
wear in India. The company is also pioneered in printing of the brand name in
front of the vest. This made the logo as a design element which made the
product to be flaunted. RUPA is one of the earliest brands which introduced
celebrity endorsement. This created huge impact and recall value. Rupa &
Company Ltd has a comprehensive portfolio of product offerings in the knitted
innerwear, casual wear and thermal wear segment for men, women and kids. The
company offers its products principally under the Rupa, Frontline, Jon, Air,
Macroman, Macroman M' Series, Euro, Kidline, Bumchums, and Thermocot brand
names. Rupa & Company Limited sells its products primarily through own retail
outlets, as well as through independent retailers in India and the Middle East.
The company also exports its products. The Company manages more than 6000 stock
keeping units (SKUs), each of them for a particular brand, segment colour and
size. The Company has its two wholly owned subsidiaries- M/s Euro Fashion
Inners International Private Limited which sells premium men’s innerwear
products under the brand “EURO” and Imoogi Fashions Private Limited which has
recently launched apparel for kids of 0-12 years of age under the brand
“IMOOGI”. Rupa also operates a Wind mill for
power generation. The company is locally compared with Lovable Lingerie Ltd,
Page Industries Ltd, V2 Retail Ltd , Trent Ltd, Brandhouse Retail, CESC Ltd,
Future Retail, Arvind Ltd, Kewal Kiran Clothing Ltd, S Kumars Nationwide Ltd,
Koutons Retail Lyd, Maxwell Industries Ltd and Globally with I.T Limited of
Hong Kong, Dickson Concepts (International) Limited also from Hong Kong,
Industria DE Diseno of Spain, Inditex SA of Spain, Gunze Ltd of Tokyo, Levi
Strauss & Co of US, Gucci Group NV of Netherlands, Tommy Hifiger BV of
Netherlands, Marc Jacobs International LLC of USA Calvin Klein Inc of USA and
Donna Karan International Inc. form USA.
Investment Rationale:
Rupa & Company Limited is one of the leading
textile companies, operating across the country and abroad. It is into
manufacturing, processing, designing and selling hosiery and fashion wear
products for men, women, and kids. It provides knitted garments, including
innerwear, casual wear, and footwear. Rupa & Company Limited sells its
products primarily through own retail outlets, as well as through independent
retailers in India and the Middle East. The company also exports its products. Rupa,
a branded innerwear player & has created and nurtured over 100 brands and
manages a portfolio of 6000 stock keeping units (SKUs)
comprising different range for men, women and kids. The company has a product
offerings catering to different sections of society covering various price
points. Over the years, the company has invested in brand building and moved up
the value chain from a commodity centric marketing strategy to a brand led
market positioning. The company is looking to capture a higher share of the in
the premium innerwear segment by introducing premium category products, which
would enable it to have better margins, going ahead. The share of super-premium
products in the overall mix has gone up from 4 % in FY09 to 9% in FY13. Rupa
has a pan–India presence with a large distribution network consisting of three
central warehouses, 19 exclusive business outlets, 20 branches, 859 sales &
marketing professionals, 950 dealers and 1,10,000 retailers. The company has
already set up extensive touch points with customers, which would enable it to
achieve consistent growth. Rupa is
looking at having a higher proportion of the customer’s wallet by introducing
newer products. The company has recently launched jeans under the Euro brand
and leggings under the brand “Femmora”. The company is also looking at
leveraging its brand equity by entering the kids’ innerwear segment. The Indian
textile industry is set for strong growth, buoyed by both rising domestic
consumption as well as export demand. Abundant availability of raw materials
such as cotton, wool, silk and jute and skilled workforce has made India a
sourcing hub. The most significant change in the Indian textile industry has
been the advent of man-made fibres (MMF). India has successfully placed its
innovative range of MMF textiles in almost all the countries across the globe.
Manmade fibre production recorded an increase of 2 per cent during the year
2012-13. India is the one of the world's largest producers of textiles and
garments. The potential size of the Indian textile and apparel industry is
expected to reach US$ 22,100 Cr by 2021, according to the reports by
Technopak's Textile and Apparel Compendium. Textile industry has made a major
contribution to the national economy in terms of direct and indirect employment
generation and net foreign exchange earnings. This sector contributes about 14
% to industrial production, 4 % to the Gross Domestic Product, and 17 % to the
country's export earnings. It also provides direct employment to over 3.5 Cr
people. The textiles sector is the second largest provider of employment after
agriculture in India. Thus, the growth and all round development of this
industry has a direct bearing on the improvement of the economy of the nation.
The hike in FDI limit in multi-brand retail will bring in more players, thereby
providing more options to consumers and this will be in all very good for
Textile Industry. It will also bring in greater investments along the entire
value chain – from agricultural production to final manufactured goods. With
consumerism and disposable income on the rise, the retail sector has
experienced a rapid growth in the past decade with several international
players like Marks & Spencer, Guess and Next shop having entered the Indian
market. The organised apparel segment is expected to grow at a compound annual
growth rate (CAGR) of more than 13 % over a 10-year period. Rupa will be surely
a beneficial as it competitive advantage lies in its owned
Brands which have grown over the years with a vast popular product line &
with decades-long experience in successfully launching, nurturing and managing
several winning brands in a pre-dominantly unorganized industry Rupa surely has
its upper hand.
Rupa & Company is
India’s largest hosiery brand, covering the entire range of knitted garments
from innerwear to casual wear & also operates a Wind mill for power generation.
Due to decades-long experience in successfully launching,
nurturing and managing several winning brands in a pre-dominantly unorganized
industry, RUPA & Co is acclaimed by the Limca Book of Records as the
largest hosiery and innerwear manufacturing and marketing company in India, for
a 8 consecutive years. Rupa
sells more than 12 million pieces of inner wear every month. Rupa’s competitive
advantage lies in its owned Brands which have grown over the years, a product
line range named $ as a brand across
all categories, a formidable reputation of “Great Quality at Great Price
points”, and a fact that it accepts the Buyer’s specification. Also RUPA is the
first Indian company to launch bacteria-resistant briefs under its exclusive
brand Euro. Rupa & Company
Limited own three state-of-the-art manufacturing facilities at Delhi, Tirupur
and Domjur with an overall capacity to produce 7,00,000 pieces a day. It has one of the largest distribution networks
through 1 lakh retail outlets across 600 locations with a dedicated support of
more than 950 dealers and distributors. Rupa had seen an accelerated revenue
growth over FY07-10 with a CAGR of 21 %. Even in FY11-13, Rupa abled to
maintain its double digit growth at CAGR of 13 %. Over FY09-13, the company was
able to increase the share of super-premium segment from 4 % in FY09 to 9 % in
FY13. Geographically, the north region contributes the highest with 48 %
contribution to FY13 revenues while east contributes 26 %. Rupa is
strategically focusing on increasing its share of the super-premium category.
The super-premium category has grown at a CAGR of 41 % over FY09-13 while the
other category has grown at a CAGR of 17 % over the same period. Among
products, men’s and thermal category have grown at a CAGR of 20 % and 22 %,
respectively, over FY09-13. Among other categories, women’s has grown at a CAGR
of 15 % while kids (on a low base) have grown at a CAGR of 44 %. Among brands,
Jon, Frontline and Macroman contributed 33 %, 26 % and 10 %, respectively. Rupa
reported 9 % YoY revenue growth in FY14. Over the years, Rupa has progressed
from a commodity centric marketing to brand led market positioning enabling it
to register a drastic transformation in EBITDA margin. Rupa’s EBITDA margin
improved from 8.2 % in FY07 to 15.2 % in FY13, which has been its peak EBITDA
margin. However, in FY14, the EBITDA margin declined 80 bps YoY to 14.4%. EBITDA
margin is expected to improve over the next two years driven by higher share of
super-premium category and introduction of new high margin products. Driven by improvement
in EBITDA margin, it is expected that its EBIDTA to grow at 10 % over FY14-16E
and PAT to grow at a CAGR of 14 % over the period. It is expected that the company surplus scenario is likely to continue
for the next three years which will keep its growth story in the coming quarters
also.
| KEY FINANCIALS | FY13 | FY14 | FY15E | FY16E |
|---|
| SALES (₹ Crs) | 829.00 | 904.00 | 973.00 | 1,053.00 |
| NET PROFIT (₹ Cr) | 65.00 | 66.00 | 75.00 | 82.00 |
| EPS (₹) | 8.10 | 8.30 | 9.40 | 10.20 |
| PE (x) | 28.10 | 27.60 | 24.30 | 22.40 |
| P/BV (x) | 7.50 | 6.40 | 5.40 | 4.60 |
| EV/EBITDA (x) | 16.20 | 15.50 | 14.10 | 12.70 |
| ROE (%) | 26.60 | 23.10 | 22.10 | 20.50 |
| ROCE (%) | 25.80 | 24.40 | 24.00 | 24.10 |
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------Disclaimer:
This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
*Dear Reader friend, if you enjoyed this article, please do share it with your Friends and Colleagues through Facebook and Twitter, and drop in your valuable thoughts in comment box..
READ HERE TO KNOW MORE ON LONG TERM INVESTING - CLICK HERE
VIEW THE POWER POINT PRESENTATION ON
