Rupa & Company hosted a conference call on February 07, 2025. In the conference call, the company was represented by Mr Vikas Agarwal  –Whole time director and Mr Sumit Khowala-CFO.

Key takeaways of the call

Q3FY2025

Revenues for the quarter stood at Rs 316 crore down 0.6%.

EBITDA stood at Rs 34 crore as against Rs 33 crore in Q3FY2024 a growth of 15% YoY.

EBITDA margin stood at 12.0% up 170 bps YoY. This is on account of disciplined approach towards cost management and efficiency.

Net profit for the quarter stood at  Rs 24 crore Up 14% YoY as against Rs 21 crore in Q3FY2024.

PAT margin was at 7.5% up 100 bps.

After a subdued H1FY2025, revenue from export sales  increased to Rs 10 crore in Q3FY2025 v/s Rs 6 crore in Q3FY2024.

Thermal wear grew by 20% YoY in Q3FY2025 as against expected growth of 30-40% due to delay and lower winter days.

9MFY2025

Revenues for 9MFY2025 were Rs 824 crore up 1% YoY.

Volume grew by 3% driven by strong volume growth in economy and athleisure segment which grew by 8% and 18% respectively.

EBITDA stood at Rs 84.5 crore  as against Rs 76.7 crore in 9MFY2024.

EBITDA margin stood at 10.3% up 90bps.

Net profit was Rs 52.7 crore as against Rs 45.5 crore in 9MFY2024.

Modern trade grew by 26% YoY in 9MFY2025 contributing 6% of the total revenues highlighting the company’s products in leading e-commerce platforms.

For 9M FY2025 export revenues grew by11% contributing 3% of the total revenues.

X-factor areas delivered a growth of 13% YoY , highlighting the company’s success in diversifying revenue stream.

Operational cash flow remains strong, generating Rs 65 crores in 9M FY2025 and the same was used to reduce debt.

The company had cash and investment to the tune of Rs 30 crore as on December 31,2024.

Gross margin: Gross margin was in the range of 28-29% and the company expects the same to improve once contribution from semi and premium segment improves.

Inventory days: The inventory days stood at around 145 days and the company expects the same to reduce to 120 days in next 1 year and than to 100 days .

EBO: The company had 35 EBO’s as on December 31 2024 and plans to add another 12-15 EBO stores in Q4FY2025. The EBO’s are on FIFO model and requires an investment of around Rs 12-15 lac.

The company expects EBO revenues  to be around 6-7% of the total revenues going forward.

Modern Retail: The company is tying up with modern retail players including Dmart, Reliance retail, Spencer. The company is focusing on Large format stores primarily in South India.

CAPEX: The company plans to incur maintenance CAPEX of Rs 15-20 crore in Q4FY2025.

Advertisement expenses: Advertisement expenses for 9MFY2025 stood at Rs 46 crore which was 5.6% of the revenues. However, the advertisement expenditure for the financial year as whole will be around 6-7% of the revenue.

Quick commerce: The company has launched its products in quick commerce retail platforms like Swiggy, BLinkit and Zepto and plans to add more quick commerce platforms to enhance local reach.

Pragathi Scheme: Through progathi scheme the company has penetrated to towns and cities in the state of rajasthan and plans to cover the whole state.

Guidance and outlook: The company has guided for revenue growth in the range of 8-9%  in Q4FY2025.

The company expects volume growth in the range of 5-6% in FY2025.

EBITDA  margins is expected to be in the range of 10-11% for FY2025.

The company expects revenue growth to be in the range of 12-15% YoY in FY2026 and FY2027.

EBITDA margin is expected in the range of 11-12% during Fy2026 and FY2027.

Management Commentary:

Commenting on the financial performance Mr. Vikash Agarwal - Whole Time Director, said  “We are pleased to present a detailed overview of the Company’s performance for the quarter. Despite the macro-economic scenario marked by mixed factors, including moderate growth and  elevated inflation resulting to restrained discretionary spending, we maintained stable  performance. Our volumes grew by ~ 3%, driven by robust sales in the economy and athleisure segments during 9M FY25.

Revenues for the quarter stood at Rs. 316 crores, while EBITDA increased 15% YoY to Rs. 38 crores in Q3 with margins improving by 170 bps, reflecting outcome of our disciplined approach towards cost management and operational efficiency. Net profit for the quarter grew 14% YoY to Rs. 24 crores, with margins improving by 100 bps, underscoring the effectiveness and resilience of our business model. We remained committed to optimizing working capital and achieved net cash surplus position in the 9M FY25. As at 31st December 2024 our net cash surplus including investments amounted to Rs 30 crores. Operational cash flow remains strong, generating Rs. 65 crores in 9M FY25. Branding and advertising expenses totalled Rs. 46 crores, accounting for 5.6% of overall revenues.

Modern Trade exhibited robust 26% growth in 9M FY25, contributing 6% to overall revenues, reinforcing our strong presence across major online platforms. Additionally, X-factor areas delivered a growth of 13% , highlighting our success in diversifying revenue streams. Our Exclusive Brand Outlet (EBO) network expanded to 35 stores as of 9M FY25, aligning with our retail expansion strategy to enhance market reach. Export revenue contribution stood at 3% in 9M FY25.

Amidst the current suboptimal macro-economic environment, our continued focus remains on customer centric approach and realigning sales strategies to ensure growth momentum remains imperative.”