Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_IndianInnerwearSector_InitiatingCoverage.pdf
P o i s e d f o r g r o w t h o n i n h e r e n t b r a n d s t r e n g t h …
Rupa & Company (Rupa), one of India’s oldest innerwear players, is well
poised for growth on the back of multiple factors ranging from increasing
share of premium products to increasing retail presence, to name a few.
With a strong brand portfolio (all owned by the company), Rupa has been
a leading player in the mid-level innerwear segment. On the back of
economic exuberance, the company is increasing its presence in the
super premium segment as well. The share of super premium products in
the overall mix has increased from 1% in FY08 to 7% in FY11, thereby
leading to an operating margin expansion of 227 bps to 10.6% during the
period. Going forward, an increased retail presence will further increase
the visibility of the brand.
Presence across all segments with self-owned brand portfolio
Apart from its flagship brands – Rupa and Euro — the company has
created various brands. As on date, the company manages over 2000
stock keeping units comprising different products ranging from men’s and
women’s innerwear to casual and thermal wear. Going forward, the
company can leverage these brands to introduce new products, either
under the same brand or in the form of brand extensions.
Retail expansion to fuel topline growth
The company plans to expand its retail presence through an asset light
franchising model. This will not only ensure lesser burden on the balance
sheet but also boost the topline growth for the company. We expect sales
to increase at a CAGR of 13.4% during FY11-14E.
Foray into premium segments to boost operating margin
Rupa has gradually increased the share of super-premium products to 7%
of sales in FY11. Consequently, the EBITDA margin has also increased
from 8.3% in FY08 to 10.6% in FY11. With increasing share of premium
and super premium products and stabilising raw material prices, we
expect operating margins to further increase to 12.5% by FY14E.
Valuations
At the CMP, the stock is trading at 22.7x and 18.0x FY13E and FY14E EPS
of | 6.3 and | 7.9, respectively. Considering the growth potential in
earnings due to the retail expansion and improving financials, the stock is
trading in line with its peers in this segment.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_IndianInnerwearSector_InitiatingCoverage.pdf
P o i s e d f o r g r o w t h o n i n h e r e n t b r a n d s t r e n g t h …
Rupa & Company (Rupa), one of India’s oldest innerwear players, is well
poised for growth on the back of multiple factors ranging from increasing
share of premium products to increasing retail presence, to name a few.
With a strong brand portfolio (all owned by the company), Rupa has been
a leading player in the mid-level innerwear segment. On the back of
economic exuberance, the company is increasing its presence in the
super premium segment as well. The share of super premium products in
the overall mix has increased from 1% in FY08 to 7% in FY11, thereby
leading to an operating margin expansion of 227 bps to 10.6% during the
period. Going forward, an increased retail presence will further increase
the visibility of the brand.
Presence across all segments with self-owned brand portfolio
Apart from its flagship brands – Rupa and Euro — the company has
created various brands. As on date, the company manages over 2000
stock keeping units comprising different products ranging from men’s and
women’s innerwear to casual and thermal wear. Going forward, the
company can leverage these brands to introduce new products, either
under the same brand or in the form of brand extensions.
Retail expansion to fuel topline growth
The company plans to expand its retail presence through an asset light
franchising model. This will not only ensure lesser burden on the balance
sheet but also boost the topline growth for the company. We expect sales
to increase at a CAGR of 13.4% during FY11-14E.
Foray into premium segments to boost operating margin
Rupa has gradually increased the share of super-premium products to 7%
of sales in FY11. Consequently, the EBITDA margin has also increased
from 8.3% in FY08 to 10.6% in FY11. With increasing share of premium
and super premium products and stabilising raw material prices, we
expect operating margins to further increase to 12.5% by FY14E.
Valuations
At the CMP, the stock is trading at 22.7x and 18.0x FY13E and FY14E EPS
of | 6.3 and | 7.9, respectively. Considering the growth potential in
earnings due to the retail expansion and improving financials, the stock is
trading in line with its peers in this segment.
No comments:
Post a Comment