Growth takes breather in FY14- Rupa :: ICICI Securities, link

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Growth takes breather in FY14
Rupa’s revenues, EBITDA & PAT have grown at a healthy CAGR of 18%,
41% and 46%, respectively, over FY09-13. However, FY14 has been a
difficult year with revenue, EBITDA and PAT growth slowing down to
9.1%, 3.7% and 2%, respectively. The EBITDA margin for FY14 has seen
a decline of 75 bps YoY.
Planning to enhance presence in premium segment
Rupa, a branded innerwear player, has created and nurtured over 100
brands and manages a portfolio of 6000 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 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.
Pan-India presence enables company to cater to diverse customers
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.
Enhancing product portfolio to have higher wallet share
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.
Low volumes in stock prevent us from assigning rating
With an increasing share of premium products, the operating margin has
improved from 8.2% in FY07 to 14.4% in FY14. The year FY14 has been a
difficult year and the company has seen a single digit growth in revenue
and PAT. We expect revenue and earnings growth to remain moderate in
FY15E, FY16E. However, we refrain from rating the stock considering the
abysmally low volumes and negligible trading activity.

LINK
http://content.icicidirect.com/mailimages/IDirect_Rupa_Q2FY15.pdf