Rupa & Company held a conference call on 18 February 2022 to discuss the results for the quarter ended Dec'21 and way forward. Mr. Vikash Agarwal – President Finance (Promoter Group) and Mr. Dinesh Kumar Lodha – CEO of the company addressed the call.

Highlights of the Concall

• The company sees robust demand in all its products. It has added multiple products in last 2-3 quarters.

• The company is making in-roads in previously untapped geographies (X-factor Markets) and also increasing its penetration in established markets.

• Men segment contributed around 83% of total revenues in 9MFY22 while women contributed 12% and Kids 5%

• Economy segment contributed around 31% of total revenues in 9MFY22 while mid-premium is 60% and premium is 9%.

• The company achieved sales of Rs 1630 crore which grew by around 36% in 9MFY12 from high potential focused markets of West Bengal, Maharashtra (Ex-Mumbai, Pune), Gujarat, MP, Chattisgarh, Western UP, Uttrakhand, Haryana, Himachal Pradesh, Punjab, Tamil Nadu, Andhra Pradesh & Kerala. The company is building a complete eco system of marketing team, retail & distribution network in the focused market. It expect growth of around 50% going forward from these focused markets.

• Government business is also a very solid oppurtunity and the company has started capping it terms of new production in all CSD (Canteen Stores Department) and CPC Central Police Canteen). The company plans to grow 5 times in 3 years. Though base is small but opportunity is huge.

• The company plans to take price increase of around 3-4% from around February 15th, 2022 in order to pass on higher raw material prices.

• The company has achieved around 17-18% growth rate in its womens wear brand “Softline” in 9MFY12. The company expects 30-35% growth in women category going ahead.

• The company sees huge opportunity in the athleisure segment. It has witnessed growth of around 27%-28% in 9MFY22 in the athleisure segment & expect robust growth rate in this segment going forward.

• The company expects to double the exports sales to Rs 38 crore in FY22 and plans to increase the exports sales by 5 times in the next 3 years. Its strategy is to export in its own brand to select countries

• In 9MFY22 modern trade channel contributed around 3% of sales, which grew by around 26% YoY. The company expects growth of 60% in FY22 as Q4 looks very strong

• The company plans to launch some specific products for the e-commerce channel & expects this channel to contribute around 10-11% of sales in the next 3-4 years.

• Advertising expense stood at around 3.5% of its sales in 9MFY22, which it plans to increase in Q4FY22 & expect this to be around 4.5% of sales for FY22

• Net working capital days improved to around 168 days in Q3FY22 from 179 days in Q2FY22. The company targets to improve its net working capital to around 150 days by FY22 end.

• At the end of Q3FY22, the company has 17 EBOs. Furthermore, it is expecting to roll out around 150 more EBOs in the next 2 years.

• The company expects revenue growth of around 18-20% & expects to maintain EBIDTA margin in the range of 18-20% for FY23 and maintain gross margin of around 35% plus going forward.