RUPA - RUPA & COMPANY LIMITED Share Price

In the earnings conference call held on May 22, 2025, Rupa & Company Limited's management, led by Whole-Time Director Vikash Agarwal, provided an optimistic outlook for the upcoming financial year. They reported a revenue of Rs. 1,239 crores for FY '25, with Q4 revenues at Rs. 415 crores, marking a 4% volume growth in Q4 and a 3% value growth for the year. The company expects revenue growth of 11% to 12% in FY '26, primarily driven by volume increases.

Key forward-looking points include:

• EBITDA margins improved, with Q4 margins at 15% and full-year margins at 10.5%. Management anticipates EBITDA margins to remain in the range of 10.5% to 11% for FY '26.
• The athleisure segment demonstrated impressive growth, with a 26% volume increase, and is expected to maintain its momentum in the coming year.
• The modern trade sector grew by 17%, contributing 5% to overall revenues, indicating a strong e-commerce presence.
• Exports increased by 24% to Rs. 31 crores, contributing 3% to total revenues, although geopolitical developments are being monitored as potential influences on global demand.
• The company has earmarked Rs. 63 crores for branding and advertising for FY '25, representing 5% of revenues, and plans to enhance this investment by 100-150 basis points in FY '26.
• A dividend of Rs. 3 per equity share is proposed, subject to shareholder approval, demonstrating commitment to shareholder value.

Vikash Agarwal underscored a focus on innovative product introductions and a consumer-centric approach to reinforce industrial leadership, with a long-term growth strategy aimed at creating enduring value for stakeholders.

Here are the major questions and their detailed answers from the Q&A session of the earnings transcript:

1. Raj Patel: "Can you just share what's the CAPEX for FY '26?" Sumit Khowala: "We have planned a routine CAPEX of Rs. 12 crores to Rs. 15 crores for FY '26, with no major CAPEX anticipated."

2. Raj Patel: "What are your plans to use the cash and cash equivalents balance of Rs. 24 crores?" Sumit Khowala: "With our healthy cash reserves and low leverage, we aim to pursue both organic and inorganic growth opportunities. We intend to utilize this cash for potential acquisitions as they materialize."

3. Riddhi Shah: "What is the marketing expense guidance for Fiscal Year '26?" Sumit Khowala: "We project our marketing expenses to be around 6% to 6.5% of revenue for FY '26, an increase from the current year's 5%."

4. Riddhi Shah: "What were the working capital days in FY '25 and the expected working capital for FY '26?" Sumit Khowala: "For FY '25, our net working capital days were 231 days, and we expect them to reduce by 10 to 20 days in FY '26."

5. Mamta Agarwal: "Are there any planned price increases for the current fiscal year?" Vikash Agarwal: "At this moment, we do not plan any price increases, as market conditions are stable and competitive. We'll monitor yarn prices closely."

6. Mamta Agarwal: "What is the anticipated overall business growth trajectory over the next two to three years?" Vikash Agarwal: "We aim for a consistent growth rate of 10% to 12% annually, with a volume growth target of 8% to 9% over the next two years."

7. Rehan Laljee: "What cost-cutting measures is the company implementing that have led to recent growth?" Sumit Khowala: "We saw a reduction in marketing expenses, administration costs, and a slight gross margin improvement, attributed mainly to a mix change. These measures are anticipated to be sustainable as we continue optimizing."

8. Rehan Laljee: "Are you considering expanding into white labeling or contract manufacturing to enhance control over margins?" Vikash Agarwal: "We are indeed looking into opportunities for white labeling, but our primary focus remains on our branded products, which yield higher margins."

9. Darshan Shah: "What are the working capital days for inventory and debtors, and how are you managing inventory?" Sumit Khowala: "In FY '25, inventory days were 128, and debtor days were 147. We utilize SAP for demand forecasting and have initiated a channel financing program for dealers to manage receivables better."

10. Darshan Shah: "What is Rupa's strategy concerning the Bangladesh situation and the corresponding revenue impact?" Vikash Agarwal: "Currently, we have no revenue from Bangladesh, but we see potential opportunities there in terms of exports. We are also focusing on diversifying into new markets beyond the MENA region."

These responses cover the major inquiries presented in the Q&A segment of the earnings conference call, providing key insights into the company's financial outlook and strategy.