ICICI Direct's research report on Rupa and Company
Rupa and Company reported a strong FY21 performance in a tough business environment. The company showed agility in rejigging both its product portfolio and distribution strategies to benefit from the changing consumption pattern and stress faced by smaller unorganised players. Rupa reported strong consolidated revenue, profitability for Q4FY21 aided by a weak base, to some extent. Revenue for Q4FY21 grew 153% YoY to Rs 454 crore (Q4FY20: Rs 179 crore; YoY down ~ 55%). Gross margin expanded 247 bps YoY to 35.7%. Also, positive operating leverage owing to lower employee & other expense (as percentage of sales) enabled EBITDA margin expansion by 1556 bps YoY to 20%, EBITDA of Rs 90.6 crore (Q4FY20: Rs 7.9 crore). Hence, PAT was at Rs 65.9 crore vs. loss of Rs 4.3 crore in Q4FY20.
Outlook
We expect revenue, earnings CAGR of 14%, 9%, respectively, in FY21-23E. Owing to its strong performance and improved industry outlook, we revise our rating from REDUCE to BUY with a target price of Rs 575 (22.0x FY23E earnings).
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