Rupa & Company Limited (NSE: RUPA) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Vikash Agarwal — Whole-time Director
Sumit Khowala — Chief Financial Officer
Analysts:
Hitesh Agarwal — Analyst
Unidentified Participant
Harsh Desai — Analyst
Saloni Shah — Analyst
Aditya Sen — Analyst
Rehan Laljee — Analyst
Santhosh Kumar Varma K — Analyst
Sahil Bora — Analyst
Presentation:
Operator
Ladies and gentlemen, you have been connected for Rupa; Company Limited Conference Call. Please stay connected. We will begin shortly. Ladies and gentlemen, you have been connected for Rupa; Company Limited Conference Call. Please stay connected, we will begin shortly Ladies and gentlemen, good day and welcome to the Rupa; Company Limited Q3 and Nine Months FY ’25 Earnings Conference Call, hosted by Orient Capital.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Hitesh Agarwal from Orient Capital. Thank you, and over to you, sir.
Hitesh Agarwal — Analyst
Thank you, Manov. Good afternoon, everyone. I welcome you all to the earnings conference call to discuss Q3 and nine months FY ’25 results of Rupa and Company Limited. To discuss the results we have from the management, Mr Vikash Agarwal, who is the Whole-Time Director; and Mr Sumit Kovala, who is the CFO. They will take you through the results and the business performance after which we will proceed for a question-and-answer session.
Before we proceed with the call, I would like to mention that some of the statement mentions made in the today’s call may be forward-looking in nature and may involve risks and uncertainties. For more details, kindly refer to the investor presentation and other filings that can be found on the company’s website.
With this, I now hand over the call to the management for their opening remarks. Over to you, sir.
Vikash Agarwal — Whole-time Director
Good afternoon, ladies and gentlemen. On behalf of Company Limited, I would like to warmly welcome all of you to our results con-call. We appreciate your time and interest in reviewing our company’s performance and I trust that everyone had a chance to look over the financial results and investor presentation that has been uploaded on the stock exchange.
Now let me give you an overview of our company’s performance. For nine months financial year ’25, overall volume grew by 3%, driven by strong volume growth in the Economy and athleisure segment by 8% and 18% respectively. Revenue for the quarter stood at INR316 crores with EBITDA increase — with EBITDA increased 15% year-on-year to INR38 crores in-quarter three with margin improving by 170 basis-point, reflecting outcome of our disciplined approach towards cost management and operational efficiency.
Net profit for the quarter grew 14% year-on-year to INR24 crores with margin improving by 100 basis-points, underscoring the effectiveness and resilience of our business model. Modern Trade registered a robust revenue growth of 26% in nine months financial year ’25, contributing 6% to overall revenues, highlighting our strong presence on leading e-commerce platforms.
Additionally, our expected areas delivered a growth of 13%, reflecting the success of our revenue diversification strategy. After a subdued first-half, export revenue amounted to INR10 crores for quarter three versus INR6 crores in corresponding quarter last year. For nine months financial year ’25, exports thereby witnessed the growth upstick of 11%, contributed 3% of total revenues.
To enhance brand visibility, we have proactively engaged in strategic marketing initiatives, including celebrity collaborations, which have positive results. We invested INR46 crores in branding and advertising, representing 5.6% of revenues as of nine months financial year ’25. Our exclusive brand outlet count has been expanded to 35 stores, reinforcing our commitment to broadening our retail footprint.
Now regarding our guidance for ensuring quarter, we would like to mention that we are continuously realigning our sales strategies to ensure that growth momentum remains imperative amidst the current sub-optimal macroeconomy environment marked by moderation in growth and elevated inflation. We anticipate the revenue growth to be in the range of 8% to 10% for financial — for quarter-four financial — year ’25, primarily driven by increased volumes.
We anticipate our EBITDA to be in the range of 10% to 11% for financial year ’25 and I would also like to take this opportunity to inform you all that we have recently onboarded national sales ahead for our organization and we are optimistic that this recruitment will give us impetus in realigning our sales team with accelerated growth. With a clear focus on Long-term growth, we are excited about the opportunities ahead and remain committed to delivering lasting value to our stakeholders. With that, I would like to conclude my speech and would like to hand over the floor to our CFO, Mr to brief you about financial performance. Over to you,.
Sumit Khowala — Chief Financial Officer
Thank you, sir, and hello, everyone, for joining us for our quarter three and nine months FY ’25 earnings call. I will provide you brief overview of our financial performance for the quarter. On quarterly performance, revenue from operations for quarter three FY ’25 stood at INR316 crores, degrew by 0.6% year-on-year. The EBITDA for the quarter stood at INR38 crores as compared to INR33 crores same-period last year, registering a growth of 15% Y-o-Y.
EBITDA margin for the quarter stood at 12% for the quarter, up by 170 basis-points Y-o-Y. The net profit for the quarter stood at INR24 crore against INR21 crore in-quarter three FY ’24 with a growth by 14% year-on-year.
PAT margins for the quarter stood at 7.5%, up by 100 basis-points year-on-year. Coming to the nine months FY ’25 performance, revenue stood at INR824 crores, grew by 1% year-on-year. The EBITDA for the nine months stood at INR85 crores as compared to INR77 crores same-period last year, registering a growth of 10% year-on-year. EBITDA margin for the nine months stood at 10.3%, up by 90 basis-points year-on-year.
Net profit for the nine months stood at INR53 crores as against INR46 crores in nine months FY ’24, which has grown by 16% year-on-year. PAT margin for the nine months stood at 6.4%, up by 80 basis-points year-on-year. Cash generated from operations standard — stands at INR65 crores positive, which has been majorly utilized in reducing the debt.
We have made significant progress in reducing our debt and has achieved a cash surplus including investments amounted to INR30 crores as on nine months FY ’25. Our working capital cycle stands at 223 days as on nine months FY ’25.
With this, I close my — I closely means I conclude my speech and open the floor for question-and-answer session. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. We have our first question from the line of Sunid Joshi from NM Securities. Please go-ahead.
Unidentified Participant
Hello. Am I audible?
Sumit Khowala
Yes, ma’am.
Unidentified Participant
I was referring to your presentation. On Slide 33, we see that we have a presence in quick commerce space with Zepto and Swig. So are we planning to onboard more players in that sense?
Sumit Khowala
Yes. Recently, we have launched our brand in, Zepto and Blanket. And going-forward, we’ll more big commerce companies to enhance our visibility in the local areas.
Unidentified Participant
Okay, sir, another question was with respect to the Pragati scheme. So last quarter-end, you talked about it was operational in Rajasthan. So is there any further progress, any further states that you have added in that state?
Vikash Agarwal
Yes, we are going on a penetrating thing into more towns and more cities there. So — and it’s going quite well there. So we are hopeful in a near year’s time, we’ll be able to implement that in total state, in overall state?
Unidentified Participant
Okay, sir. Thank you.
Operator
Thank you. We have our next question from the line of Harsh Desai from ABC Capital. Please go-ahead.
Harsh Desai
Hi, sir. Thank you for taking my question. I just have a couple of questions. I just wanted to know what will be the advertisement spend for FY ’24, ’25 and for Q4 as well.
Sumit Khowala
So it will be in the — for FY ’24, ’25, it will be in the range of 6% to 7% and for the quarter it will — it will be also in the range of 6%.
Harsh Desai
Okay. Another question would be, I just wanted to know-how has been the traction in the segment in this quarter and what kind of marketing initiatives we have taken this quarter and how marketing is skewed across categories, if you could specify on that front also?
Vikash Agarwal
So we are building up a strong portfolio and are building up a strong team for the women’s segment. In women’s segment, we haven’t done so well so-far. But the idea is to come up with a whole range of new product, which is more economical and more acceptable to the market. And at the same time, we are building up a strong sales team also, which focuses on a — for the entire more into innerwear and a future also.
So — and as I’ve said in the opening remarks, we have appointed a national sales head also for the whole of organization and we are sure and it will help us to have better productivity of team and focus on the — on all the segments of the company.
Harsh Desai
Okay. Thank you so much. That’s it from my side. Thank you
Operator
Thank you. Thank you. We have our next question from the line of Mamta Agarwal from ABS Investments. Please go-ahead.
Unidentified Participant
Hello. Thank you for the opportunity. Sir, my question is, what are our capex plans for the remaining of FY ’25? And do we have any plans to venture into new segments?
Vikash Agarwal
So capex plan is around — really is around INR30 crore to INR40 crores what we do INR15 crores to INR20 crores and new segments we are getting into rain suits, rain coach and all. So there’s a new segment which will be launching this quarter. And it’s where you are strengthening the portfolio as well in the kids range.
Harsh Desai
And sir, what kind of volume growth you are expecting to be in FY ’25?
Vikash Agarwal
For a yearly basis around
Sumit Khowala
FY ’25, for quarter-four, our guidance is around 8% to 10% and yearly it comes around 5% to 6%.
Unidentified Participant
Oh, that’s great. Sir, my last question is what is the EBITDA guidance for FY ’24, ’25 and specially for Q4
Sumit Khowala
Both in the range of 10% to 11%
Unidentified Participant
Okay. Great, great. Fair enough. Thank you, sir.
Operator
Thank you. Ladies and gentlemen, you may press star and want to ask a question. The next question is from the line of Saloni Shah from SK Investment. Please go-ahead.
Saloni Shah
Thank you, sir for the opportunity. I have two questions. The first one being, how many stores are we planning to open in the 4th-quarter? And can you give us an amount range as to how much we plan to spend on the opening — on opening each EDOs
Sumit Khowala
Currently we have 35 stores. We are planning to open 12 to 15 stores in this quarter-four of FY ’25. And most of the stores are on the FO/FO model. So ideally the store cost is around INR10 lak to INR12 lakh and it will be beer by franchisee only.
Saloni Shah
Okay, sir. And my second question is, sir, can you throw some light on the demand trend trends that are shaping up in the mass segment as well as the premium segment for the rest of FY ’25?
Sumit Khowala
We expect that the demand for the premium segment to be grow in-quarter four that currently means if you see that economy segment has grown well and premium is also performing well. So going-forward, the raw-material prices has been stabilized and we expect that premium segment and other higher-margin business will grow in coming quarter and years to come.
Saloni Shah
All right, sir. Thank you so much. Thank you.
Operator
Thank you. A reminder to all participants, you may press star and want to ask questions. The next question is from the line of Aditya from RoboCapital. Please go-ahead.
Aditya Sen
Hi, thank you for the opportunity. Sir, the strategies in-line. Considering those, what could be the
Operator
Organ be a little louder?
Aditya Sen
Yeah. Am I audible now?
Sumit Khowala
Yes.
Aditya Sen
Yeah. So I was saying considering several fact several growth factors in-line for the next two years, what could be the growth guidance from your end?
Sumit Khowala
And growth guidance or growth drivers,
Aditya Sen
Growth guidance, revenue growth guidance for next two years.
Vikash Agarwal
It would be in the range of 12% to 15%
Aditya Sen
And what would be the ballpark EBITDA?
Vikash Agarwal
It would be in the range of 11% to 12%,
Aditya Sen
11% to 12%. All right. Thank you.
Operator
Thank you. A reminder to all participants, you may press star and one if you wish to ask a question. I repeat, you may press star and one to ask a A question. The next question is from the line of from Equitree Capital. Please go-ahead.
Rehan Laljee
Hi, thanks for the opportunity. Am I audible?
Vikash Agarwal
Yes.
Rehan Laljee
Hi, sir. So first of all, could you help me understand the volume for the quarter Y-o-Y only for the quarter.
Vikash Agarwal
Next quarter volume is a — volume growth is 1%.
Rehan Laljee
Correct. But as I can see in the P&L, the subcontraction expense has grown by about INR6 crores. So if we reported flattish top-line and 1% volume growth, so can you help us understand the INR6 crores
Vikash Agarwal
The expenses is basically the part of the production process and whatever subcontract expenses — contracting expenses incurred is added to the closing stock. So seeing the percentage increase or decrease, it reflects on the closing stock.
Rehan Laljee
Okay. So then it becomes broadly same, but INR6 crores delta on a Y-o-Y basis with no volume growth. I mean, can you help us to be something different.
Sumit Khowala
Volume growth will be totally dependent on-sales.
Rehan Laljee
Okay. So this is basis production.
Sumit Khowala
Yeah.
Rehan Laljee
Okay. Second is that in Q2, you had mentioned that there is a delayed thermal situation and you’re expecting Q3 and Q4 to have ramp-up of thermal sales, but the — like we’ve not seen that play-out in Q3.
Sumit Khowala
In-quarter — in-quarter three, thermal has — in thermal has thermal has grown and the sales growth in-quarter three for the thermal is around 20%. So thermal has grown well. And apart from that exports and other modern trade business has grown well.
Vikash Agarwal
But at the same time, I would like to highlight, thermal did grow 20%, we expected a much higher-growth. But as we could see the winter has also was not so strong as you all expected. The expectation was and forecast for winters will be very strong, which came quite late and now we see this is early or end of Jan early-February, it’s quite hot now. So the season has not been so strong for winters.
Rehan Laljee
Okay, because the commented — the commentary from the competition has been significantly different where they even had Q2 sales have some percentage of thermals kick-in and Q3, they expected a significantly better ramp-up in thermals?
Sumit Khowala
Yeah, in thermals.
Vikash Agarwal
No, no, no. We have a different experience and we got a very strong booking impact for thermals and we expected a growth of around 30% to 40% and where we landed to just 20% and we expected a quite strong season, which because of bad winter, it didn’t work-out so well.
Sumit Khowala
And for nine months, the growth of the thermal is flat.
Rehan Laljee
Exactly my point, because in the competition I think that they received even in Q2, while — because Q3 is bulk of where you do your thermal sales. And in Q2, you generally sell — you get to see some order shape up, right? And we all expected some form of commentary on that, which you said is shaping up as well. I think in Q2 con-call, you mentioned your guidance for the full-year will still be
Vikash Agarwal
In very strong as we mentioned, for our all, we do thermal conference — for booking conference all-India and we’ve got a very strong booking because everybody expected to be very strong winter forecast. And as we all know, winter was not so strong at all. And it was a very short-time.
Rehan Laljee
Okay. Second is that on the gross margins, I think you’ve reported a 29% gross margin for the quarter. So can you help us understand why is that significantly lower than the other competitors who report 32% 33% gross margin and they claim it to be sustainable because even if we focus — even if we focus on the mass-market, we’re still not reporting great volume growth like them.
They’re reporting high single-digit volume growth. And if you claim that we are focusing on the semi-premium or mid-premium segment, our ASPs and our gross don’t show that. So can you help me understand this down?
Vikash Agarwal
It’s just that if you see the volume for the economy — so economic segment is higher than the overall volume growth of the company, okay. So it’s not that it should be even out when mid-premium and premium segment will perform, we anticipate that going-forward, both these segments will outperform and you will find that there is a scope for improvement in gross margin, say, by 1% or 2%.
Rehan Laljee
Okay. Currently for nine months and that’s still not making it what they are already doing. That’s my question to you that it’s clear that your revenue is competing us
Sumit Khowala
With our competitor, but that is the fact I am — I can only with my company.
Vikash Agarwal
The competition in fact, their rate maybe it’s in terms of at leasure of women’s where they are doing quite well and all, which — which we are not doing so-far.
Rehan Laljee
So what is the difference and why are we lagging behind? What’s the difference in execution that we are seeing?
Vikash Agarwal
So it’s difficult to explain. We are trying everything. And as mentioned, probably we are lacking a strong sales head, which we finally got one and already on the role. So I’m sure in coming time, we’ll be able to align the team properly and get a better output of the team which will help focusing on different segments like women, athleisure and all which are more, more retail or which is more of a marketing range than just a push range.
Rehan Laljee
Okay. And how are you seeing your Q4 shape up overall because you do bulk of your sales in Q4
Vikash Agarwal
So Q4 bulk of sales because that’s the summer time, the peak time for our — of our category of our range and we expect a growth of at least 8% to 10% as mentioned. And it’s a time is a festive time. We have lot of festivals like holy eat, peak summers are there and in a way people tend to buy into summers a lot.
Rehan Laljee
So that 8 to 10 will be again volume or will it be net growth?
Sumit Khowala
It would be value, yeah.
Rehan Laljee
So this is including volume or net value.
Sumit Khowala
It’s net value and volume will be, I think if raw-material price continues to be same, then it would be around volume growth will be around 10%.
Rehan Laljee
Okay. Thank you very much. And at the full-year basis, you’ve closed your top-line at about 5%, 6% growth.
Sumit Khowala
Yes.
Rehan Laljee
But your guidance was 12% to 15%, I think to the last participant.
Sumit Khowala
In last quarter, we have given a guidance that the quarter — second-half will be better than first-half and will grow 10% over the second-half.
Rehan Laljee
Okay. Got it.
Vikash Agarwal
Of course, our revenue growth for the overall year was a bit strong, but as we see overall macroeconomy, it’s not doing so great and hence for our is also a bit a bit lower than what we expected.
Rehan Laljee
No, because broadly what we’re trying to understand is that is the industry as a whole, we are hearing from you that there is headwinds and there are some demand challenges and we’re reporting — I think we reported about 3% kind of volume growth on a nine-month basis.
But if you look at your other competitors across-the-board, they have already achieved significantly higher-volume growth already. And even if I extrapolate your Q4 number and assume that, that figure is achievable, we’re still lacking already basis their nine-month figures. So are we — are we losing market-share or how are we supposed to look at it from that point?
Because then are we — where are we — where are we losing? Why are we not getting right there up the alley?
Vikash Agarwal
So absolutely, this is what — well, our job is to build-up a strong team and see where we are lacking. So we understand a few areas where we need to cover-up. So something which we were strongly taking was a strong sales, seems strong sales head to drive sales into secondary. Our secondaries are very important.
So we have got a very strong profile. So this is particularly one role what we are missing, we have got a very strong IT head. We have got a very strong export head. We are appointing again a very strong retail head. So in terms of building up a team, this was the last leg, which was lacking and I’m sure what you are talking, even we understand that, but in we are quite confident in coming times we’ll be able to overcome the will be.
Rehan Laljee
Okay, thank you so much.
Operator
Thank. We have our next question from the line of Samil Shah from Paris Investment. Please go-ahead.
Unidentified Participant
So wanted to know out of our total revenues, how much is it coming from online apps and portals? 6% is the total contribution from modern trade. Okay, 6% and has it grown if I were to compare
Sumit Khowala
Nine months-to grown by 26%.
Unidentified Participant
Okay. Okay. And a couple
Unidentified Participant
Of years back, we were doing EBITDAs in the range of 18% to 20%. So I
Sumit Khowala
Was couple of years back.
Vikash Agarwal
Yeah.
Unidentified Participant
Yeah, two consecutive years, we had done an EBITDA of 18% 20% yeah. So just wanted to know also was it basically because of the raw-material, I mean cotton prices or and can we achieve the similar EBITDAs in future.
Vikash Agarwal
If yarn price moves upward significantly, then there will — we are sure that EBITDA — EBITDA margin would be in the range of around 17% to 18%.
Unidentified Participant
So can I know — I mean currently what I mean what is the range of yarn prices?
Vikash Agarwal
INR2650. But in 2021, ’22, the yarn prices went to around.
Unidentified Participant
Okay. So it has dropped down from 470 to 265 270 currently.
Vikash Agarwal
Yeah.
Unidentified Participant
Okay. And in terms of guidance, I missed earlier participants’ reply. So in terms of guidance, what can we expect for FY ’26 in terms of revenue?
Vikash Agarwal
‘26% to 15% revenue guidance and EBITDA in the range of 11% to 12%.
Unidentified Participant
Okay. Okay. Thank you very much. That’s it from my side.
Operator
Thank you. We have our next question from the line of Santosh Varma from Vanish Ventures. Please go-ahead.
Santhosh Kumar Varma K
Hello, sir, am I audible?
Operator
Please go-ahead.
Santhosh Kumar Varma K
Yeah. So I have a question regarding the EBOs. We have set-up already 35 ABOs. What has been our experience from the EBOs, the footfalls or which brands are selling better? Can you just give a color on the EBOs existing?
Vikash Agarwal
In EBOs, we are majorly focusing on outerwear and in FOFO model, we are almost on breakeven to profit and in this high-speed areas where we have opened Coco and Coco model, these are wins not under the — not in the breakeven. So the outerway — the focus is to outerwear and premium range basically. The focus is to enhance the outerwear and range and presence in our high-speed areas.
Santhosh Kumar Varma K
Okay, okay. So in the presentation, mentioned we’re going to add another 100 stores in FY ’26 FY ’26. So those — so entire focus of EBOs will be in premium and mid-premium segment and out of it majorly?
Vikash Agarwal
Yes.
Santhosh Kumar Varma K
Okay, okay. So for example, after FY ’26 for next one, two years, what is the plan for the EBOs? So we’re expecting higher margins or what is the entire plan for DBOs? And what — what is the revenue contribution we’re expecting from the ABOs, which we want to happen after two, three years kind of?
Vikash Agarwal
The revenue contribution won’t be like we haven’t planned that much, but 6% to 7% now with the revenue contribution from the EBU. But right now, we are in the building stage and probably by second-quarter of next year, we’ll have some concrete plan how much it can contribute to the EBU and how the overall balance sheet would look like?
Santhosh Kumar Varma K
Okay. Sir, can you give any color on our premium and mid-premium segment which — what is the performance and what is the — or what do you say experience from the market and we were able to sell more or what is the plan for the premium and the premium segment?
Vikash Agarwal
Can you — repeat that question?
Santhosh Kumar Varma K
Okay, okay. I’ll repeat it. So I want to understand what is the plan for the premium and nit premium segment? Thank you. Yes, sir. So for the innerwear, premium and lithium segment, what is the plan from now?
Sumit Khowala
The market is growing and we find that there is enough opportunity to grow both this segment, premium and mid-premium segment. So we are focusing on the geographical areas as well as steep and continuous development of our innerwear products. So we anticipate that going-forward, both this segment will grow.
Santhosh Kumar Varma K
Okay. Sir. And my last question is on our inventory levels that. So it’s currently I think 136 days kind of it is going on. So what is the expectation for next two, three years if both will go to 109, 120 from FY21 kind of proposition which you are in.
Sumit Khowala
Your voice is not audible
Santhosh Kumar Varma K
Okay one second is it better sir?
Sumit Khowala
Yes.
Santhosh Kumar Varma K
Yes, sir. My question is on inventory days. So what is the plan for that? For next one, two years, we’ll see the reduction in inventory days. Currently, 136 is what is in the presentation or how much time it will take for us to go back to 109 or 130 kind of inventory days, which is in FY ’21 and FY ’22.
Sumit Khowala
Finally, inventory days is around 145 days. So we are planning to reduce it to 120 days and later it — I mean later it reduce it to 100 days. So we are con we are having continuous focus on cost optimization and we believe that next one to year down the line, we’ll receive a 100 days.
Santhosh Kumar Varma K
Okay, okay, okay, sir. Thank you, sir.
Operator
Thank you. We have our next question from the line of Sahil from MNS Assets Associates. Please go-ahead.
Sahil Bora
Hello, good afternoon. Sir, I wanted to know what are our plans for expanding the modern retail stores and the central warehouses in FY ’26.
Vikash Agarwal
We are — we are continuously tying up with this modern retail stores and big, big mod big stores like D-Mart Reliance, Metro, more Spencers. So we are — we are focusing our approach to the large-format stores and major focus is South India.
Sahil Bora
Okay, sir. Thank you. Thank you and all the best.
Operator
Thank you. Thank you. A reminder to all participants, you may press star and want to ask questions. As there are no further questions, I now hand the conference over to Mr Kitesh Agarwal from Orient Capital for closing comments. Over to you, sir.
Hitesh Agarwal
Hello, Kash. Thank you. Thank you for joining us on the call today. I would also like to thank management for spending the time and answering all the queries today. We are the Capital Investor Relation Advisor to Rupa Dupa Company Limited. For any queries, please feel free-to contact us. Thank you, everyone, and have a great day. Thank you.
Vikash Agarwal
Thank you. Thank you so much.
Operator
Thank you. On behalf of Rupa Company Unlimited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.