- 24 May 2022
- ICICIdirect Research
RUPA REPORTS DECLINE IN MARGINS, PROFITABILITY
RUPA - 230 Change: -1.02 (-0.44 %)News: Rupa and Company reported a flattish revenues on a YoY basis to Rs. 455 crore in Q4FY22. Gross margins declined 122 bps to 34.4%. EBITDA margin declined by 367 bps YoY to 16.3% owing to other expense to sales ratio increasing by 151 bps YoY to 13.4% and Employee cost to sales ratio increasing by 84 bps YoY to 4.8%. Absolute EBITDA declined by18% YoY to Rs. 74 crore. Higher interest expense and increased tax rate (27.7% in Q4FY22 vs 25.4% in Q4FY21) led to net profit being lower by 25% YoY to Rs. 49.3 crore
Views: Flattish revenue growth with decline in gross profit margin and with expenses reverting back to normal has led to decline in EBITDA margins of the company. The decline in gross margin is mainly due to increased raw material (cotton) prices. The key monitorable will be the ability of the company to take calibrated price hikes to improve its gross margin profile. Also progress on improving the share of premium products which has remained stagnant over last few years would be critical in improving the margin profile of the company
Impact: Negative