On a favourable base, sales grew by 56% YoY to Rs 514.7 crore (I-direct estimate: Rs 463 crore). On a pre-covid base, revenue recovery rate is the highest at 125% in Q2FY23 vs. 105% in Q1FY23. On an average Q2 revenues are ~75% of Q1 sales, however Q2FY23 sales stood at 87% of Q1FY23 revenues which is the highest ever compared to any pre-covid year.
Own manufacturing contribution (Bangladesh & India) has increased significantly over last two years and it is currently contributing ~66% of revenue in Q2FY23 (vs. 35% in Q2FY20). The Company is aspiring to achieve 70-75% of revenue from its India and Bangladesh plants in FY23. The management highlighted that the company had significantly curtailed its dependence of finished goods from China to
On the profitability front, gross margins improved 100 bps YoY to 48.1%, however continued to remain below pre-covid levels on account of significantly higher RM and freight expenses (65% crude based derivatives) and change in product mix (value segment contributed 37% currently vs. 22% in Q2FY20). Subsequently EBITDA margins stood at 13.9% (up 120 bps YoY, Q2FY20: 16%). Absolute EBITDA came in at Rs 71.6 crore (Q2FY22: Rs 41.8 crore, Q2FY20: Rs 66.2 crore). On account of healthy operational performance, PAT more than doubled to Rs 43.4 crore (131% of Q2FY20).
Higher push towards domestic and international travel and recovery in airline traffic has significantly perked up demand for luggage during Q2FY23. The strong growth was also owing to new launches across categories during the quarter (backpacks and luggage). Demand recovery continues to be more pronounced towards the mass category than the premium category which is also fuelled by market share gains from unorganised players. With softness in raw material prices, the management expects gradual improvement in gross margins in the ensuing quarter (gross margin range: 50-52%). To further strengthen its manufacturing capacity, the company has embarked on a Rs 100 crore capex plan to enhance its capacity by ~25% by FY24E. Company continues to have healthy balance sheet with net debt/equity ratio comfortably placed at 0.1x. We expect company to surpass Rs 2000 crore revenue mark in FY23 (FY20: Rs 1718 crore).
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