Rupa & Co shares fell as much as 20 percent during early trading on Tuesday, May 24, the largest one-day drop ever, following weak earnings pressure for the quarter ended March and a sudden reshuffle in the company’s top management. Following the developments, shares of Rupa & Company fell nearly 20 percent to Rs 414 at 10:25 am on Tuesday. The counter was just shy of its circuit cap at 412.5. The scrip settled at Rs 515.60 on Monday.
For the entire fiscal year 2021-2022, the company reported an increase in net profit of 9.4 percent to Rs 191.8 crore, from Rs 175.3 crore in the previous fiscal year. The company’s revenues increased 12.3 percent to Rs 1,474.1 crore during FY222.
The company also released its Q4 results on Monday, May 23, 2022. On a consolidated basis, Rupa & Company’s net profit decreased 25.2 percent to Rs 49.30 crore on a 0.3 percent increase in total revenue to Rs. 455.50 crore in Q4 March 2022 as compared to Q4 March 2021.
Pre-tax profit (PBT) declined 22.7 percent year-on-year to Rs 68.20 crore in the fourth quarter of March 2022. EBITDA declined 18.1 percent year-on-year to Rs 74.20 crore in the fourth quarter of March 2022. EBITDA margin was 16.3 percent in the 4th quarter of March 2022, down from 20 percent in the fourth quarter of March 2021. The board of directors recommended a dividend of Rs 3 per share for the fiscal year ended March 31. 2022.
The reason behind the decline in EBTIDA was higher raw material prices, personnel costs and advertising costs, management said on the earnings call. Revenue growth remained flat despite a 10 percent drop in volume due to company price increases. The company pushed through price increases, but did not pass on the full increase in raw material costs to consumers, leading to a decline in EBITDA and net profit. The company also clarified during the call that subcontracting costs were higher compared to last year due to higher inventory.
For the full fiscal year, the company also missed its revenue growth forecast of 18% and also witnessed a loss of market share.
Rupa is one of the largest knitwear brands in India producing indoor wear, casual wear, thermal wear and sleepwear for men, women and children.
Rupa & Company said Dinesh Kumar Lodha has resigned for personal reasons, and he is and will be part of the selection process for the new CEO to ensure a smooth transition.
Ramesh Agarwal is part of the promoter family and his resignation from the position of CFO is to free up his bandwidth from regular day to day operations and leverage his rich experience in the overall growth and transformation of the company. He will continue to lead the company as a full-time director.
Agarwal will be replaced by Sumit Khowala, who has been appointed as the company’s new CFO (key personnel) from June 1, 2022.
The company said Agarwal will continue to lead the company as a full-time director. In place of Agarwal, the company has promoted Sumit Khowala to Chief Financial Officer, who has been with the company for more than a decade.
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