Earnings Call Transcript - XNSE:RUPA 2026-11-03

Operator

Ladies and gentlemen, good day and welcome to Q2NH1FY27 Earnings Conference Call of Rupa & Company Ltd. hosted by MUFG in time. 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 this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Prajna Singh from MUSC in time. Thank you, and over to you, ma'am. Thank you.

Prajna Singh, Head of Investor Relations

Good evening, everyone. I welcome you all to the earnings conference call to discuss Q2 and H1FY27 results of Rupa and Company Limited. To discuss our results, we have with us from the management, Mr. Vikas Agarwal, the whole-time director, and Mr. Sumit Kowala, Chief Financial Officer. They will take you through the results, and then we will proceed to Q&A session. Before we proceed to the call, a small disclaimer. This conference may contain certain forward-looking statements about the company, which are based on beliefs, opinions, and expectations as on date of this call. The actual results may differ materially. These statements are not guaranteed of future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is also given on page 2 of the company's investor presentation. Now, I would like to hand over the call to Mr. Vikas Aguilar. Thank you, and over to you, sir.

Vikas Agarwal, Other

We continue to strengthen and scale up these areas with an emphasis on enhancing its product mix and increasing the contribution of these categories. These initiatives are expected to support sustainable revenue growth and drive improved profitability margins over the media for long term. Modern trade contributed 5% to an overall business, providing opportunities to strengthen and diversify our distribution channels. EBITDA for the Q2.26 crores, restring a year-on-year improvement of 15.9%, with an EBITDA margin of 8.1%. PACT for the Q2.17 crores, restring a year-on-year improvement of 17.4%, with a PACT margin of 5.3%. The improvement in operating profitability was supported by the company's continued focus on cost optimization and operational efficiency. During the quarter, the board also approved the appointment of Mr. Sunidmal Kalubdar as an independent director of the company. He retired as group executive president and CFO of Indicator Industries and currently served on the board of various companies including Ayathe Bhilla Fashion and Retail Limited and Vodakon Idea Limited. This appointment further strengthens the company's governance framework and brings additional experience and perspective to the board. We welcome him and look forward to his valuable contribution towards the company's strategic direction and long-term growth. Looking ahead, the company remains focused on driving sustainable growth through expansion of its distribution network, strengthening secondary stage and building a stronger stage leadership and execution team when comprising experienced industry professionals. In the second half of the financial year, We are hoping to achieve revenue growth of around 10%, with a return margin of around 9%. With this, I would like to hand away the call to our CFO, Mr. Sumit Kavala, to take you through the financial highlights of the quarter, and the first half of financial day 27. Thank you.

Sumit Kowala, CFO

Thank you, sir, and good afternoon, everyone. I will now take you through the key financial highlights for the period. For Q2 FY27, revenue from operations stood at 320.4 growth as again 320.2 growth in Q2 FY26 which remained flat on a year-on-year basis. Gross margin for the quarter stood at 27.6% as compared to 27.4% in the corresponding quarter last year. EBITDA for the quarter stood at 26% as compared to 22.4% in the same period last year, resisting a growth of 15.9% year-on-year basis. EBITDA margin for the quarter stood at 8.1%, improving by 110 basis points year-on-year. Net profit after tax for the quarter stood at 17 crore as against 14.5 crore in quarter to FY26, existing a growth of 17.4% year-on-year. Pat margin for the quarter stood at 5.3%, improving by 80 basis points year-on-year basis. Now moving to the first half performance, revenue Resisting from operations for H1 FY27 stood at 522.8 growth as compared to 504.1 growth in H1 FY26, registering a growth of 3.7% year-on-year basis. Gross margin for H1 FY27 stood at 31.4% as compared to 31.2% in the corresponding period last year. EBITDA for H1 FY27 stood at 41.7 crore as compared to 34.6 crore in H1 FY26, resisting a growth of 20.4% year-on-year basis. EBITDA margin for H1 FY27 stood at 8% as compared to 6.9% in H1 FY26. We remain committed towards improving profitability through better product mix, efficient channel management, focused investment in high growth categories, and disciplined cost optimization initiatives. With this, I conclude my remarks and open the floor for question and answer session. Thank you.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Raj Patel from RK Securities. Please proceed.

Raj Patel, Analyst — RK

Yeah, hi. Am I audible? Yes, sir. Yeah, so thank you for the opportunity. Just a quick question from my end. So I was keen to know what are the reasons behind the EBITDA growth, whereas we see there was a flat revenue.

Sumit Kowala, CFO

The main reason for improvement in EBITDA is because of the improvement in gross margin. Gross margin is improved by almost 30 basis points. Then there is a improvement, then there is saving in advertisement cost. Last year, it was 5.1%, this year it's 4.7%, and all other expenses contribute to the saving somewhere around 40 basis points. Consequently, the EBITDA is improved by around 110 basis points.

Raj Patel, Analyst — RK

Got it. That was all from my side.

Sumit Kowala, CFO

Thank you.

Operator

Thank you. The next question is from the line of Santosh Shetty from LGC Capital. Please go ahead.

Santosh Shetty, Analyst — LGC Capital

So, thanks for the opportunity. What is the growth in thermals for the quarter? And please guide on the order book for thermals.

Sumit Kowala, CFO

Thermal showed a good traction during the quarter and registered a growth of 30% plus in this quarter. And going forward, we hope that thermal will perform well and there will be good performance from the thermal by this year. All right. Thank you so much. All the best.

Operator

Thank you. The next question is from the line of Payal Sharma from DD Capital. Please go ahead.

Payal Sharma, Analyst — DD Capital

Hi, sir. Thanks for the opportunity. So, I have one question. Last three-four quarters, you were a debt-free company. Currently, you are debt-positive. So, please explain the reasons for this.

Sumit Kowala, CFO

If you see, from March 26 to September 26, there is an increase in working capital by almost 75%. So, in order to meet or serve the working capital requirements, our borrowing has been increased.

Operator

Okay, sir. Thank you so much. I understand. Thank you. The next question is from the line of Yash Mehta from Great Securities. Please go ahead.

Yash Mehta, Analyst — Great Wall Securities

Hello, everyone. So, I just wanted to know, like, what will be your KPEX plan?

Sumit Kowala, CFO

KPEX plan? Recently, our board approves a KPEX of around 83 crores, out of which around 58 crores will be used for development of factory-cum warehouse at West Penwall Hoosiery Park, And another 25 crore will be used for construction of warehouse and storage of accessories, for storage of accessories and dedicatedly for modern trade business. So it will cost around 25 crore. So total outlet will be 83 crore and it will be spent in another 2-2.5 years. Understood, understood.

Yash Mehta, Analyst — Great Wall Securities

Thank you so much.

Operator

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and 1 on their touchtone telephone. I repeat, anyone who wishes to ask a question, may press star and 1 on their touchtone telephone. The next question is from the line of Vinay Jadwani, an individual investor. Please proceed.

Vinay Jadwani, Analyst — Individual Investor

Yeah. Yeah, I would like to know that as you are guiding for a 10% growth in sales for the whole year, so March 26 sales were around 1260 crores. And the second half sale for the last year was around 750 crores. And keeping in mind the current first half sale, the max comes from 880 crores. So are you saying that in the second half, we are targeting a sales of around 880 crores?

Sumit Kowala, CFO

Yes. We are hopeful that we achieve a percent growth during the year.

Vinay Jadwani, Analyst — Individual Investor

Means 20% growth from the second half of last year?

Sumit Kowala, CFO

Yes.

Vinay Jadwani, Analyst — Individual Investor

And what about the competition intensity in the whosy market as of now? Is that subsided or it adds status quo?

Sumit Kowala, CFO

Yes, there is an intense competition going in the Ujiri market, where there is a price war going in the market on the scheme side, discount side, and also receivable granting credit days is a big challenge.

Vinay Jadwani, Analyst — Individual Investor

So, it hasn't improved from the last quarter, from the last call, the intensity is as it is, you mean to say. Yes, because many large investors are also losing patience. I have been checking the shareholding pattern. Abacus was holding around 4% state. It has come down to 2% actually. The sales is not growing. So, what kind of 2 to 3 year view here we can see in the company if you You can give some kind of a color on taste. For this year, as you are guarding 10% with an EBITDA of 9%. Earlier, the normal EBITDA margin used to be 13 to 14%. So, by when?

Vikas Agarwal, Other

This is not good to us. This is like, if you see the industry, industry is going through a little top competitive time. So, all the industry, all the major brands have this issue. So, I am sure in coming quarters things will improve.

Sumit Kowala, CFO

Yeah, yeah, yeah. From expecting high and all, so industry is going through a tough time.

Vinay Jadwani, Analyst — Individual Investor

Yeah, yeah, I understand that. A lot of industry today came with today's results. Their sales were down actually at 10%. We have maintained the sales for this quarter. Their sales were down actually by 10%. So, whole industry is facing the head when you mean to say. Okay. Yeah. Yeah. Okay. Perfect. Yeah. Thank you.

Operator

Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touchtone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touchtone telephone. As there are no further questions from the participants, I now hand the conference over to Ms. Pradhania for closing comments. Over to you, ma'am.

Prajna Singh, Head of Investor Relations

Thank you, everyone, for joining us on the call today. I would also like to thank the management for sparing the time and answering all the queries. We are MEFG in time. Investor Relations advises to Rupa and Company Limited. Thank you.

Vikas Agarwal, Other

Thank you.

Operator

Thank you very much. On behalf of Rupa and Company Limited that concludes this conference, thank you for joining us and you may now disconnect your lines. Thank you.