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20% Drop in Rupa & Co Shares Due to Poor Q4 Results and Management Exit

Following a disappointing earnings report for the quarter that ended in March and an abrupt reorganization of the company's top management, Rupa & Co. shares had their largest one-day decline ever during the early trading hours of Tuesday, May 24. Following the revelations, Rupa & Company shares fell over 20% to Rs 414 at 10.25 am on Tuesday as a result. At 412.5, the counter was slightly below the circuit limit. On Monday, the scrip closed at Rs 515.60.

The company reported a 9.4% increase in net profit for the entire fiscal year 2021–2022 to Rs 191.8 crore from Rs 175.3 crore in the prior fiscal. During the FY222, the company's revenues increased 12.3% to Rs 1,474.1 crore.

On Monday, May 23, 2022, the business also released its Q4 earnings. On a consolidated basis, Rupa & Company's net profit decreased by 25.2% to Rs 49.30 crore in the fourth quarter of March 2022 compared to the fourth quarter of 2021, while total revenue increased by 0.3% to Rs 455.50 crore.

In the fourth quarter of March 2022, profit before tax (PBT) decreased by 22.7% year over year to Rs 68.20 crore. In the fourth quarter of March 2022, EBITDA decreased 18.1% YoY to Rs 74.20 crore. In comparison to Q4 March 2021, when the EBITDA margin was 20%, Q4 March 2022 saw an EBITDA margin of 16.3%. For the fiscal year that concluded on March 31, 2022, the board recommended a dividend of Rs 3 per equity share.

During the earnings call, management explained that higher raw material costs, labor costs, and advertising costs were to blame for the decline in EBTIDA. Despite a 10% decline in volumes as a result of price increases implemented by the corporation, revenue growth remained constant. Although the company raised prices, it did not pass the whole increase in raw material costs on to customers, which caused a decline in EBITDA and net profit. The business over the phone further explained that due to larger inventory, subcontracting costs were higher this year than last.

The company also fell short of its 18 percent sales growth forecast for the entire fiscal year and saw market share decline.

One of India's top knitwear manufacturers, Rupa creates innerwear, casual wear, thermal wear, and sleepwear for adults, women, and children.

According to Rupa & Company, Dinesh Kumar Lodha left the company for personal reasons, but he is still participating in the hiring of the new CEO to ensure a smooth transition.

Ramesh Agarwal, a member of the founder family, resigned from his position as CFO to free up his time from routine daily tasks and utilize his wealth of knowledge in the overall expansion and transformation of the business. He will continue to serve as the company's full-time director and lead it.

Beginning on June 1, 2022, Sumit Khowala will take Agarwal's place as the new Chief Financial Officer of the organization (important managerial staff).

According to the company, Agarwal will continue to serve as a full-time director and lead the organization. The business has elevated Sumit Khowala, who has been there for more than ten years, to the position of chief financial officer in place of Agarwal.

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