Monte Carlo Fashions LtdQ2 FY23Textiles & Apparels

Monte Carlo Fashions Ltd

Q2 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Revenue guidance

Category 2

→The company expects to grow its Rock It athleisure brand at a CAGR of 30% to 35% over the next 2 to 3 years.
→For the entire financial year, turnover from Rock It is projected at INR 18 to 20 crores, up from INR 8.3 crores last year.
→Consolidated revenue growth can outpace the economy by 2x to 2.5x if the economy grows around 7%.
→The company aims for a long-term revenue growth range of 15% to 20% or potentially higher, subject to economic conditions.
→New plant capex of INR 100 crores for home textiles is expected to add significant revenue with estimated asset turnover of 2x.
→Existing businesses and smaller brands like Luxuria, Rock It, and Cloak & Decker are targeted to grow at 30%-35% annually.
→Overall, the company is confident of maintaining margins while expanding revenues through brand premiumization and channel expansion.

Category 3

→Company expects to outgrow the economy by 2x to 2.5x if the economy grows at around 7%, indicating a strong revenue growth outlook.
→Targeted revenue growth for emerging smaller brands (Luxuria, Rock It, Cloak & Decker) is 30%-35% CAGR over the next 2-3 years.
→EBITDA margin band is maintained at 20%-22%, with confidence to sustain or improve despite current market challenges.
→PAT margins historically stable around 11%-12%, with expectations to maintain this level in the long term.
→Potential margin expansion possible due to premiumization and cost efficiencies as brand awareness increases.
→New Home Textile plant (INR100 crore capex) expected to boost EBITDA margins in that segment from ~11% to 22-23%.
→Growth plans supported by new store expansions and increased omni-channel presence.
→Overall, the company is cautiously optimistic on margins and earnings recovery with steady revenue growth.

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→No explicit mention of any immediate or planned new fundraising through equity or long-term debt.
→Current debt situation: Short-term debt increased to around INR 200 crores due to higher inventory and working capital; long-term debt tenure is around 6 years.
→Capex plans: Approx. INR 15-20 crores per year for existing business needs; around INR 100 crores for new plant (home textile business) over next 1-2 years.
→No specific comments on raising fresh debt or equity, emphasis on managing working capital and existing capex.
→Management remains confident to sustain EBITDA margin band of 20%-22% despite higher short-term debt.
→Any future financial plans may be clarified post trade show and Q2 results.

→The transcript does not explicitly mention the current or expected order book or pending orders for Monte Carlo Fashions Limited.
→The company is optimistic about revenue growth and maintaining EBITDA margins in coming quarters, with positive marketing and inventory management strategies.
→Early discounts were offered in the current quarter with inventory levels at retail stores below last year’s levels, signaling good stocking positions for upcoming trade shows.
→The management plans to share exact revenue guidance for FY24 after the trade show in Q2.
→Overall, the company expects a revival in sales and performance but no specific data on order book or pending orders is provided in the transcript.

Yes

→There are two types of capex planned for the next 2 years:
→ - For existing business requirements: INR 15 crores to INR 20 crores per year for machines and warehouses.
→ - For the new Jammu and Kashmir plant: INR 100 crores (total investment including land, building, machinery).
→The Jammu and Kashmir plant is expected to take 12 to 15 months to become operational after land registration, anticipated by mid-September.
→The new plant will improve home textile margins by eliminating the need to procure blankets from outside and abroad, targeting an EBITDA increase from current 11% to 22-23%.
→Asset turnover expected for the new textile business is 2x.
→No specific mention of other strategic investments beyond these capex items.

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