Repro India LtdQ2 FY16Printing & Publication

Repro India Ltd

Q2 FY16 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Revenue guidance

Category 3

→The company expects exponential growth in the e-Retail platform, moving from proof of concept to delivering significant sales.
→Book sales online are growing; titles listed increased from ~2.13 lakh to over 3 lakh, with weekly book sales increasing from 1,000 to 2,500 books per week recently.
→The potential market is huge with 2 lakh books sold daily online in India, and growth projected as more publishers join the content repository.
→There is an anticipated significant jump in volumes within 3 months from the date of the call (August 2016).
→Strategic focus on expanding capacity from current 6,000 books/day to 25,000-30,000 books/day with minimal investment, indicating volume scalability.
→Entry into new geographies possible once empaneled as a global vendor, with inquiries seen from Africa, South-East Asia, and UK.
→The shift to digital/e-book sales remains uncertain but the traditional print market in India is still growing steadily.

Category 2

→The company expects significant growth in e-Retail with exponential increase in book sales (from 1,000 books per week to 2,500 and growing).
→New businesses (e.g., e-Retail, Rapples) have better EBITDA margins and higher growth potential compared to traditional printing business.
→EBITDA margins in traditional print business are around 12-15%; new businesses could contribute significantly higher margins.
→Domestic sales momentum is expected to improve from Q3 and Q4 FY17, potentially achieving breakeven closer in coming quarters.
→Overall EBITDA expected to improve as new business contribution increases.
→Company is focusing on secure payments and credible customers (MNCs), reducing risk and improving financial health.
→No explicit EPS guidance provided, but strategic shift and growth in e-commerce driven book sales are likely to boost operating profits over time.

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→There is no explicit mention of any current or future fundraising through debt or equity in the transcript.
→The company discusses minimal CAPEX for ramping up the capacity of the "one book factory," mainly related to IT upgrades rather than physical assets.
→For setting up additional one book factory facilities, initial investments are expected to be small and mainly IT-focused.
→The investments already made include around $7-$10 million for IT and content repository (one-time investment) and about $5 million for physical infrastructure.
→The company intends to grow organically by leveraging existing infrastructure and partnerships, especially with INGRAM, rather than focusing on large-scale fundraising.

→The transcript does not explicitly mention a specific current or expected order book or pending orders figure.
→The company is focusing on growing its e-Retail business, which had reached about 2,500 books per week contributing approximately Rs. 10 lakh in revenues, with steady weekly growth.
→They are seeing increasing titles listed on e-commerce channels (over 3 lakh titles now) and expanding partnerships with publishers, providing a growing content repository.
→They mentioned efforts to engage with 4 large multinational clients like Oxford and Cambridge, aiming for global vendor empanelment leading to new business from countries like Mozambique, South-East Asia, and the UK.
→Payments receivable from overseas (Africa and others) are around $8-10 million, coming down gradually.
→Future growth is expected as online book sales in India rise, with scalable printing capacity up to 30,000 books per day.
→Overall, the company anticipates increasing order flow aligned with platform growth and new client tie-ups.

Yes

→Current capacity of the "one book factory" is around 6,000 books per day; can ramp up to 25,000-30,000 books per day with minimal investment.
→CAPEX to ramp up capacity to 25,000 books per day is minimal, mainly focused on IT upgrades, not on physical machines.
→Physical investment for the initial one book factory was approximately $5 million.
→IT and content repository investment is a one-time expense ranging from $7 to $10 million.
→Plans to set up additional one book factory facilities in other parts of India (e.g., Delhi or South) to service customers faster. Initial investments for new facilities expected to be small and scalable.
→Strategic investment focus on expanding the one book factory capacity and content repository infrastructure to scale e-Retail and digital printing business.
→No significant new CAPEX planned beyond IT and capacity ramp-up, with an emphasis on fast setup and minimal investment for future factories.

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