Digital Transformation Should Act as a Growth Booster for Repro India Limited

Summary

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• In FY22, Repro India Limited plans to focus on e-retail business and to address current short-term challenges being thrown up by pandemic.
• Management of costs should act as principal growth enabler for Repro India Limited.
• Healthy cash flows helped the company in shoring up infrastructure and has helped it in preparing for post-Covid opportunities that should emerge.

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Overview of Repro India Limited

What started as a small printing press in 1990 is now being counted as a comprehensive, international publishing industry services company. Repro India Limited works with publishers, retailers, bookstores, libraries, and schools to give dynamic solutions for complex and difficult content publishing challenges. The company works in both markets, domestic and international. It is because of this company’s expertise and network of connections, that today’s growth­-minded businesses set themselves free so that they can give their 100% focus on other, mission-­critical applications. The company’s presence spans across 4 continents from Asia and Africa to U.S. and U.K. It serves with its pioneering industry solutions and has been in this business for nearly 3 decades.

Growth Enablers of Repro India Limited

• Focus on e-Retail Business: Repro India Limited has been focusing on e-retail business and is gearing up to capitalize on huge e-retail opportunity. This has resulted in higher ratio of e-retail business in overall business mix quarter-over-quarter. The company has been increasing its reach with help of geographical replication, B2B and new channels. Apart from this, the company now plans to address current short-term industry challenges risen due to pandemic. Schools and colleges comprise ~80% of book industry and these are yet to be opened fully. This has resulted in stagnant demand from this market. E-retail is now an only significant vehicle for sales for publishers and supply chain has not yet reached its full flow. The company is able to see some green shoots in its e-retail business, while focus remains on growing business. E-retail business of the company saw its revenue grow by 40% to INR20.02 crore in 1Q22 on INR13.95 crore in 4Q21. Its EBIDTA grew to 5% in 1Q22 from 3% growth in 4Q21. Due to strong growth in revenues from e-retail, the company’s overall revenues saw 24% growth. It grew from INR62.12 crores in 1Q22 in comparison to INR50.18 crores in 4Q21. Repro India Limited exceeded pre-Covid revenue/volumes and it has achieved 7500+ books/day in 1Q22. E-commerce industry continues to change and this was seen in FY21. More than ever, businesses continue to create and/or improve e-commerce businesses to address needs and requirements of customers. As technology and people evolve, all businesses should focus on future to ensure they are present in global online marketplace. This need pushes businesses to make e-retail presence and make sure that consumers access products from anywhere. If we see trend in last few years, e-retailers have seen growth of transactions and they are offering range of goods and services not restricted by geographical boundaries. As newer and innovative delivery models crop up, consumers find shopping and ordering easy. India still has a tag of world’s fastest growing e-retail market. Total internet users in India should see exponential growth.

• A Silver Lining: While world still struggles from aftermath of COVID-19, there are wells of opportunity yet to be discovered and potential ready to be unleashed. For the company, this opportunity gets reflected in strong global demand for books. Since people avoid physical purchasing, Repro ‘one book’ Print-on-demand solution has now been seeing greater significance. It allows readers to purchase books at click of a button and allows publishers to access global market. All this is being done with minimal investment. The company has used period of pandemic to prepare and gear up for demand. It has worked upon infrastructure, enhanced technology platforms etc. Pandemic and internet revolution created online shopping a habit. This gave both buyers and sellers an opportunity to purchase and sell more. Sellers now use digital platforms to make their product visible to their customers. Social media marketing made sure that customers can be targeted and reached while maintaining accuracy. In India, there were 624.0 million internet users in Jan 2021. In 2021, number of internet users in this country increased 47 million or 8.2% on year-over-year basis. In India, there were 448.0 million social media users in Jan 2021. Base of internet and social media users should see a rapid growth.
• Capitalising on Sectoral Trends: India has a growing young population and it has higher literacy levels which makes it an established market of huge consumer of books. Estimates state that it is 6th largest book market in world. Behaviour patterns of Indian readers is seeing some major changes. In several ways, there has been a shift from being savers to spenders. While book market is seeing growth, online channel of book market should parallelly be able to see growth. One of direct outcomes of COVID-19 is that bookstores were shut for a long time. People have started buying books online, directly impacting Repro print-on-demand model. This model is focused on online sales.
• Adaption of Financial Prudence: The company has used various lockdowns to review people’s roles and responsibilities and reduce its overheads. With adoption of practice of re-negotiating contracts, the company was able to achieve better cost efficiencies. The company-wide collections focused on collecting significant amounts which were due, helping bring down debt and interest costs to a great extent. This has enabled healthier cash flow. In 4Q21, the company was cash positive. From perspective of business, the company focused on onboarding of publishers. Now, it is prepared for new opportunities that come. E-commerce revolution should continue to stay and buying product online is a new normal. As schools and higher educational institutions open, the company plans to gear up to meet demand. In addition to its existing one-book model, the company continues to effect multi-channel innovations like B2B portals so that sales can be improved. By focusing on technology, and maintaining relationships with various customer segments and focusing on specific product segments like higher education and international POD segment etc., the company has done its groundwork for improved margins. Strategic channel tie-ups continue to enable optimum pricing to customers.

Conclusion:

Repro India Limited continues to unlock potential of books-on-demand industry. This strategy enables the company to grow with publishers wishing to meet readers in all corners of world by involving optimum time and optimum cost. This company has invested in technology, infrastructure and skills. This makes sure that growth-oriented strategies that were adopted will continue to flourish and grow and will continue to act as a medium for growth in business for publishers. Focus of the company has always been and will continue to be on book aggregation, production and distribution to ensure that books reach readers anywhere in world. This enables the company to participate in process of spreading education, making content available to readers and seeing customer growth. Focus of partnering publishers to explore growth in global and Indian markets with support of technology platforms should support the company over long-term.

Stock price of Repro India Limited has seen a strong run up in just a little over 6 months. Between Apr 1, 2021-Oct 14, 2021, this stock has delivered a return of ~55.83%. The company should be able to continue this growth in stock price as it gears up to capitalize on significant e-retail opportunity and as it increases proportion of e-retail business in overall business mix quarter-on-quarter. Repro India Limited continues to increase reach with help of geographical replication. In FY21, there was continued focus on strengthening foundations of print-on-demand business. This was despite COVID-19 pandemic. While the company saw a slowdown that entire world went through, it sees opportunities that should open up once pandemic comes under control. The company exhibits confidence that measures it adopted should help in FY22. It plans to unlock potential that was built up during last 2 years.

In comparison to run up seen in Repro India Limited’s stock, Sensex delivered only ~22.54% return between Apr 1, 2021-Oct 14, 2021. To conclude, online revolution and cost management steps are expected to help the company achieve sound growth levels in FY22. A custom-built infrastructure, latest technology and trained manpower gives the company competitive edge.

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Exclusivity:

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Stock Disclosures:

The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Author Disclosures:

This Article represents the Author's own personal views. The Author did not receive any compensation and do not have any business relationship with any of the companies mentioned in the Article.