Repro India
Printing a sound growth story
The company is capitalising on the growing global trend of outsourcing printing and content management solutions to countries like India
| Buy | Repro India |
| BSE Code | 532687 |
| NSE Code | REPRO |
| Bloomberg | REPR@IN |
| Reuter | RPRO.BO |
| 52-week High/Low | Rs 184 / Rs 75 |
| Current Price | Rs 124 (as on 16th May 2008) |
Repro India is one of India’s most integrated end-to-end content & printing solutions company present across the value chain ranging from creative designing, pre-press, printing, post-press, assembly, warehousing, dispatching, database management, sourcing and procurement, localization and web based services.
Its current business involves printing and publishing services for Scientific, Technical and Medical Books, Trade Books, Digital Printing Books, Content Services, fulfillment, magazines, books, children's books, brochures, pamphlets, annual reports and investor communications for corporates and educational manuals for IT companies. The possibility of maintaining high margins is higher in this segment compared to the vernacular publishing segment.
The company also provides value-added printing and prints related solutions to major publishing houses, corporates and software companies (packaging and developing manuals).
The company’s Content Development Service offers content creation, enhancement and conversion through a comprehensive spectrum of creative services that address the need for specific graphic design as well as large volumes of graphic electronic workflows.
In the IT segment the company operates in four areas- Packaged software, Educational manuals, Technical manuals and Telecom kits. The company is the largest service provider in the area of printing online lottery tickets, which includes onsite printing, thermal paper solutions etc. In the corporate segment the company focuses in the areas of Customer Relationship Management (CRM) and Shareholder Relationship Management (SRM) in addition to which they create and print annual reports, calendars, corporate brochures, websites, customer and employee communication programmes for customers like Hindustan Lever, Colgate, Satyam, Tata Group and Wipro among others.
Well-placed to capitalise on the booming outsourcing business in digital printing
The company has leveraged it’s expertise in Digital Printing Business in order to capitalise on the growing opportunities both from international and domestic markets. The company is well poised to benefit from growing international trend of outsourcing print and related services from countries like India. With the aid of Digital Printing, Repro is able to meet demand for quick, reliable methods of producing, fulfilling and distributing content as expeditiously as possible without error and with utmost flexibility.
Global commercial printing industry is expected to grow to US $ 400 billion by 2009. Printing is one of the USA’s largest manufacturing industry generating revenues of USD 157 bn from printed products and services.
Printing Industry in one of UK's largest economic sectors at GBP 13 bn. The combined turnover of paper, printing and publishing industry is GBP 29 bn representing 3.5% of UK GDP Within the global market, USA and UK markets are very large and are looking at outsourcing There are huge World Bank funded education projects in the African Continent offering large opportunities to the developing countries like India.
Publishers in the UK and the US - the company's key markets - are looking at outsourcing a higher portion of their work to low-cost locations such as India. India is expected to get more of the high-end work in future. The children's books segment, where Repro has a good presence, is growing at a faster pace.
Gearing to increase its high margin export business
Export constitutes 45% of sales of the company. The Export market for the print industry holds exciting potential. The global market for the printing industry will see good growth with large market opportunities in the U.S., Europe, and Asia. According to the study, the global print market is forecast to grow by 18 % to US $ 721 billion by 2011, with fastest growth in developing/emerging countries. Digital printing processes, both electro photographic and inkjet, will continue to grow ahead of all other sectors.
The company continues to perform well in the area of exports by enhancing the business vertically with its existing clients and adding on new potentially large clients to its Client's list.
The company has set up a 100% Export Oriented Undertaking (EOU) under Software Technology Park (STP) Scheme at Mahape, Navi Mumbai by the name ‘Repro India Ltd. - Content Services’.
Elite list of clients
The company has invested in goodwill, with a client base of over 250 of the world’s largest corporates. The main clients include publishing houses such as Alligator Books, Heinneman Educational Books (Nigeria) Plc, Modern Publishing Inc, Orient Longman, Oxford University Press, Software companies like Microsoft Inc, Lenovo India, and Indian Corporate include Tata Steel, Nokia India, NIIT, Wipro and Satyam Computer Services.
Only authorized Microsoft replicator in India
In the IT segment almost 80% of revenue comes from Microsoft Inc for whom the company is the only authorized replicator in India.
Strong performance
For the nine-month ended Dec 2007, net sales grew 25% to Rs 118.67 crore. Operating profit also grew 24% to Rs 19.79 crore. PAT was up 63% to Rs 10.97 crore
Strong visibility
Although the printing industry in India has been growing at a CAGR of 14% over the last several years, only players like Repro having the capability to leverage the outsourcing opportunity can deliver impressive results. There is strong viability of the company’s business model since they have augmented their existing infrastructure, which includes the entire value chain covering the content center, digital pre-press (state of the art equipments from Heidelberg Harris & Muller Martini) high-end printing presses and post press equipment. Given the outsourcing opportunity in this space and considering the position of Repro relative to its competitors and relationships with large customers the business outlook going forward is promising.
Repro India’s initiatives like offering digital workflow and comparable technology, adding new clients in India and abroad, increasing the geographical spread, enhancing products and services vertically to existing clients and/or offering value added services, providing content services globally coupled with the global focus on education, the sustained growth in consumption of printing products, strong outsourcing trend and the advantages of global sourcing etc. give strong visibility to revenue & profitability in the coming years.
Attractive valuation
In FY 2008 we expect the company to register sales of Rs 159.76 crore and PAT of Rs 14.09 crore. On equity of Rs 10.48 crore and face value of Rs 10 per share, EPS works out to Rs 13.4. This is expected to rise to Rs 16.7 in FY 2009. The share price trades at Rs 124. P/E on FY 2009 EPS works out to just 7.4.
| | 0603 (12) | 0703 (12) | 0803 (12P) | 0903 (12P) |
| Sales | 115.89 | 130.89 | 159.76 | 194.91 |
| OPM (%) | 17.8 | 16.7 | 16.8 | 17.0 |
| OP | 20.65 | 21.92 | 26.78 | 33.13 |
| Other inc. | 0.61 | 0.46 | 1.24 | 1.61 |
| PBIDT | 21.26 | 22.38 | 28.02 | 34.75 |
| Interest | 3.22 | 3.57 | 4.56 | 5.70 |
| PBDT | 18.04 | 18.81 | 23.45 | 29.05 |
| Dep. | 4.20 | 5.58 | 6.42 | 7.71 |
| PBT | 13.84 | 13.23 | 17.03 | 21.34 |
| Tax | 5.13 | 3.79 | 2.94 | 3.84 |
| PAT | 8.71 | 9.44 | 14.09 | 17.50 |
| EPS* (Rs) | 8.3 | 9.0 | 13.4 | 16.7 |
| * Annualised on equity of Rs 10.48 crore; | ||||
| Repro India: Results |
| | 0712 (3) | 0612 (3) | Var. (%) | 0712 (9) | 0612 (9) | Var. (%) | 0703 (12) | 0603 (12) | Var. (%) |
| Sales | 36.48 | 32.97 | 11 | 118.67 | 95.16 | 25 | 130.89 | 115.89 | 13 |
| OPM (%) | 21.2 | 17.2 | | 16.7 | 16.8 | | 16.7 | 17.8 | |
| OP | 7.73 | 5.67 | 36 | 19.79 | 15.98 | 24 | 21.92 | 20.65 | 6 |
| Other inc. | 0.09 | 0.02 | 350 | 1.08 | 0.37 | 192 | 0.46 | 0.61 | -25 |
| PBIDT | 7.82 | 5.69 | 37 | 20.87 | 16.35 | 28 | 22.38 | 21.26 | 5 |
| Interest | 1.18 | 0.96 | 23 | 2.85 | 2.20 | 30 | 3.57 | 3.22 | 11 |
| PBDT | 6.64 | 4.73 | 40 | 18.02 | 14.15 | 27 | 18.81 | 18.04 | 4 |
| Dep. | 1.62 | 1.50 | 8 | 4.70 | 4.04 | 16 | 5.58 | 4.20 | 33 |
| PBT | 5.02 | 3.23 | 55 | 13.32 | 10.11 | 32 | 13.23 | 13.84 | -4 |
| Tax | 0.97 | 0.86 | 13 | 2.35 | 3.29 | -29 | 2.28 | 4.88 | -53 |
| Deferred Tax | 0.00 | 0.01 | -100 | 0.00 | 0.11 | -100 | 1.51 | 0.25 | 504 |
| PAT | 4.05 | 2.36 | 72 | 10.97 | 6.71 | 63 | 9.44 | 8.71 | 8 |
| EPS* (Rs) | 15.5 | 9.0 | | 14.0 | 8.5 | | 9.0 | 8.3 | |
| * Annualised on equity of Rs 10.48 crore; | |||||||||
BigGains !!
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