Business of Repro India
Repro India is in the business of creating print services for its customers. Repro India’s services range from creative and designing, sourcing and procurement, printing and production, warehousing, assembly and dispatch to customer promotions. It is an end-to-end printing service provider, which caters to publishing houses, corporates, software companies etc. both in the domestic as well as export market. Repro has entered the export market in 2003-04 and it contributes to 30% of the total turnover. Notable customers include Microsoft, IBM Global Services, Sun Microsystems India Private Limited, Tata Steel Limited, Tata Consultancy Services Limited, Satyam Computer Services Limited, Wipro Limited, and Nokia.
The products and services include the following –
Publishers in India and abroad:
1. Publishing - educational and learning books, children retail books (range of formats), paper backs, catalogues, calendars and stationery,
2. Magazines, broadsheets etc.
Products and services for the corporate clients:
1. Shareholder Relationship Management programmes
2. Customer Relationship Management programmes.
Products and services for clients in the IT industry:
1. Packaged software
2. Educational manuals
Financials
The turnover of Repro India last fiscal was Rs.869.36 million and the profit for the same fiscal was Rs.44.58 million. The interest cost for the same year Rs.24.47 million which shows a high component of debt in the capital structure. The topline has been growing decently in the last three years with the revenues being Rs. 716.56n in the year ended March 31 2003, Rs.815.36m in the next year. However as can be seen though there is a rise in the turnover for each of these years the rate of growth or profit has declined.
However the profits have actually declined for the period with the profits being Rs.45.75m in 2003, Rs.36.21m in the next year and Rs.44.58m in the last year. The EPS last year has been Rs.5.67 down from Rs.5.91 in fiscal 2003. This variation is the result of the increase in the prices of raw material, employee cost and manufacturing cost. There is a conscious decision on the part of the management to increase the usage of imported raw material, which is driving the cost upwards. The percentage of imported raw material to total raw material was 15.07% in 2002-03 and has gone up to 20.69% in the last fiscal.
Objects of the IPO
Repro India plans to raise funds for the enhancement of its existing facility in Vashi and also to set up new capacity in the SEZ of Navi Mumbai. These are the main drivers of the money that will be raised through the IPO. The timelines for the expansion of existing facility is June 2006 whereas for setting up of a facility in the SEZ is March 2007.
Key Risk
One key risk that the company is facing is that there are multiple litigations that are pending against it, both criminal and civil and one of its directors also has certain criminal cases filed against him.
If these litigations prove are adjudged against the company it will take a hit on the profits.
Conclusion
The IPO is open from 28th November till 3rd December and the issue is priced between Rs.145-165. The P/E multiple for the same comes out to be between 25.57 and 29 before the issue of the new shares. Considering the fact that the earnings growth have not been consistent for the company and even the topline is not growing at this rate the issue looks over priced. Plus there are a slew of other IPOs where the investors can put their money at around the same time as this IPO. Looking at these factors one can avoid putting money in Repro India.
The following table shows the upcoming IPO that have been covered under this section and their status. You can click on any of these to read more about them.
