La Opala RG - Aspirational consumer story


(Marathondreams) #125

Sitarganj expansion plan can be seen both ways. 1. It could be considered as management’s confidence of the future growth 2. It could be considered as “bravado” knowing current under utilization of the capacity.

La Opala is the domestic market leader with very good brand recall in the opalware market for last 25+ years. They also have 30%+ OPM for last few years. Now for the first time, they are facing competition from another domestic player i.e. Borosil (after acquisition of Hopewell ‘Larah’ brand). Borosil is planning to spend 30 Cr in Advertising and Marketing for FY 19. So unless La Opala drops their prices (which will reduce their margins), it would be difficult to grow sales from here on.

But market size is also increasing and La Opala has cash to fight the competition (by spending more on A&M as well as dropping prices). This means growth will come at a cost. Sometimes market leader tends to down play the competition and thereby allowing competitor to get “foot in the door” .I think lot will depend on how quickly La Opala accepts the competitive threat and take corrective steps.

Disclosure - not invested in La Opala. Invested in Borosil. Hence would be happy if La Opala ignores competition :wink: