Promoters are again selling !!
And there is someone buying as well. Related to Sunidhi Securities. This name was there in the AR in top 10 shareholders.
it’s an inter transfer from one promoter to another.
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hii guys…
Does any one had idea about sharing between Amazon Ingram and Repro .???
If amazon charges around 13% (Ingram can charge the same %) then Repro k liye kya bachega???
@kunal28parikh @suru27 both seniors if you have any idea ??
Promotors selling raises serious question on the company specially when valuations are highly stretched …
Repples will be the future of education,…
Isn’t it steps for moving from blackboard to digit one? Where does Repro is in picture in this?
When teachers will use digital blackboard then students will also move from notebook to device like repples…
In short it’s starting of the edge repro has predicted few years earlier…
We should learn to differentiate between signal and noise is all I can say 
Lets think next 14 quarters and beyond ( 2022) , @25% quarterly run rate BOD sales will double 4 time ( four doubles back to back = 256 Cr) from current 16 crore a quarter, that works out to be more than 1000 crores annual revenue from BOD itself, assigning 10% NPM for BOD business, BOD profit will be 100 Cr, which translates into EPS of 100 per share and certainly, you will agree to the fact that business with negative working capital, asset light, moderate moat, long runway with great management band width in terms of passion , integrity and capability will not trade at a PE of 7. Considering it will trade at 40 PE, the price should quadruple in much less that 14 quarters since market is discounting machine. Please do point out where I am wrong.
Disclosure: Invested at lower level, currently 20% of portfolio.
Though I m heavily invested in this counter
- Basis for 25 percent quarter on quarter growth for 4 years, then, someone can argue for 10 years. Assumptions are good but need strong validation. Online book sales market is 3k crores if I remember and repro expects it to be 8k crore . I am skeptically of such a huge jump in 4 years specially if one seems how with less promotions e commerce growth has fallen from 60-70 percent to a mere 18 percent . So, let’s say if e commerce continue to grow at 18 percent and I f books grow at 20% ( few points higher higher than overall e-commerce ) then the whole market size after 5 years will be 7.5k crores. Repro is not yet aggressively working in high volume low margin books marker So. Let us say this is 60 percent of market , so, key market comes to .4 of 7500 which is 3k crore. Let’s us say they take 10 percent of this market (current overall market share is 1.5 percent ) at 12 percent pat margin which turns to 300 cr revenue and 36 cr pat. The remaining 4500 cr let us say they take 5 percent of market at 8 percent margin which is 225 cr revenue and 17 cr pat . So a total of 535 cr revenue with 53 cr profit . Let us say they did 20 percent better than this still turns out to be 65 cr profit. Key will be to understand unit price cost economics of competition vs Repro if with increasing volume , continuation of single point tie up with Ingram , they can build ecnoomies of scale n become price competitive in high volume low margin segment n kill competitors . This is possible with continuation of single point partnership of Ingram in India, low working capital decent margin continuation of execution. But why it may not happen
A. If the whole supply chain of online book delivery is analysed , among repro, Ingram n Amazon, the weakest moat is with repro n strongest with Ingram n Amazon . Infact I would say what repro brings to the table is a professional mgmt in an unorganised sector and not more than that compared to other two and hence they are weakest among 3 and whenever there would be a margin pressure on other two , it’s Repro which will face the brunt
B. As e commerce is not making money , it would try to screw vendors ( already happening , check 2 days back et now )
C. The kind of growth we are projecting means in 7 - 10 years repro ll b a monopolistic business which means more bargaining power. E commerce players like Amazon n Flipkart ll hate to see that business scenario n will play their cards some or other way
D. If everything would be been so rosy , the key of lock is in Ingram’s hand, why Ingram did not participate in preferential issues
I think before we think of making the most bullish assumption, we must factor in the risks of why that bullish projection can grow wrong .It always helps us to avoid bigger losses when things go wrong and nothing is permanent. Risks are unocuured events but once they occur , the game changes. Frankly with such businesses, I would like to take the conservative scenario and if it passes threshold expectation then stay invested and then let execution build the business strength unless some of business strength points get crushed over a period of time. These are just numbers and we can go wrong by a big margin but even if with most conservative estimate we cross our expectation threshold then nothing better. As Keynes says, better to be roughly right than precisely wrong and that’s where I get my comfort keeping assumption intact. Disc: invested with sizable allocation n would be happy to be proven wrong
I think now slowly we are getting a glimpse of financials so that we can build competitive vs repro cost economics to try to peep in future. Waiting eagerly for q4 FY 18 financial statements to make an attempt over that
By the way heartening to see continuation of momentum in BOD run rate , falling debt n check on traditional business . Paper prices are though playing havoc on gross margins
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Thanks Saurabh for detailed rightup and reminding all the risks that can nullify the assumption going forward. Another thing based on current 5500 books per day, for 16 Cr revenue per quarter, they need to expand significantly, say more that 10X to scale up, roadmap for that is yet to be seen going forward.
Risk of Ingram pulling out from Repro is least likely, off course nothing can be ruled out in world of capitalism, since they have to undergo big revenue disruption at-least for couple of years and thereafter too not going to have significant delta of profit even if they do it by themselves or find another partner. Ingram will never tie up with Amazon in order to protect them from being eaten away by Amazon demon given that past history of Amazon.
Risk of sluggish market growth is bigger risk but that is where management bandwidth is key to gain market share by prudent strategy for business growth in terms of market share gain. However, that is yet to be seen going forward.
Thank You once again,
Disclosure: Invested
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Yes, so far apart from small things here and there, bigger plan and execution looks on track. Let’s hope for the best.Concall will give further details like receivables n all.
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Thats why I tried to compare these companies on capability to build a moat and highlighted Repro does not have any and the only reason they were selected is a professional management in unorganized sector and hence i would let the execution story play and take calls on valuation rather than building a long term story as the the tussle between overall supply chain participants can result in an unexpected outcome for Repro. So, good to hold stocks and be bullish but keep eyes open understanding the risks and be vigilant. Agree with all your points. Still, Repro may or may not achieve those numbers and other two may or may not acquire this business because of 2 key reasons:
- Does not fit into their size
- They know they can screw it the day they want because what it brings to table they may get from other but what the other two bring to table, it cant get anywhere else in simple words
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Given that greater moat with Ingram/Amazon, Margin Squeeze pressure on Repro by both Amazon and Ingram will be highly likely outcome in future but that will only happen once they achieve certain critical size where margin squeeze will not screw up the entire business. As such, any future margin increase accrued out of economy of scale in future will be eaten away by Amazon/ Ingram but again then scaling up should make business sense for Repro, if only Ingram / Amazon going to benefit from this. IMHO their is case for every body to remain in business as long as they make money in fair agreement and understanding and at the cost of each other. Other scenarios like , Amazon acquiring Ingram, Ingram finding another partners does not make a business sense as already cited by members. It is yet to be seen that, What Repro management will do in future to fend off their margin squeeze. Nonetheless, these events if at all will take place , will only happen after Repro achieve critical size. I am not invested in Repro for life time, if going gets smooth even for couple of years , we will make no less that 2 to 3X from here.
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Correction
IMHO their is case for every body to remain in business as long as they make money in fair agreement and understanding and not at the cost of each other.
Promoters has decreased in their stake in the company by 3% in Dec’17 quarter. Curious to dig rationale behind it ?
It was sold by abhinav vinodh vohra to a sonam rishabh parekh at 799. No idea about why or who that is. If promoters decrease stake in he next quarter then we will know that something is not okay. As of now they seem focussed on growth and growing the company and its valuation. Vijay Kedia continues to hold a large chunk of the company. So does Malabar fund. Let us wait until next quarter.
This helps. Lets keep in radar. Thanks
I think this the first time we have got complete clarity on the capacity that they have
One Book digital Print capacity current 6000 books per day going upto 20000 books per day in FY19
Digital Print short run capacity of 25000 books per day which is suitable for printing 30-1000 copies at a time
Offset Print capacity worth 200-300 crores of business annually in Gujarat.
Books on demand run rate for Jan 2018 was 5500 BPD. The interesting thing was that out of 5500 only about 2000 was printed on the one book printer the rest I assume was pre printed using the digital short run printers. Two important takeaways one book print capacity in FY19 will be 10 times the current utilization. BOD sales can be greater than the capacity of one book printers because of pre-printing.
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