Growth from outsourcing finally taking off
Moneylife Digital Team
Repro India is an end-to-end print solutions provider for domestic and international customers supplying to all large publishing houses such as Pearson, Oxford University Press and Macmillan. Its long-standing relationship with Macmillan worldwide has helped it to acquire the printing facility in Chennai in July 2011. The stock got listed in January 2006 at over Rs300 and then crashed all the way down to Rs42 in March 2009. Much against the broad market trend, the stock has risen from Rs81 to Rs171 now. 
Repro has substantial revenues from exports. Africa already accounts for a major share—90%—in exports. It has a presence in Nigeria, Ghana, East Africa and South Africa. Its products are being used in schools, colleges, universities, distance education and corporate training workshops in India; schools in Nigeria, South Africa and a dozen other African countries; children’s sections in retail stores in the UK and the US; and e-Readers worldwide. Exports account for 60% of its revenues, while domestic market makes up the balance 40%. Repro works closely with educational publishers and offers them a one-stop solution right from content to print to fulfilment. It also works on content in non-English languages such as Swahili, Yoruba, etc. Following the acquisition of Macmillan’s facility, Repro reported 84% rise in its net profit at Rs9.40 crore for the quarter ended 30 September 2011 compared to Rs5.10 crore reported in the same period of last year. Revenue for the quarter stood at Rs77.36 crore, a rise of 18% against Rs65.46 crore in the corresponding quarter last year. Commenting on the Q2 FY11-12 performance, Mukesh Dhruve, director–finance, Repro India said, “There are lots of opportunities for large integrated printers in India. While India is currently the 12th largest printing market globally, it is poised to climb to the 8th position if the current growth curve continues.”
The Indian publishing industry is flourishing due to increasing literacy and demographic profile–with the youth requiring educational publications and older population needing leisure reading. Currently, India’s publishing industry, valued at Rs10,000 crore, publishes over 80,000 titles. Of these, 60% are educational, 40% trade, folk, religious and spiritual. However, distribution remains a challenge for Indian publishing due to inadequate infrastructure, leading to lower penetration and availability of books in tier-II and tier-III cities. These factors account Repro’s continuing buoyant demand.
Over the past five quarters, Repro India’s average growth in revenues and operating profit was 27% and 51%, respectively. Its average operating margin is 14% and return on net worth is 16%. Its market-cap to revenues is 0.57, while its market-cap to operating profit is 3.72 times. The stock would be an attractive buy at around Rs130.