Hardcore investors consistently looking for reasonably priced quality value stocks, that are backed by good managements with an excellent pedigree and are yet to be recognized by the market participants.
In our serious hunt for such efficient companies, we have been zeroing in on a couple of such names, which look interesting to us from a medium- to long-term horizon.
Repro is a provider of Print, Content, and Fulfillment solutions and also bridges the miles b/w content owners and the end customers. It is Established in the year 1990. As of present, 53 percent of the company shares are owned by promoters. They are the first company to adopt the ‘Print on Demand’ Business.
PRINT ON DEMAND
Here the book is only produced after it has been bought, it directly eliminates the challenges of the traditional publishing supply chain.
They have strategic tie-ups with ‘Ingram’ which is the world’s largest content aggregator with 14 million repository.
It has also Tie-up with leading E-Retailers like Amazon, Flipkart, Paytm, Snapdeal, etc. It clocked Q3 FY20 revenues of around 13 crores and book sold more than 3.6 lakhs. The main USP ( unique selling proposition of this print on demand business model is that it has Zero Inventory, Zero Wastage, Zero Book Returns, and Zero Obstacle.
Revenue Break up (Financial Year 2019)
Print Domestic —- 52 percent.
Print Export —— 20 Percent.
E-Retail (Print on Demand) —– 28 Percent.
So if we analyze it has 85 percent revenues coming from India and rest 15 percent from the rest of the world.
The Total Book market of India is around 60,000 Crores, in which only3-5 percent are E-retail while if you compare the United States has 70 % of e-Retail. As of now, India is the Sixth Largest Book market in the world. 15 Percent of #-Commerce sales are from books. India has approximately 10,000 organized publishers.
To comprehend why Repro India is at an affectation point and how it very well may be a story to look out for throughout the following scarcely any years, one needs to comprehend the segments of its business.
Repro India has three organizations segments: 1) Traditional printing 2) Rapples 3) Print on request. Despite the fact that with time it’s normal that the conventional business and the modern rapples business will progress admirably, yet our bullishness on the stock stems from its ‘print on request’ business. This specific business of Repro accompanies zero stock, runs on negative working capital, and is enormously versatile.
Whenever we discuss about the book business, we need to differentiate it into two divisions – education and trade. The business in India is growing. The educational segment is growing rapidly in the last few years, not so much the trade. And there are lots of obstacles too.
The book print sector is in tandem with the showing patterns of book publishing in India. In the educational book publishing, both the government-backed means public companies and private sector players, are doing very good. The organic development and growth in regional language publishing is very fascinating. Trade publishing though is witnessing tough problems of readership, and perhaps the reason for the lack of growth. So in trade, the norms are short-run and print-on-demand.
45% of trade publishing (value terms) in India is in Indian languages. By numbers, it beats the English books. The important side of this is that Hindi is under 35precent of this market size.
The organization is one of its sort in India, and the just one to have the manufacturing center for print on demand business.
As the world moves towards digitalization and web-based business, the interruption is affecting our lives in manners we never envisioned.
‘Print on demand’ business domain is the ‘Brahmastra’ for the disruption in the realm of physical books. Repro has a tie-up with Ingram, one of the world’s biggest substance aggregators. Ingram follows a ‘one nation, one tie-up’ model; so Repro would have the option to profit by this all together. For each venture opportunity, we attempt to discover a moat or advantage that a business has. On account of Repro, the tie-up with Ingram is a huge preferred position.
This basically implies if there is any request from India for any of the large number of books that Ingram has in its vault, Repro will be the one to satisfy that request.
This would likewise mean worldwide titles that previously took 2-3 weeks to get conveyed will be at your doorstep in 2-3 days. The book advertise is moving on the web continuously and with more web infiltration, it is relied upon to develop all the more quickly.
At present, just around 2.5-3 percent book market in India has gone on the web. In the US, about 70 percent of the books are sold on the web. The book industry in India is developing at around 20-30 percent consistently. The absolute book sector in India is anticipated to develop to around Rs 80,000 crore by 2021-22. In the next five years, the online book market is anticipated to catch around 10-15 percent of complete deals.
Repro does Rs 13 crore business for each month and it orders a piece of the pie of around 11-12 percent. It’s anything but difficult to compute the sort of income Repro can gain from this business throughout the following 3-5 years. The margins on that scale will be strong. Combined organization debt levels in the course of the most recent few years has descended from Rs 240 crore to Rs 126 crore starting last quarter. Incomes have been extremely solid as well. Deals are developing reliably with higher net revenues. The organization is at an intonation point, where it would hurl strong incomes with negligible CAPEX, which will assist it with reimbursing the whole obligation.
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We are betting big on this smallcap education sector stock. We are expecting the turnover of the company to double in the next couple of years. According to our research team, the stationery market in India is worth Rs 30,000 crore.
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At present online book industry is around Rs 2,000 crore. If you are looking to purchase a book online from e-commerce websites, it has gone through various channels such as author, publisher, distributor, and retailers. Now based on this scenario we are thinking about a big disruption in this domain, as there is no distributor, they have to deal with the only publishers, and they have tied up with Ingram, which has 14 million titles. In 5 years, this online market is going to expand to Rs 25,000 crore. Currently, Repro India is one of the leading and pioneer in print on demand business and also they don’t have any competition.
Ace Investor Vijay Kedia is currently holding approximately 7-8 percent in Repro India. The company provides content and prints magazines and other periodicals, books and brochures, maps, atlases, posters, and others.
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With such a great amount of making it work, the organization is accessible at a reasonable market cap of Rs 480 crores. Repro could be the best-preferred bet for the new bull cycle, whenever it occurs.