REPRO INDIA LTD: A Star in the making

The title is not said by me, but these were the words from Vijay Kedia sir.

Repro India is in the Printing & Stationery sector. The current market capitalisation stands at Rs 489.58 crore.

The company management includes Vinod Vohra - Chairman, Sanjeev Vohra - Managing Director, Mukesh Dhruve - Executive Director, Rajeev Vohra - Executive Director, Pramod Khera - Executive Director, Ullal R Bhat - Non Executive Director, Jamshed J Irani - Non Executive Director, P Krishnamurthy - Non Executive Director, Dushyant Mehta - Non Executive Director, Alyque Padamsee - Non Executive Director, Mahalakshmi Ramadorai - Non Executive Director, Bhumika Batra - Addnl.Non Exe.Independent Director. 


It is listed on the BSE with a BSE Code of 532687 and the NSE with an NSE Code of REPRO.


Its Registered office is at 11th Floor, Sun Paradise Business Plaza, B wing, Senapati Bapat Marg,,Lower Parel. Mumbai,Maharashtra - 400013.


Their Registrars are Link Intime India Pvt. Ltd.

Below are various points which I've found in forum.valuepick.com, I don't deserve any credits for this

Repro is the largest "print-on-demand" company. Its subsidary, Lightning Source, is the biggest print-on-demand company in the world. Their self-publishing company Lullu.com is also the biggest and they use lightning source too.

1. Amazon also is in print on demand segment and even they could not compete against Ingram. Their self publishing company createspace is their play on print on demand. Publishers never went with Amazon because of the backstabbing they got when Amazon started decreasing the publishers royalty.
2. Ingram has a massive portfolio and it will just keep on increasing as publishers find them honest and economically viable. Self publishing trends also will help them.
3. Publishers find Ingram critical to their business model. Because of print on demand economics. A traditional publisher had to go to a printer and print thousands of books. The more books you print lower your fixed cost. Then these books will go to a distributor and he will sell it. If he can't, he sends back to publisher.
4. Traditional publisher has massive working capital need. Also, if the distributor defaults he is quickly into loss
5. With print on demand, the publisher has no inventory. Although the fixed cost is same for per product, the gains are much more if you compare it with cost of working capital and inventories
6. And that's why most publishers are shifting or will have to shift to print on demand
7. This trend would not have been possible if it wasn't for ecommerce. That was the inflection point for Ingram back in 2004.
8. When a customer orders a book on amazon, Ingram gets that order on its system. It prints there and then and ships it to end customer. So Ingram only prints a book when it has an order from a customer.
9. Going ahead, negative working capital shall emerge as the biggest moat for repro as it is for Ingram.
10. For Ingram too, this tie up is due to compulsion. printing machines are costly so this is a high captital intensive business. Also, understanding the demographics and Indian environment this would have been very difficult. They have more than million books. They just have to convince the publisher and agree on a royalty arrangement for India market.
11. Once repro, Ingram and the foreign publisher agree on royalty sharing agreement, repro just has to put the EPub files on its system which makes it available on Amazon and flipkart
12. That's it. Whenever a customer orders, repro factory will print it and deliver in three days time to end customer. According to their concall they are working on one third of capacity and don't need to spend on capacity expansion.
13. Listing of these massive titles should take one years time in my opinion.
14. Rest of the business, exports, rapples, etc are just bad capital allocation decisions which management should reverse once print on demand takes off.
15. My company is a customer of repro and we have seen massive impact on our India sales. To be honest, for an mnc like ours, without repro, this would not have been possible. We also work with lightning source in America and European market. So this agreement with Ingram gave us more confidence on their ability to deliver.
16. Without Indian ecommerce growth, growth in print on demand would not have been possible as brick and mortar stores like crosswords lack such ability. They need physical books to display on their stores unlike Amazon which just has to write description of the book and a cover page. Repro is the best play on Indian ecommerce in my opinion rather than an expensive Infibeam stock which burns cash
17. Amazon pays twice a week to repro so there is instant money on the sale. And repro pays the publisher weekly and sometimes monthly. So there is no credit period like traditional publishing.
18. The growth in ebooks can be a threat. Although repro does have distribution rights, the major money is in their printing business. Our firm is into trade publishing and for the last ten years there has been no decrease in the sale of print books in American and European markets. Actually for the industry, ebooks sales have decreased in the last one year.
19. With high device cost ebooks will find it difficult to penetrate in the Indian market. And there is a strong regional publishing market which will take even more time for this shift if at all the shift comes.
20. Valuations aside, print on demand business, which management calls as one book business, is where the growth lies.
21. Tie up with Ingram is similar to what investor must have seen with lubrizol- astral or pokarna-brettonwood tie up

Below is the video for the analysis made by Vijay Kedia and the analysis on Repro starts from 8:05

My analysis:

1) As per Vijay Kedia and Nelson's report Online book sales in 2020 should be around 17500 crore and Repro being the leader in the online book market by that time it should at least have a market share of 20% is what I believe, so sales of 3500 crore in 2020

2) As per Repro's management commentary and Nelson's report Online book sales in 2020 should be 7000-10000 crore, let us take it as 8000 crores and Repro's share around 20%, so sales of 1600 crore in 2020

3) As it is a light asset model and high margin business let us take in the worst case it makes a net profit margin of 15% (I believe it should be 20+), considering 1600 crores and 15% margin we come to PAT around 240 crores for 2020

4) In the worst case if we give a valuation to Repro around 1.5x sales, it would come to 2400 crore (1600 into 1.5) or 10x PAT (10 into 240) *Worst case*

Last quarter result:

Last quarter we can see that the company has finally made some turnaround with lower finance costs and better operations which I believe will continue growing Arithmetically or Geometrically or even Exponentially.

NOTE : THE ABOVE IS NOT A RESEARCH REPORT NOR A RECOMMENDATION  BUT INFORMATION AS AVAILABLE ON PUBLIC DOMAIN. 

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: Repro is my core portfolio stock, so my views may be biased