Shares of Lux Industries fell more than 7 percent on Wednesday after the company reported lower net profit with a hit to profitability during the June quarter.
At 13:30 IST, shares of the company were trading 6 percent lower at Rs 1,813.85 on the BSE. Lux Industries is one of the largest players in the hosiery business, having a market share of around 15 percent of the organised industry.
Lux Ind Q1 | #1QWithCNBCTV18
• Net profit down 22% at `50 cr Vs `63.7 cr (YoY)• Revenue up 36% at `571.7 cr Vs `421.1 cr (YoY)• EBITDA down 14% at `77.8 cr Vs `91 cr (YoY)• EBITDA margin at 13.6% Vs 21.6% (YoY) pic.twitter.com/ol3d475UeD— CNBC-TV18 (@CNBCTV18Live) August 9, 2022
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The company's gross margins took a beating due to high-cost inventory stocking in the previous quarters and volatile raw material prices. However, Lux Industries said this was partially offset by growth in overall volumes and the company’s ability to pass on higher input costs.
The only silver lining in the company's performance was revenue growth.
“This revenue growth was largely fuelled by improving traction of power brands, particularly ‘ONN’ and ‘Lyra’ coupled with its legacy brand ‘Lux Cozi’ which forms a part of premium and mid-premium portfolio,” said Chairman Ashok Kumar Todi.
Todi added that the company has also seen a gradual shift towards online purchases largely driven by millennials, which enabled Lux to create new channels for engaging with the end users and offer various products.
Overall volume grew by 14 percent, largely driven by increased demand for branded products from Tier I, II, and III cities. Further, growth in volumes for economy brands largely remained stable at 8 percent. The mid-premium segment saw double-digit overall growth of 52 percent, while the premium segment reported strong growth of 25 percent.
“Our share of export is gaining traction too, the share of export revenue in the June quarter of FY22 stood at 9 percent of our total revenues,” Todi said while adding, “Going forward, with softening of raw material prices and streamlining of the high-cost inventory, we expect healthy growth in our margins to deliver consistent, competitive, and cash accretive growth”.
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