MIL was incorporated in 1979 as a pvt ltd company by Mr Irshad Mirza (Chairman). It manufactures footwear, finished leather apparels. The company has established brands like RedTape, Mode, Bond Street and Oaktrak. MIL also operates in the overseas market.
(2/17)
Industry Backdrop:
India is the 2nd largest global producer of footwear after China, accounting for ~ 10% of the annual global production of ~22Bn
pairs.
The industry is seeing huge traction in tier II & III cities.
(3/17)
Mirza Overseas business:
MIL also operates in the overseas market and earns 30-35% of its revenue from exports, wherein 90% of footwear sales is under customers' brands and 10% is under the company’s RedTape footwear brand. MIL's primary export market is the UK.
(4/17)
Risk profiling:
Financial risk profile of MIL has improved, with debt reducing to ₹221 crore as on Sept 30, 2021 from over ₹400cr YoY .
It’s interest coverage ratio improved to ~9 times for 9MFY22 from ~4 times compared to the same period of 9MFY21.
• 68.24% India
• 17.77% UK
• 4.26% USA
• 9.23% ROW
(6/17)
Mirza International Brand Portfolio:
• Redtape Athleisure
• Redtape
• Bond Street(A fashionable footwear brand available
at low price points for mass appeal)
• Oaktrak( A high fashion leather footwear brand)
• Mode (Exclusive Womenswear)
• Yezdi
(7/17)
Some Statistics:
• 6 Integrated Manufacturing units
• 3 Distribution branches
• 276 exclusive Redtape
Stores(FY21)
• 30 Years of supplying
footwear to established
global brands
• 24 countries
• 54 million pairs of footwear pa
(8/17)
Key Growth drivers:
• Healthy operating performance in the domestic market and recovery in international business
For 9MFY22 , MIL witnessed full recovery to pre-pandemic levels in the domestic segment which recorded revenue growth of ~8% vs 9MFY20.
(9/17)
• Ticking all the Boxes:
MIL has presence across multiple channels, including, franchisee-based retail stores, MBOs & ecommerce. MIL sells footwear, apparel & accessories, under the mentioned brands. Also, it undertakes make-to-order contracts for various reputed brands
(10/17)
Triggers:
1. Healthy revenue growth and operating margin sustaining above 18%
2. Increase in Cash accruals, while keeping a well judged cash conversion cycle
3. Expansion in abroad business
(11/17)
MIL’s operations involve importing raw materials, such as cow hide, which is not available in India.
Exports account for ~35% of revenue, which exposes the company to volatility in forex rates. MIL enters forward contracts (100% of its exports & imports are hedged)
(12/17)
Financials:
• Healthy Debtors Days of 28
• Not a great Operating Profit Margin which is around 12% and with the rise in input prices this number can see more pressure going forward
• ROCE of 6.08% and ROE of 1.2% is below average
(13/17)
• Debt to Equity of 0.20
This sector is consistently increasing capacity, expanding retail & online presence over the years. So it is important to check whether the leverage is highly dependent on debt or equity. MIL D/E is nicely placed as compared to its peers.
(14/17)
The board of MIL has approved the amalgamation of RTS Fashions with MIL. Furthermore, the domestic business of MIL, which comprised two thirds of revenue in fiscal 2021, will be demerged into a new entity Redtape Ltd wherein the shareholding of MIL will be mirrored
(15/17)
E-commerce presence, A big positive:
MIL has a separate e-commerce division that looks after online sales through various platforms like Amazon, Flipkart & Myntra.
Approximately 35% of its sales come from online platforms which can going forward help to revive its OPM
(16/17)
The Stock is currently trading at its All Time High level of ~₹230/share. And can be considered expensive. However due to the unlocking of the economy & office resuming. The demand of shoes which is its main business is seeing robust traction, both online & offline.
(17/17)
How do you rate Mirza in comparison with Relaxo and Bata?
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