Lux industries reported 22% YoY revenue growth and a 58% YoY fall in net profit in March Quarter 2023. The stock price is up 4% since the Q4FY23 results were released on May 30, 2023. The positive stock price reaction is due to strong double-digit revenue growth, highest among the top quartile of the innerwear industry. All other peers, including Page industries reported lackluster revenue growth in March Quarter 2023.
Lux Industries is one of the largest players in the hosiery business having a market share of nearly 15% of the organized industry. The company’s products include men’s, women’s and kids innerwear, winter wear, socks & slacks for women in varied colours and designs. There are nearly 5,000 SKUs under various brands and sub brands of LUX. The company’s revenues came in at Rs 715 crore in Q4FY23 compared to Rs 593 crore same period previous year. Lux industries reported its highest ever revenues in March Quarter 2023. Revenue growth was 56% QoQ in Q4FY23.
Double-digit revenue growth was despite delayed onset of winter and gradual softening of demand post diwali. According to the management, the economy segment was severely impacted due to inflationary pressures. Economy segment constitutes 80% of the total revenue mix. Operating margin came in at 5.93% in March Quarter 2023 compared to 18.23% in the same period previous year. Twelve percentage point fall was due to the combined impact of volatile raw material prices and high-cost inventory stocking both with the company and the distribution channel. According to the management, with the stabilization of raw material prices, the company’s objective is to moderate the quantity of products lying in the distributor network, replenish the sold material with speed and generate higher inventory turns to enhance margins in the near future. Impacted by lower margins, net profit slipped 58% YoY to Rs 31 crore in Q4FY23 compared to Rs 74 crore corresponding quarter previous year. The company plans to foray into newer segments with focus on the athleisure clothing and womenswear segment and also broaden its distribution network.
