Craving Alpha Chronicles | Opportunity in India's Tableware Market
Issue #1 | Uncover the recipe for investment success as La Opala Limited serves up growth and innovation in India's booming tableware market
Opala RG Limited, an esteemed Indian brand known for its high-quality and affordable tableware product has maintained a focus on innovation, expanding distribution channels, and a reputation for excellence. La Opala is poised for continued success.
In this blog post, we explore why now is an opportune time to invest in this rising star of India's tableware industry
The Product
La Opala's opalware products, made from durable and safe glass, have gained popularity among health-conscious consumers seeking eco-friendly alternatives. The company's commitment to innovation has propelled its sales growth, as it consistently introduces new designs and products, staying ahead of evolving consumer preferences.
Key Reasons to keep in focus
Increasing Total Addressable Market:
Investing in La Opala aligns with the changing dynamics of India's consumer goods market. As India's middle class expands and discretionary spending rises, demand for high-quality tableware is increasing. La Opala is well-positioned to cater to this growing market segment, offering stylish and affordable products that resonate with Indian consumers
Increasing Distribution Network
Embracing the digital revolution, La Opala has established a strong online presence and an extensive distribution network, capitalizing on the rising popularity of online shopping in India. This strategic approach allows the company to reach a broader customer base and ensures its sustained growth in the dynamic e-commerce landscape
Valuation- Fair
Key evaluation parameters for La Opala;
30% CAGR increase in reserves over the past 10 years.
Current PE (trailing) at 40x, though seems expensive it seems justified given their growth potential and consistent ROIC (18%) and operating margins (38%)
FY23 saw them generate their highest ever Operating Profit of 123Crores, marking an inflection point.
When evaluating La Opala as an investment, key financial indicators such as the Price-to-Earnings (P/E) ratio, Price-to-Sales (P/S) ratio, and Dividend Yield demonstrate the company's financial strength and investment attractiveness. Additionally, La Opala's low-cost production capabilities and well-established brand reputation contribute to its long-term sustainability.
Negative factors *extract from credit report
Reduction in the liquid investments held by the company to below ₹150 crore
Deterioration in debt coverage indicators with total debt to gross cash accruals (TD/GCA) going above unity on a sustained basis
Inability to grow its TOI at a healthy pace along with significant moderation in its PBILDT margin and return on capital employed (ROCE) due to sustained competitive pressure.
In summary, investing in La Opala RG Limited offers an exciting opportunity in India's tableware market. The company's commitment to quality, innovation, and market expansion positions it to benefit from the changing consumption patterns and rising affluence of Indian consumers. Its financial performance, attractive valuation metrics, and alignment with evolving consumer preferences make it a compelling choice for investors seeking long-term growth and success.
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Disclaimer: The stock discussed above is a part of our “Future Leaders” portfolio and hence we and our clients may have an exposure to the company.
It is important to conduct thorough research and seek professional advice before making any investment decisions. This blog post provides general information strictly educational in nature and should not be considered as financial or investment advice.