Studds Accessories Limited
Company Background:
Incorporated in 1983, Studds Accessories Limited, is the world’s no. 1 organized helmet manufacturer of bikes, in terms of number of helmets sold as per Frost & Sullivan report of 2018. In FY18-19, STUDDS manufactured 58.6 crore helmets. It has two major brands namely STUDDS & SMK helmets. The company sells its helmets across 39 countries across the world. Studds has the leadership position in helmets segment in India. Its market share (in terms of volume) is estimated to be nearly 25.66% followed by Vega (11.05%) and Steelbird (10.87%), as per 2018 market studies.
The company’s strength lies in:
- Wide product range: The company has a wide product portfolio of over 50 products. There are 7 different sizes available in helmets, suggesting a fluid adaptability to market needs
- Strong dealer network: A strong dealer network of 373 active dealers
- Quality: Company’s facilities have been granted major safety certifications such as BIS certifications IS: 4151 (for motorcycle helmets) and IS: 2925 (for industrial helmets), ECE 22.05 and SLSI certifications, required for exporting its products to international markets. Average number of defective helmets produced is less than 1%.
- Innovation: STUDDS has launched 16 new products in the last 3 years. Over 45 trademarks registered in India and abroad.
Financial Performance:
The company’s revenues grew at a stable CAGR of 13% from FY17 to FY19 (Rs.389 crs). The company’s profitability grew a strong 35% CAGR owing to operating leverage with higher capacity utilization. EPS growth has been equally impressive at CAGR of 31.7%. The company is nearly debt free, i.e. Net cash positive. Leverage is mild as indicated by a debt to equity ratio of 0.25x. EBITDA margin has improved from 13% in FY17 to 18.5% in FY19.
Brief financial snapshot is given below: (Rs. In Lakhs)
| Particulars | 2017 | 2018 | 2019 |
| Revenue from Operations | 30,912.50 | 33,644.40 | 38,904.00 |
| Other Income | 219.80 | 534.50 | 821.30 |
| Total Revenue | 31,132.30 | 34,178.90 | 39,725.30 |
| Growth % | 9.8% | 16.2% | |
| Cost of Material Consumed | 12,581.10 | 15,285.60 | 18,077.90 |
| (Increase)/decrease in Inventories of Finished Goods and Work-in-Progress | -196.30 | 63.80 | 49.40 |
| Employee Benefit Expense | 2,711.70 | 3,188.20 | 3,771.00 |
| Finance Cost | 36.10 | 34.70 | 31.10 |
| Depreciation and Amortization Expense | 522.30 | 573.90 | 593.20 |
| Other Expenses | 11,791.10 | 9,884.70 | 10,486.60 |
| Total Expenses | 27,446.00 | 29,030.90 | 33,009.20 |
| Growth % | 5.8% | 13.7% | |
| PBT | 3,686.30 | 5,148.00 | 6,716.10 |
| Growth % | 39.7% | 30.5% | |
| Tax | 1,311.70 | 1,859.90 | 2,598.90 |
| Profit for the year | 2,374.70 | 3,288.10 | 4,117.20 |
| Growth % | 38.5% | 25.2% | |
| EPS | 12.07 | 16.71 | 20.92 |
| Growth % | 38.4% | 25.2% |
For a more detailed view of financial statement and notes, please click here.
Future Prospects:
The demand for helmets is increasing in India due to strict enforcement of road safety laws (The Motor Vehical (Amendment) Bill 2019) in some states & increase in awareness about safety. There is demand for helmets for pillion riders as well. The global premium Motorcycle helmet industry is estimated to grow at a CAGR of 10.4% during 2018 to 2025. Europe is the largest market for premium motorcycle helmet due to increase in the motor cycle permits in several European countries.
Studds Accessories owns two helmet plants with a capacity of 610 lakh helmets and 4.9 lakh units of two-wheeler luggage a year. It is looking to add two more plants to meet the expected rise in demand. The Faridabad Unit IV with production capacity of 1.5 Mn. Bicycle helmets p.a. became operational in 1st Quarter of FY 2020. Consumer spending through online purchases has increased significantly in recent times. The Company has made its products available on online web sites (such as Flipkart and Amazon) to ensure its products reach maximum consumers across the world. This digital expansion will fuel future growth at lower costs.
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