Urban Tots: Shaping the Future of India’s Toy Industry

Urban Tots is one of the companies that are at the helm of this revolution. Urban Tots, which falls under Deepak Houseware and Toys Pvt. Ltd. (DH&T), has established itself as one of the key players in the Indian toy sector. DH&T focuses on producing and selling various kinds of toys such as plastic toys, electronic toys, and role-play sets. Some of their impressive products in the market are plastic-made heavy toys like Mercedes and BMW bikes. Urban Tots is equipped with a dynamic production facility covering 36,000 square yards in Bhiwadi, Rajasthan with PLI scheme support from the Indian Government.

Urban Tots has a varied business model, manufacturing and selling a diverse range of toys through well-known retail outlets like Hamleys, FirstCry, DMart, and Reliance Retail, as well as online giants such as Flipkart and Amazon. They also take pride in their retail store, aptly named Urban Tots. Currently, Urban Tot’s Share Price is  ₹100 per share.

In January 2023, the BJP launched its election manifesto for 2024 which outlined a visionary intention for India’s toy manufacturing industry. It promises to convert India into a leading toy manufacturing country in the world with the aid of leveraging the country’s human resources and cultural diversity. This highly ambitious plan aims at creating quality toys that can be on par with the international markets and hence a major benefit to companies involved in toy manufacturing.

Financial Performance

Urban Tots has shown significant improvement in its financial performance. The company recorded a 67% increase in sales from the preceding ₹49 Cr in FY23 to ₹80 crore in FY24. This surprising increase is attributed to a sturdy book value, the acquisition of new customers, and the growth of the company’s product base. The net profit of Urban Tots also registered a growth of 138% from ₹4 Cr in FY23 to ₹10 Cr in FY24. The profit margin multiplied from 9% in FY23 to 12% in FY24 due to the efficient use of labor and fixed resources.

This financial success is based on the fact that Urban Tots has got a strong retail and online footprint. It has distribution tie-ups with leading supermarkets and a significant online presence on websites such as Amazon and Flipkart to ensure that its products are easily available to a wide audience.

Face Off:  Urban Tots Vs. Ok Play

Urban Tots and OK Play are both involved in the toy manufacturing business. In this face, we compare urban tots with Ok Play, a listed brand as an Indian toy manufacturer in plastic-modeled toys. 

By FY24, Ok Play India Limited saw an impressive 711% increase in its stock price, jumping from ₹2.67 to ₹21.64 in just 1.5 years, mainly due to the benefits of the PLI scheme. By FY25, Urban Tots is poised to be the largest toy manufacturer in India, thanks to potential gains from the PLI scheme and Order Book.

With Urban Tots' current valuation at ₹555 Cr and a forward PE ratio of 19x, it appears to be undervalued when compared to the sector's forward PE ratio of 73x and its competitor, Ok Play India Limited, with a forward PE ratio of 258x for FY25. This presents Urban Tots as an attractive investment opportunity.

Future Expansion and Strategic Partnerships

Other government initiatives such as subsidies under the DIC scheme and the PLI scheme also continue to support Urban Tots’s growth. The future perspectives of the company include retail development and marketing strategy. These efforts make Urban Tots a viable investment company with expected high turnovers and an upcoming IPO in the next 5 years.

Urban Tots entered into a distinctive MOU with IOC in January 2023. As per this arrangement, Urban Tots will open toy shops as well as kiosks at IOC retail stores in India. This strategic move effectively utilizes IOC’s distribution channels to access customers, especially those in tier 2 and tier 3 cities, which helps improve Urban Tots’ market coverage.

A Promising Investment Opportunity

The Urban Tots Share Price is approximately ₹100 per share today, which is relatively high due to its strong financial performance and potential for growth. The Indian toy industry is expected to grow strongly due to favorable regulations and increasing demand, and Urban Tots is a viable investment option. Currently, Urban Tots shares are available in the pre-IPO market. Potential investors might be interested in Urban Tots due to its more advanced market position and the growth potential of the toy sector.

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Conclusion

During the same period, Urban Tots attained a 9% net profit margin and a bottom line of ₹4.2 Cr. One of its main rivals, Ok Play India Ltd, trades on the domestic stock exchange (NSE) in Q3 FY24 at a TTM PE ratio of 131x and has a TTM net profit of ₹3.2 Cr.

Investors looking to enter the successful toy industry in India could consider Urban Tots as a lucrative investment option due to its established performance and well-thought-out expansion strategies. Investors seeking detailed analysis of Urban Tots' stock price, industry data, and unlisted share investment should explore the informative research report -  Urban Tots

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