Mukul Agrawal-backed Lux Industries Share Jumps 9% After Reebok Licensing Deal

Mumbai, July 10: Lux Industries share price surged as much as 9% on Friday after the innerwear maker announced an exclusive licensing agreement to manufacture and sell Reebok-branded innerwear and thermal wear in India. The development was cheered by investors, who see the partnership as a significant step in the company’s strategy to strengthen its premium portfolio and tap the growing demand for branded innerwear.  

The rally also drew attention as ace investor Mukul Agrawal, who holds a stake in the company, stands to benefit from the sharp appreciation in the stock. Friday’s gains came amid renewed optimism over Lux Industries’ long-term growth prospects following a series of strategic initiatives, including capacity expansion and business restructuring. As of writing the stock was up 6% at Rs 1,297. 

Exclusive rights to Reebok innerwear

Under the agreement, Lux Industries’ Vertical B business will receive the exclusive rights to design, manufacture, market and distribute Reebok-branded men’s and women’s innerwear and thermal wear across India. 

Stock is rising after grabbing licensing agreement to manufacture and sell Reebok-branded innerwear and thermal wear in India. Source: NSE 

The licensing agreement has become effective immediately and includes an option to renew for another 10 years. The financial value of the arrangement has not been disclosed. 

Lux Industries clarified that RILUK IPCO Limited, the licensor, is not a related party. The agreement does not provide the licensor with any board representation or equity stake in the company, and there will be no changes to Lux Industries’ capital structure as part of the transaction. 

Strengthening premium portfolio 

The Reebok partnership is expected to strengthen Lux Industries’ presence in the premium innerwear segment, where competition has intensified with the entry of global and domestic brands. 

The company already markets brands such as Lux Cozi, ONN, Lux Venus and GenX. Industry observers believe adding Reebok to its portfolio could help the company expand its reach among younger consumers while improving product mix and brand positioning.  

The company had earlier indicated that it was exploring international licensing opportunities to diversify its offerings and strengthen its competitive position in the organised innerwear market. 

Growth initiatives gather pace 

The licensing announcement comes close on the heels of another major strategic initiative. Earlier this month, Lux Industries approved a ₹600-crore capacity expansion at its manufacturing facility in Dankuni, West Bengal. 

The expansion will add around 12 lakh square feet of manufacturing and allied infrastructure, taking the total built-up area of the facility to nearly 20 lakh square feet over the next six years. The company expects the project to generate incremental annual revenue of ₹900-1,000 crore once optimum capacity utilisation is achieved.  

The company is also undergoing a proposed business restructuring through a three-way demerger.  

What investors are watching 

Market participants believe the Reebok licensing agreement could provide Lux Industries with a fresh growth lever by enabling it to leverage the global sportswear brand’s recognition in India’s expanding premium innerwear market. 

However, investors will closely monitor the pace of product launches, consumer acceptance and the financial contribution from the new partnership over the coming quarters, since the company has not yet quantified the revenue potential of the arrangement.  

The focus will also remain on execution of the Dankuni expansion project and the proposed demerger, both of which are expected to play a key role in shaping Lux Industries’ medium-term growth trajectory. Friday’s rally suggests investors are optimistic that the combination of brand partnerships, manufacturing expansion and corporate restructuring could strengthen the company’s competitive position in India’s fast-growing innerwear market. 

Source: 

• https://www.nseindia.com/get-quote/equity/LUXIND/Lux-Industries-Limited