Page Industries slips 16% in a week post Q3 result; stock nears 52-week low

The stock slipped 5% to Rs 20,414, falling 16% in the past one week post-Q3 result. It was trading close to its 52-week low of Rs 20,102 touched on March 7, 2018, on the BSE.

Shares of Page Industries were trading lower for the fifth straight day, slipping 5 per cent to Rs 20,414 apiece. The stock has fallen 16 per cent in the past one week after the December 2018 (Q3FY19) results.

The stock was trading near its 52-week low of Rs 20,102 touched on March 7, 2018, on the BSE in intra-day trade.

Page Industries is the exclusive licensee of Jockey International Inc. (USA) for manufacture distribution and marketing of the JOCKEY brand in India, Sri Lanka, Bangladesh, Nepal, UAE, Oman and Qatar. The company is also the exclusive licensee of Speedo International for the manufacturing, marketing and distribution of the Speedo brand in India consisting of swimwear apparel water shorts, equipments and footwear.

In Q3FY19, the company reported around 12 per cent volume growth – strong recovery after reporting flat volume growth in Q2. The rise in volume growth attributed to the shift in festive season which resulted in pent up demand during the quarter. Page Industries has stopped disclosing the segmental data, which makes it difficult to track category wise growth, analysts said.

For year-to-date (YTD) FY19, revenue growth for Page decelerated, with topline increasing 16 per cent year-on-year (revenue CAGR: 18 per cent in FY15-18). Lower demand from retailers due to Goods and Service Tax (GST) related issues and increasing competitive intensity has slowed down the growth trajectory.

However, on the profitability front, EBITDA (earnings before interest, taxation, depreciation and amortisation) margins continued to improve with margins expanding 190 bps YoY to 22.1 per cent. Factoring in the performance of YTDFY19, analysts at ICICI Securities revise earnings estimate downwards for FY19/20E.

“We build in revenues and PAT CAGR of 17 per cent and 22 per cent, respectively, in FY18-20E. Being the industry leader, Page has historically traded at premium valuations due to consistent revenue and earnings performance and robust return ratios. It currently trades at 48x P/E and 7x MCap/Sales FY20E estimates. To justify these valuations, resurgence towards its historical revenue growth run rate 18- 20 per cent, with sustained improvement in EBITDA margins remains critical for Page,” the brokerage firm said in result update with ‘hold’ rating on the stock.

Though the Page Industries is likely to mitigate the competition with strong brand positioning, ongoing innovations, increasing number of stores and wide distribution reach, analysts at Dolat Capital believe that the monopoly of the company has come to an end in the category. Consequently, the brokerage firm believes that the historical P/E multiple would not sustain.

At 12:32 pm; Page Industries was trading 4.7 per cent lower at Rs 20,478 on the BSE. In comparison, the S&P BSE Sensex was up 0.51 per cent at 35,532 points. A combined 74,776 equity shares changed hands on the counter on the NSE and BSE so far.