Volume pick-up key to more gains for innerwear major Page Industries

The stock of innerwear major Page Industries hit its lowest level in the last year and half. From its 52-week high on June 27 this year at ₹50,471, it has shed about 32 per cent. It is currently trading at ₹38,356.

 

In addition to a muted September quarter performance (Q2FY26), brokerages have cut earnings estimates citing muted demand, delayed volume recovery and slower expansion. At the current price, the stock is trading at 49 times its FY27 earnings estimates.

 

A subdued demand environment hit its volume performance over the last couple of quarters. The company’s Q2 revenues was up 3.6 per cent on the back of a 2.5 per cent growth in volumes to 56.6 million pieces. This is the second consecutive quarter of low single digit volume growth due to weak demand in the early part of Q2, lower secondary offtake across categories and higher sales towards the end of the quarter.

 

Demand has, however, picked up towards the end of the quarter and continued in the post festive period as well. 

 

The company is aiming to hit double digit revenue growth going ahead and expects the second half of FY26 to be better than the first. What is witnessing healthy growth across its channels are modern retail especially ecommerce and the premium portfolio which is doing better than the economy segment.

 

Given the Q2 performance, persistent weak demand in core category, lag in volume recovery despite inventory normalisation and slower retail rollout, Elara Research has trimmed its earnings estimates for FY26/27/28 by 1.8 per cent, 6.1 per cent and 9.4 per cent.

 

It has revised its rating to buy from accumulate with a target price of ₹49,482. It expects earnings growth to be 8 per cent annually between FY25-28 on the back of raw material tailwinds and premiumisation.

 

The weak topline and higher cost hit its operating performance.

 

While gross margin improved 345 basis points year-on-year (Y-o-Y) on the back of structural efficiency gains and muted raw material cost, operating profit margins at 21.7 per cent were down by 90 basis points.

 

This was on the back of higher marketing costs on account of new product launches, and a 20.6 per cent rise in employee costs and a 13.5 per cent increase in other expenses. The company maintained its operating profit margin guidance of 19-21 per cent in FY26 as it expects the marketing and technology costs to move up going ahead.

 

While the company has maintained its margin guidance, Upasana Madan and Gaurang Kakkad of Centrum Research await an improvement in demand environment, volume pick-up and market share gains to turn positive on the stock. They have maintained a neutral rating with a target price of ₹40,000.

 

The expansion of distribution in Q2 has largely been led by exclusive branded outlets while net multi brand outlets have been muted over the last few quarters. While this is the case as the company is focusing on improving the quality of outlets, expansion is expected to pick up going ahead.

 

Systematix Research has a hold rating and believes that rising competition in the innerwear and athleisure categories remains a key concern for Page Industries. The brokerage has trimmed its revenue estimates by 6-11 per cent and net profit estimates by 10-15 per cent pegging the target price at ₹41,881.