Strong volumes, realisations lead to upgrades for Page Industries

Brokerages expect robust demand, premiumisation and price hikes to drive stronger volume growth and realisations for Page Industries in FY27, despite rich valuations

Robust demand, price hikes and premiumisation are likely to rub off on volume growth and realisations for innerwear major Page Industries.

 

Though volume growth was 4 per cent in FY26, Page ended the financial year (Q4FY26) with a volume uptick of 10.4 per cent.

 

Analysts expect the company to continue the strong finish into FY27. Though prospects for the current year have improved, valuations are on the higher side. The stock is up 11 per cent over the past three months.

 

Most brokerages hint at a strong volume/realisation trajectory for FY27. Kotak PCG Research believes that gains for the company in the current financial year will be led by faster growth in the women’s and athleisure categories.

 

Further realisations are expected to improve led by price hikes and improving mix.

 

Double-digit volume growth, coupled with realisation improvement, is expected to drive mid-teens revenue growth in FY27.

 

The brokerage has increased its revenue estimates for FY27-29 by 5-7 per cent and earnings per share projections by 2-4 per cent.

 

Though it is bullish on the outlook, the brokerage has a sell rating as Page Industries is trading at 45 times its FY28 earnings estimates which they consider to be on the expensive side. 

 

It has, however, changed its estimates given higher revenue growth forecasts with its target price increasing to ₹37,000 from ₹34,500 earlier.

 

What should help the company improve its growth and market share is the consolidation in the market, resulting in lower competitive pressures.

 

Several brands, according to JM Financial Research, either exited general trade, reduced geographic presence or cut back discounting and marketing spends amid profitability pressures.

 

This created incremental headroom for category leaders like Page to gain share, led by stronger supply chain, distribution network and brand investments. The company is also expected to see traction in the e-commerce segment which now contributes 15 per cent of revenue.

 

Goldman Sachs Research, too, has upgraded the target price to ₹48,000 from ₹45,000. This is on the back of price hike taken in May and expectation that volume growth momentum is likely to sustain, going ahead.

 

The brokerage points out that recovery in volume growth is led by structural factors and outperformance by the exclusive branded outlets compared to multi-brand outlets and distributor channels. This bodes well for the long term.

 

In addition to volume growth, the Street will also focus on the margins. The pressure on the raw material could recede in the near term as cotton prices have come down from $85 to $76 per pound. During Q4, inflationary pressures in key input costs, particularly cotton and other raw materials, had remained elevated.

 

The company, however, mitigated the impact through strategic sourcing initiatives, supply chain optimisation measures, operational efficiency improvements, and selective pricing interventions.

 

Operating profit margins came in at 20.8 per cent and were down 62 basis points (bps) year-on-year (Y-o-Y) and 214 bps on a sequential basis.

 

In spite of plans to increase investments in technology and marketing, the company reiterated its long-term operating profit margin guidance of 19-21 per cent.