Broking firm, Emkay Global has suggested to buy the stock of Page Industries for gains of up to 20%. The brokerage sees an upside on the stock to Rs 37,500 from the current market price of Rs 31,200.
|Current market price of Page Industries||Rs 31,200|
|Target price of Page Industries||Rs 37,500|
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. Page Industries is also the exclusive licensee of Speedo International Ltd for the manufacture, marketing and distribution of the Speedo brand in India. According to Emkay Global, the Q1 performance was slightly better, with revenue recovery at 60% (10% ahead of estimates) and EBITDA margins at 6.8%.
Sales grew 76% yoy to Rs 5 billion on low comparables, but declined 43% qoq due to the Covid-induced restrictions.
Margins to recover to 21% levels
According to Emkay Global EBITDA margins of 6.8% were better than expected, supported by cost control and higher gross margins (up 1,000 basis points; ex-subcon expenses) on better manufacturing overhead absorption. “The commentary was strong with Page Industries indicating 21%+ margins on full recovery ahead. Page Industries has also been able to contain the impact of strong increase in raw material prices with better cost control – has effected only 4% price hike (cumulative 7-8%) vs 20% cumulative hike by peers that operate in the economy segment,” the brokerage has said.
Expect a strong recovery ahead and buy the stock of Page industries
According to Emkay Global with manufacturing operations normalized and the store network fully operational, it expect a strong recovery ahead. “Page Industries strong product expansion plans and fast scale-up of distribution network provide better visibility of mid-teens growth sustaining ahead. Valuations at 52x FY23E Earnings Per Share are at a discount to other high-growth peers. Maintain Buy with a revised target price of Rs 37,500 based on 55x Sep’23E EPS,” the brokerage has said.
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