This Mid Cap Apparels Stock Can Jump 8%, Reported Revenue of Rs 11.1bn, Chola Wealth Direct Suggest Buy

Chola Wealth Direct, a leading brokerage firm, has recommended investors buy the stock of Page Industries Ltd for a target price of Rs 44,530. According to the brokerage, the company has given a strong performance despite a challenging environment. An overall strong demand pickup has led to a good performance.

Stock Overview

Today, Page Industries opened at Rs 41,250, currently trading at Rs 41,450, gaining 0.14% from the previous close of Rs 41,390.75. The brokerage has estimated a target price of Rs 44,530 for 12 months. The stock has the potential to jump 8%, according to the estimated Target Price & the Current Market Price. Data shows it has given the strong growth in last 1 year. almost 33% returns. However, in the last 1 month, it has fallen around 8% but maintained the fall. It has touched the 52 week low of Rs 29,119.95 on 30 June 2021. While the 52 week high of 46,737.70 on 26 April 2022.

CMP	Target Price	Potential Gains
Rs 41,450	Rs 44,530	8.00%

The company has increased the level of its inventories to counter the inflationary trends that are currently underway. The costs have been restructured by reducing travel and other discretionary expenses. The management had indicated that the investment in elastic manufacturing is a critical aspect for its business

Q4FY22 Earning Updates

Page Industries reported revenue of Rs 11.1bn (+26.2% YoY/-6.6% QoQ) led by volume growth, better product mix & price hikes. Absolute EBITDA stood at Rs 2.7bn (+57.3% YoY/+10.2% QoQ) while margin came at 24% (+470bps YoY/+360bps QoQ). The net profit of the company was at Rs 1.9 bn in Q4FY22 (+64.9% YoY/+14.7% QoQ). The healthy operational performance led the company to register an all-time high PAT in FY22 amidst a challenging business scenario. The demand momentum is improving for all the product categories indicating better topline growth trajectory in near term. In FY22, Page Industries continued to enhance its distribution touch points, where it added 5,500 taking the total count to 110,548 touch points. The company had managed to clock in 24% EBITDA margin despite RM Inflationary pressure. Volumes grew 8.7% YoY to 50 million pieces while average realizations improved 16% YoY to Rs 221/ piece.

Management's outlook

The company has witnessed strong demand pickup across all the product categories. The company has added 200 exclusive brand outlets during the financial year and the firm continues to strengthen its distribution channels. The company aspires 1 billion dollars in topline with a 5-year horizon. The management is focusing on digital and business transformation to strengthen efficiencies, automation, and speed to market. The management is very confident about its medium & long-term prospects with its wide product portfolio, and strong business model. The firm is positive on the Jockey Juniors range, with India having a distinct advantage of growing kids' population. Speedo brand faces headwinds as the government has allowed swimming pools to function due to the pandemic.

International presence

The company has been scaling up its presence internationally in the Gulf region and has increased its EBOs from 4-8 in the past year. Franchise model store expansion has been opted by the management. Only 1% of the total revenue has been contributed through its overseas business, but the management believes that there is a huge growth potential through its business abroad.

 

Views & Recommendation: Suggests 'buy' for a Target Price of Rs 44,530

The company is aiming to scale its capacities on both manufacturings as well as sales to capture the next leg of growth. Attractive industry drivers like higher disposable income, increase in urban population, and higher aspiration for branded apparel will turn favourable for Page over the longer run. Strong distribution reach, loyal customer base, growing brand name, diverse product portfolio, and strong business model differentiates Page from its peers.

"At Current Market Price (CMP), the stock is trading at 67.0x and 57.8x, FY23E and FY24E earnings respectively. We retain our rating on the stock to a Market Performer assigning a target price of Rs 44,530, the earlier target price was Rs 39,231," the brokerage has said.

About The Company - Page Industries Ltd.

Page Industries is the exclusive licensee of Jockey International Inc (USA) to manufacture and distribute the Jockey brand in India, Sri Lanka, Nepal, Bangladesh and UAE till 2040. They broadly operate in premium men's innerwear; women's innerwear and leisure wear segments. Jockey enjoys high brand recall and they spend ~5% of their annual sales on brand building and promotional activity, which enables them to dominate most of the segments in which they operate. They are also the exclusive licensee of the Speedo swimwear brand in India. The page has a network in ~250 cities and ~760 exclusive brand outlets in India. They compete with major brands like Crusoe, Hanes, Lovable and Enamor.

Disclaimer

The stock has been picked from the brokerage report of Chola Wealth Direct, Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.