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At a time when corporate India’s sales and earnings growth is anaemic, Page Industries’ 34 per cent net profit growth for the March 2015 quarter adds to its appeal.
The stock surged 7.7 per cent in today’s trade, adding to the 4 per cent rise yesterday. The company had announced the results towards the close of market hours on Thursday.
Page Industries holds the exclusive licence for Jockey (innerwear and casual wear) and Speedo (swimwear). Both brands have a strong recall and are renowned in international and domestic markets; the brands score on quality. Second, innerwear is a more essential purchase for consumers compared to other apparel such as shirts or trousers.
The third factor supporting strong growth is Page’s enormous distribution network. Jockey is retailed through over 176 exclusive brand outlets and more than 30,000 retail stores in 1,200 towns or cities. Speedo, which was brought into the company’s portfolio in the 2012 fiscal, is sold through 950 outlets and eight exclusive brand outlets.
Strong and steady
Sales for Page Industries grew 33 per cent for the March 2015 quarter over the year ago. The company has maintained a sales growth above 25 per cent for the past four quarters, a stark contrast to the shrinking sales growth India Inc has been posting. Page’s net profit growth is similarly on a strong footing, expanding more than 20 per cent over the past four quarters.
With benign prices of primary raw material cotton, the material-to-sales ratio has remained steady at around 39 per cent for the recent March quarter compared to the year-ago period. But a hike in other expenses pulled the operating profit margins down slightly to 20 per cent against 21.7 per cent in the March 2014 quarter.
Higher other expenses had also weighed on margins in the September 2014 quarter. Even so, margins are higher than peers such as Lovable Lingerie and other retail companies as well.
Today’s price surge saw the Page Industries' stock hit Rs 16,500, its all-time high, though it did correct slightly later. The stock’s trailing 12-month price-earnings multiple at 93 times is far above its peers as well as its own three-year average of 51 times.
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