Broker's call: Page Industries (Marketperformer)

| Updated on June 21, 2019 Published on June 22, 2019

Chola Securities

Page Industries (Marketperformer)

CMP: ₹20,879.45

Target: ₹22,141

Key highlights: a) In 4QFY19, revenue fell by 0.1 per cent y-o-y to ₹610 crore, one of its slowest ever sales growth. Total volume grew 1 per cent y-o-y at 36.9 million piece, while blended realisation decreased 1 per cent y-o-y to ₹161/piece. Subdued consumer demand, de-stocking by retailers post GST and increasing competition impaired the company’s performance this quarter.

b) Gross margin expanded by 100 bps y-o-y to 63.6 per cent, while EBITDA margins declined 440 bps y-o-y to 19.7 per cent significantly due to negative operating leverage and higher sales incentives. EBITDA at ₹120 crore was down 20.5 per cent y-o-y. Other operating expenses inched up 110 bps y-o-y to 23.4 per cent and employee cost rose 430 bps y-o-y to 15.8 per cent. Other income increased by 20.1 per cent y-o-y to ₹8.71 crore.

c) PAT de-grew 20.4 per cent y-o-y to ₹750. PAT margin contacted 315 bps y-o-y to 12.3 per cent.

Valuation: We value the company at 41XFY21E to arrive at a target price of ₹22,141 and give it a Marketperformer rating.

Risks: a) Continued slowdown in consumer discretionary spends, losing market share due to heightened competition from both organised and unorganised segment; b) Adverse raw materials price movement.

Published on June 22, 2019
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