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Emkay Global
Page Industries (Buy)
Target: ₹37,500
CMP: ₹32,078
Page Industries has made a good comeback after the pandemic and now offers better growth momentum after the slowdown in FY19-20.
We expect normalised mid-teens growth ahead, driven by structural opportunity and faster growth in athleisure (about 33 per cent of sales); increased focus on the under-penetrated women’s and kids segments with a separate team and scale-up in offerings; accelerated network expansion (40 per cent addition in the last two years), the benefits of which are yet to kick in.
In addition, a comparison of 10 innerwear players highlights a lack of meaningful success by competitors in the premium segment, as well as Page’s unmatched brand and distribution strengths. We are optimistic about PAGE delivering higher growth and forecast a 34 per cent EPS CAGR with a margin gain of 410 bps over FY21-24 (+110bps vs. FY19). Reiterate Buy with a September 2022 target price of ₹37,500, valuing the company at 55x September 2023 EPS – in line with other large high-growth peers – which is justified by its wide moats and best-in-class ROCEs. Delay in recovery and slower market share gains remain key risks to our forecasts.
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