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Chola Securities
Page Industries
Target: ₹20,763
CMP: ₹18,442.70
In Q1-FY21 revenue declined by 65.9 per cent y-o-y to ₹280 crore on account of sharp decline in volumes of nearly 69 per cent, due to store closures and supply side challenges arising due to the nationwide lockdown. Page derives 60 per cent of topline from metro cities which witnessed higher impact of Covid relative to other parts of the country. The company expects the sales to return to pre-Covid levels by Q3-FY21.
Gross margins declined by 696 bps y-o-y to 48.1 per cent owing to under absorption of fixed costs and factory overheads due to lower production in the quarter. Fixed overheads were higher owing to the full wage payments. With increase in sales gross margin is expected to recover in the coming quarters. The management plans to get EBITDA margins back to 20 per cent range once the revenue recovers and implemented cost optimisation measures play out.
The increase demand for Athleisure coupled with existing cost rationalisation efforts are expected to support margin recovery. The management remains optimistic on bringing business and margins to normal levels in Q3-FY21. The company remains well positioned to benefit from anticipated recovery on the back of its strong balance sheet, brand and robust store network.
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