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Strong end to challenging year…

Page continued its upward trajectory with healthy topline growth in Q4FY21, driven by strong demand for athleisure wear. Revenue grew 63% YoY to | 927.1 crore (two year CAGR: 20.4%), with volumes increasing 54.2% to 46.2 million pieces (partially attributable to benign base). On account of higher RM prices, gross margins declined 122 bps YoY to 57.6%. Employee and other expenses increased 23% and 37% YoY, respectively. Subsequently, EBITDA margins came in at 19.3% (I-direct estimate: 20.5%, Q3FY21: 24.4%, Q4FY20: 10.7%). Absolute EBITDA increased 80% YoY to | 169.8 crore. Driven by a healthy operational performance, PAT came in at | 115.6 crore (Q4FY20: | 31.0 crore).

Athleisure segment outperforms in FY21

Given the inherent strength of the brand, Page displayed a resilient performance in FY21, notwithstanding challenges faced in H1FY21. Despite revenues declining ~66% in Q1FY21, the company exited the year with mere 3% revenue de-growth. While volumes de-grew ~12% YoY in FY21, change in product mix towards athleisure wear led blended realisations to increase ~9% YoY. On full year product wise growth trends, the management indicated that athleisure, kids and e-commerce have reported volume growth while men’s and women’s innerwear saw a decline. Going forward, Page remains confident of sustainability of demand from athleisure wear based on the stickiness of new trials. The Jockey junior segment would continue be the key focus area as the segment continues to see healthy traction. The segment posted ~80% revenue growth in FY21 with revenue contribution nearly doubling to ~4% in FY21 (as per our calculations). We believe the kids wear segment could scale up quickly through leveraging Jockey’s existing strong distribution network (38 exclusive junior outlets).

Building levers for sustainable growth

During FY21, Page accelerated its distribution touchpoints by ~14600 outlets to 78000+ retail network. Furthermore, it added nearly 180 exclusive branded outlets taking the total count to 930+ stores. The expansion of distribution reach has been well distributed between metros and non-tier I cities. The company aims to add around 8-10% outlets every year to expand its distribution reach. To further penetrate the untapped markets of tier III, IV cities, it has launched a bouquet of products catering to these markets (currently at pilot stage while acceptance has been encouraging).

Valuation & Outlook

We like the company’s new initiatives (focus on kids wear segment, implementation of auto replenishment system, new launches in athleisure wear and thrust on increasing penetration in rural areas) to propel sales and earnings growth. Factoring in the near term challenges, we prune our earnings estimates by ~15% for FY22E but broadly maintain our estimates for FY23E. Page continues to have a healthy balance sheet with robust liquidity position (| 435 crore) and strong RoCE of 52%+. We maintain HOLD rating on the stock with a revised target price of | 34800 (62x FY23E EPS, earlier TP: | 31500) and await a better entry point.

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