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Enhanced distribution reach to aid revenue growth….

About the stock: Page Industries is the exclusive licensee of Jockey international brand and is the market leader in premium innerwear and leisurewear category. The brand is distributed in 2,895+ cities & towns and available in 100000+ MBOs and 1000+ EBOs. Page sold ~ 148 million pieces in FY21.

* Strong backward integration facilities having capacity of 250 million pieces

* Robust business model generating 55%+ RoCE, delivering consistent EBITDA margins of 20%+ and having debt free b/s

Q2FY22 Results: Page reported a robust operational performance in Q2FY22 with revenues coming in at an all-time high and crossing the | 1000 crore mark.

* Revenue for the quarter grew 46% YoY to | 1084.0 crore (two-year CAGR: 18%). Volume grew 43.6% YoY to 56.6 million pieces

* Despite RM inflationary pressure, the company has been able to maintain healthy EBITDA margins of 21.5% (Q2FY21: 22.3%)

* Tracking healthy operational performance, PAT grew 45% YoY to | 160.5 crore. Liquidity positon remains robust with cash worth | 536 crore

What should investors do? Page’s share price has grown by ~3x over the past five years (from ~| 13200 in November 2016 to ~| 40000 levels in November 2021).

* We maintain HOLD recommendation on the stock

Target Price and Valuation: We value Page at | 43850 i.e. 63x FY23E EPS

Key triggers for future price performance:

* New initiatives (focus on kids wear segment, implementation of auto replenishment system, new launches in athleisure/women wear, thrust on increasing penetration in rural areas) to propel sales and earnings growth

* Significantly accelerated its distribution touchpoints (13950 in Q2FY22) to 100000+ MBOs and 1000+ EBO stores

* To further penetrate the untapped markets of tier III/IV cities, it has launched a bouquet of products catering to these markets

* Expects to sustain healthy revenue trajectory. The company is aiming to reach sales of US$1 billion by FY26 (CAGR: 21%)

* We build revenue, earnings CAGR of 21%, 31%, respectively, in FY21-24E

Alternate Stock Idea: Apart from Page, in our retail coverage we also like Aditya Birla Fashion & Retail (ABFRL)

* ABFRL has charted out growth strategies to become a ~US$2.8 billion entity (| 21000 crore) by FY26E, translating to 15% CAGR in FY20-26E

* BUY with a target price of | 350/share

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