Hold Page Industries Ltd For Target Rs.45,400 - ICICI Direct
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Strong demand to spur 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 105000+ MBOs and 1000+ EBOs. It 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
Q3FY22 Results: Reported healthy operational performance in Q3FY22 with revenue and PAT coming in at an all-time high.
Revenue for the quarter grew 28% YoY to | 1189.8 crore (two-year CAGR: 22%). Volume grew 24.6% YoY to 59.3 million pieces
Despite raw material inflationary pressure, the company has been able to maintain healthy EBITDA margins of 21.1% (Q3FY21: 24%)
Tracking a steady operational performance, PAT grew 14% YoY to | 174.6 crore. Liquidity positon remains robust with cash worth | 556 crore
What should investors do? Page’s share price has grown by ~3x over the past five years (from ~| 14300 in February 2017 to ~| 41000 levels in February 2022).
We maintain HOLD recommendation on the stock
Target Price and Valuation: We value Page at | 45400 i.e. 65x FY24E 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 (27200 in 9MFY22) to 105000+ MBOs and 1030+ 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 and company targets to its sales to reach US$1 billion by FY26 (CAGR: 21%)
We build revenue, earnings CAGR of 22%, 32%, 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 target price of | 360/share
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