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Muted performance; expect quick growth recovery

• In 1QFY26, Page Industries (PAGE) reported weaker revenue growth of 3% YoY, with volume growth of 2% (est. 9%; 8.5% in 4QFY25) to 58.6m units. Volume growth decelerated sharply after registering healthy ~10% growth in the previous three quarters. Retail consumption sentiment was weak along with the impact of a shift in festive consumption and a fall in retail footfalls in May’25 amid geopolitical tensions. However, PAGE saw MoM uptake and is hopeful for a volume recovery in the coming quarters, with expectations of double-digit sales growth in a normal business scenario.
• GM expanded 500bp YoY to 59.1% (beat), supported by stable input costs and improving efficiency. Thereby, EBITDA margin expanded by 330bp YoY to 22.4%. PAGE has not increased prices in 1Q. It expects ad spends to be ~4-5% in FY26. That said, management has maintained its EBITDA margin guidance of 19%-21% for FY26 despite achieving 21.5% in FY25. We model an EBITDA margin of 22-22.5% for FY26-28.
• PAGE has launched a new fashionable range of products under JKY Groove on jockey.in and select EBOs in the country, addressing a younger target audience. The initial response to the collection has been encouraging and the company expects to scale up gradually.
• Although PAGE saw a sharp deceleration in growth in 1QFY26, we believe that growth will bounce back quickly in an early festive season. PAGE has been expanding TAM through distribution, new products, etc. In the backdrop of improving demand drivers (multiple positive feedback for urban demand), we continue to believe that PAGE will be able to capitalize on its growth opportunities. Benign input costs and cost efficiencies are likely to offset higher marketing/digital spending, which will help PAGE sustain its margin going forward. We believe the valuation will remain rich, though we are confident of growth acceleration and margin expansion in FY26. We reiterate our BUY rating on the stock with a TP of INR54,000, premised on 60x Jun’27E EPS.

Miss on revenue; profitability in line

• Volume up ~2%: Sales grew 3% YoY to INR13.2b (est. INR14.3b) in 1QFY26. Sales volume rose 1.9% YoY (est. 9%, 8.5% in 4QFY25) to 58.6m pieces. Online business continued to deliver robust growth. Inventory remained healthy across distribution network. Product realization was up 1% YoY at INR225/piece, backed by premiumization and an increasing share of ecommerce. Currently, PAGE is focusing on product innovation, cost optimization and various marketing initiatives without any price hikes.
• Strong margin expansion: Gross margin expanded ~500bp YoY to 59.1% (est. 57%) and EBITDA margin expanded 330bp YoY to 22.4% (est. 20.5%). The margin expansion is primarily led by stable input costs, efficient sourcing and improved operating efficiency. Employee/other expenses rose 16%/1% YoY.
• The Odisha plant is now operational and will be scaled up gradually. This facility enhances PAGE’s capacity to meet rising demand and improve efficiency.
• In-line profitability: EBITDA grew 21% YoY to INR2.9b (est. INR2.9b). PBT rose 22% YoY to INR2.7b (est. INR2.7b). Adj. PAT was up 22% YoY at INR2b (est. INR2b).

Highlights from the management commentary

• Consumption patterns in 1Q were subdued, affecting tertiary sales growth. The company is confident of growth recovery for the coming quarters. PAGE expects double-digit sales growth in a normalized business environment. Currently, it is focusing on product innovation, cost optimization and marketing initiatives.
• In 1Q, management indicated that innerwear slightly underperformed other categories such as Athleisure; however, the difference is not significant. Management expects an uptick in volumes in the coming quarters.
• PAGE has launched a new fashionable range of products under JKY Groove on jockey.in and select EBOs in the country, addressing a younger target audience. The initial response to the collection has been encouraging.
• In 1Q, inventory days stood at 56 as of 1Q end vs. 64 at the beginning of 1Q. Net working capital was 48 days vs. 64 days at the beginning of the quarter.
• FY26 EBITDA margin guidance remains broadly unchanged at 19-21%.

Valuation and view

• We cut our EPS estimates by 2-4% for FY26 and FY27.
• While management has maintained its EBITDA margin guidance of 19-21% for FY26 despite achieving 21.5% in FY25, we model an EBITDA margin at the higher end of the guidance at ~22% for FY26-FY27. We estimate a CAGR of 13%/14%/14% in sales/EBITDA/PAT over FY26-28E.
• Inventory optimization through the ARS system, new product launches, capacity expansion, and digitalization initiatives will support growth, in our view. PAGE’s brand equity keeps evolving into a lifestyle brand from only an innerwear brand. It will fit the brand across product lines. Benign input costs and cost efficiencies are likely to lead to a better margin print. We believe the valuation will remain rich, though we are confident of growth acceleration and margin expansion in the near term. We reiterate our BUY rating on the stock with a TP of INR54,000, premised on 60x Jun’FY27E EPS.

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