Page Industries Ltd’s stock has been experiencing a significant downturn over the past six weeks, plummeting nearly 15% from its 52-week high. Despite this downward trend, brokerage firms closely monitoring the stock are largely optimistic about its future, believing that it is poised to reach new heights, potentially hitting the Rs 50,000 mark that has eluded it in previous bullish periods.
Operational Performance and Market Outlook
Analysts have noted that Page Industries demonstrated strong operational performance in the December 2024 quarter, although consumer demand remains somewhat subdued. Nevertheless, the company has seen impressive growth in modern retail and e-commerce sectors, indicating a potential rebound in demand following government initiatives to stimulate consumption.
In the third quarter of FY25, Page Industries fell short of its revenue target. However, Ebitda margins improved by 435 basis points to 23%, driven by cost efficiencies, strategic sourcing, inventory management, and gross margin gains. Despite challenges like weak demand and heightened competition, the company’s strategic focus on expanding distribution channels and implementing advanced retail systems has garnered praise from industry experts.
Financial Performance and Growth Prospects
Page Industries reported a 34.3% year-on-year increase in net profit, reaching Rs 204.7 crore, with revenue rising by 7.1% YoY to Rs 1,313 crore in the December 2024 quarter. The company, known for its iconic Jockey brand in India, achieved an Ebitda of Rs 302 crore, marking a 33.6% YoY growth. Ebitda margins expanded to 23% YoY, driven by improved gross margins and cost optimization strategies.
Despite facing growing competition, Page Industries has sustained robust sales post-pandemic, achieving a revenue compound annual growth rate (CAGR) of 9.9% from FY19 to FY24. Analysts at Elara Capital project a revenue CAGR of 11.6% and a profit after tax (PAT) CAGR of 17.7% for FY24-27, anticipating continued growth driven by raw material advantages and a focus on premium offerings.
Market Sentiments and Expert Recommendations
Elara Capital anticipates that favorable gross margins resulting from subdued cotton prices will persist in the next few quarters. Adjusting for sales growth and other factors, Elara has raised its earnings estimates for FY25 by 2.9%, maintaining its projections for FY26 and FY27. The firm maintains an ‘accumulate’ rating on Page Industries, setting a target price of Rs 52,268 per share.
Despite recent declines, shares of Page Industries remain attractive to investors, trading at Rs 43,045. Analysts from SMIFS have noted that while revenue for Q3FY25 met expectations, operating and net profits exceeded estimates. The company’s focus on operational efficiency, cost control, premium products, and stable raw material costs has contributed to its strong performance.
Looking Ahead and Dividend Declaration
As Page Industries plans for FY26, the company is considering revising its pricing strategy after a three-year period of stable prices. The company’s board has approved a third interim dividend for FY25 at Rs 150 per share, with a record date set for February 13 and payment scheduled for March 7.
International brokerage firms also hold varying views on Page Industries, with Morgan Stanley maintaining an ‘overweight’ stance and a target price of Rs 44,500, while Macquarie remains ‘underperform,’ assigning a target price of Rs 36,000.
In conclusion, despite recent market fluctuations, Page Industries continues to exhibit resilience and growth potential. As the company navigates evolving market conditions and consumer demands, its strategic initiatives and operational strengths position it for long-term success in the competitive landscape.
