Page Industries - Q1FY21 Result Update - ICICI Securities

Disruptions owing to the pandemic weighed significantly on the Q1FY21 performance as two-third of the quarter was a washout. Store closures, supply side challenges translated to volume de-growth of 69% YoY to ~15 million pieces in Q1FY21. Material presence in metro cities (~60%) further hampered operations due to stringent measures by local authorities. The management indicated that green shoots were visible with strong demand for outerwear segment (athleisure) post relaxation in lockdown. Subsequently, ASP grew 12% YoY in Q1FY21. Also, channel inventory has been on a declining trend indicating strong pent up demand (secondary sales higher by 18-20% than reported Q1FY21 number). Overall revenues for quarter de-grew 65.9% YoY to Rs. 284.8 crore. Reported gross margins fell 696 bps YoY to 48.1% on the back of inventory provisioning of Rs. 10.7 crore. Gross margins (including sub-contacting charges) were at 23% vs. 39% YoY owing to lower absorption of labour charges. Page significantly rationalised overheads with other expenses down 66.3% YoY to Rs. 48.8 crore (mainly cut in marketing spends). Employee expenses de-grew 4.3% YoY to Rs. 122.9 crore. Subsequently, it reported EBITDA, PAT loss of Rs. 34.7 crore, Rs. 39.6 crore, respectively (tax credit: Rs. 12.8 crore). Page continues to have a healthy b/s that would enable it to tide over challenging scenario better than peers.

Valuation & Outlook

Despite operational losses in Q1FY21, liquidity position stayed healthy with cash & cash equivalents increasing 56% QoQ to Rs. 173 crore led by optimisation of working capital (working capital reduced 10% YoY). Factoring in the performance of Q1FY21, we revise our earnings, revenue estimates downwards by 12%, 23%, respectively, in FY21E. Inherent strength of the brand, robust balance sheet and strong distribution network would enable Page to navigate through challenging times more swiftly than peers. We bake in earnings CAGR of 14% in FY20-22E and expect the company to generate RoCE of 54% in FY22E. We maintain HOLD rating on the stock with a revised target price of Rs. 20950 (52.0x FY22E EPS, previous TP: Rs. 21400).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PageInds_Q1FY21.pdf

Shares of PAGE INDUSTRIES LTD. was last trading in BSE at Rs.18511.15 as compared to the previous close of Rs. 19145.35. The total number of shares traded during the day was 3253 in over 1634 trades.

The stock hit an intraday high of Rs. 19264.8 and intraday low of 18400. The net turnover during the day was Rs. 60778715.

Source : Equity Bulls

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