Buy Page Industries; target of Rs 2960: Firstcall Research

“Page Industries was set up in 1994 with the key objective of bringing the world renowned brand 'Jockey' to India. Its promoters, Genomal family, had then been associated with Jockey International Inc. for 44 years as their sole licensee in the Philippines. It became a public company in March 2007 and is quoted in the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India. The company is located in Bangalore, India are the exclusive licensees of Jockey International Inc. (USA) for manufacture and distribution of the Jockey brand innerwear/ leisurewear for men and women in India, Sri Lanka, Bangladesh, and Nepal and UAE. In the early 1990s, when globalization was just unfolding in India, innerwear was a low involvement category for consumers. There was no organized international innerwear brand retailed in India. Page Industries Ltd identified this need and introduced a wide range of quality products for men and women employing modern global marketing and distribution methods.”

“The company commenced operations in the year 1995 with the manufacturing, distribution and marketing of Jockey products. As of the end 2011, the company employs over 13,000 people with manufacturing operations spread over eight plants in Bangalore totaling 7,35,000 square feet of space. It commands wide spread pan India distribution encompassing over 18,000 retail outlets in 1,100 cities and towns and has revolutionized the innerwear market by launching exclusive Jockey outlets across India numbering 65 as of March 2011. In August 2008, Page Industries' promoter’s Genomal family and Jockey International USA celebrated their golden anniversary of association and both groups renewed their commitment to an even more exciting next 50 years. In 2005 and 2009, the company was awarded the 'best licensee of the year' by Jockey International Inc., as recognition for its outstanding achievement in establishing and strengthening the Jockey brand as a market leader in India. Page Industries has entered into the new licensing agreement with Jockey International Inc. up to December 31, 2030. In 2010, the Company bagged the “International Licensee of the Decade” award for achieving record growth year after year, offering world class products and maintaining global quality standards across all operations.”

“Page Industries Ltd disclosed a phenomenon rise in standalone net profit for the quarter ended Dec 2011. During the quarter, the profit of the company surged 27.47% to Rs 199.14 million from Rs 156.22 million in the same quarter previous year. Net sales for the quarter for the quarter rose 28.38% to Rs 1721.090 million from Rs 1340.63 million, when compared with the prior year period. It reported earnings of Rs 17.85 a share during the quarter, registering 27.47% increase over previous year period.”

“At the current market price of Rs 2620, the stock is trading at 31.61 x FY12E and 26.43 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.82.90 and Rs.99.11 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 34% and 41% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 18.61 x for FY12E and 15.73 x for FY13E. Price to Book Value of the stock is expected to be at 13.51 x and 8.94 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 2960 for medium to long term investment,” says Firstcall Research report.  

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