Reduce Page Industries: Dolat Capital
Dolat Capital has come out with its research report of Page Industries and has recommended reduce rating on the stock in its August 12, 2013 report.
August 19, 2013 / 13:17 IST
Dolat Capital report on Page Industries:
Q1FY14 result below estimate; Volume growth of 17.1% Net Sales at Rs 3bn up 39.4% YoY (Dolat est. Rs 2.87bn). EBITDA at Rs 637mn (est of Rs 640mn) was up 36.3% YoY as EBITDA margins declined by 48bps YoY to 20.9% (est. of 22.3%). Gross margin declined by 16bps YoY to 49.8%. PBT at Rs 655mn was up 33% YoY (est of Rs 654mn). Net profit grew by 32% YoY to Rs 431mn (Dolat est of Rs 439mn).Volume growth for the quarter stood at 17.1%. Volume growth in Men segment was at 12.5%, Women segment grew by 19.4% while Leisure wear growth stood at 34.6%. Management has guided for a 15% overall volume growth for FY14 and indicated that it is not witnessing any significant slowdown.Realisation improved by 18.9% YoY to Rs 108.6/pc. Men realization grew by 17.5% YoY and 4.7% QoQ led by mix improvement (new launches in the premium segment). Women segment realization increased by just 5% YoY and down 8.6% QoQ due to sale of low value products.For Q1FY14, the other expenses grew by 59% to Rs 464mn. The increase was mainly due to higher as spend at Rs 150mn v/s Rs 70mn in Q1FY13. However, the same is likely to get even out in the coming quarters.We believe Page Industries strong distribution reach and Jockey brand provides company a strong platform to introduce new products. Its strong franchise ensures a sustained growth of 20-25% over the next 4-5 years. We estimate a 28% CAGR in revenue and PAT for the company during FY13-15E. At CMP, the stock trades at 32x FY14E EPS of Rs 132.7 and 25.5x FY15E EPS of Rs 167.8. While we continue to like the company from the long term perspective, given the sharp run up in stock price we recommendation Reduce.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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