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Last Updated : Apr 24, 2018 12:22 PM IST | Source:

Bullish on Page Industries: Akash Jain

"We are structurally bullish on Page Industries as it is a secular story. It is one of the great companies available at listed space," says Akash Jain, Vice-president, Equity Research at Ajcon Global Services.

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Akash Jain

We are structurally bullish on Page Industries as it is a secular story. It is one of the great companies available at listed space. No doubt, the valuations will always look expensive when one goes to buy it but history has proved that it always provides excellent returns over a long term. There is no price target which can be assigned for such companies. The ownership for such kind of companies has to be forever which will act as a wealth creator.

It is an exclusive licensee for Jockey products in India, Sri Lanka, Republic of Maldives, Bangladesh and Nepal. The Company pays royalty on net invoiced sales to Jockey International Inc. USA annually towards licensing fee for the use of “Jockey” brand.


The company’s men’s innerwear products account for only 18.5 percent of the potential market, while its women's innerwear products command an even lesser share of 6-7 percent . The company plans to ramp-up its production capacity at a CAGR of 17 percent over the next three years. A strong focus on Exclusive Brand Outlets (EBOs) and Jockey Comfort Zones are the key drivers of incremental sales growth.

After robust volume performance in the December quarter, the company’s confidence about growth could be gauged from both its expansion of distribution presence and its capacity. In addition to expanding the distributor network, the company is looking doubling its exclusive brand outlets over the next year, to reach the 1,000-mark by the end of FY19.

The company is adding 80 outlets in February/March 2018 and likely another 500 in FY19, taking the total EBO count to ~1,000 by end-FY19. These outlets are expected to contribute 40 percent of revenues by FY20, as compared to 15 percent in FY17. They allow cross-selling and, thus, much higher sales as compared to multibrand outlets.

What will add to the sales potential at these is expansion of its range into other categories, such as children's inner wear. After launching boys' wear products last year, the company is expected to launch girls' wear this month.

While children's wear is in initial stages, growth is expected to be led by the larger categories of men’s inner wear and leisure wear, which contribute 46 percent and 36 percent to revenues. While overall volume growth in the December quarter was 11 per cent over the year-before period, it was led by recovery in volume growth for the men’s segment.

Volumes here had recorded four per cent growth in the September quarter before recovering to 12 percent in the December one, led by trade incentives. Growth should look up as the transition to the goods and services tax regime, which has been hampering sales, nears completion.

The trend of high growth for the leisure segment, including swim wear brand Speedo, is expected to continue. The leisure segment recorded 20 percent growth in the December quarter, with swim wear volume growth up 169 percent, while realisations were up 16 percent.

The management indicated the company would be able to maintain 10-12 percent volume growth on an annual basis. We are confident that this double-digit growth trend will continue for the next two to three years.

The company’s strength lies in premium product mix suited for the new generation, Strong brand equity of ‘Jockey’, robust distribution network, increasing market share in premium innerwear segment, strong double-digit volumes growth, one of the best working capital cycle in the industry, robust return ratios with improving incremental ROEs.

However, there are concerns like higher raw material prices, which will limit its operating margin band to 21-22 percent over the next couple of quarters. Two, more competition from international and domestic brands. Despite higher raw material costs, the operating profit margins improved by 200 basis points to 20.8 percent in the December quarter, due to lower employee costs and other expenses.

Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.
First Published on Apr 24, 2018 12:22 pm