Buy Page Industries; target of Rs 54000: Motilal Oswal

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Motilal Oswal's research report on Page Industries

Page Industries (PAGE) reported sales growth of 11% in 2QFY25 (est. 7%; 4% in 1Q), with healthy 7% YoY volume growth (est. 3.5%; 3% in 1Q) to 55m. Demand improved sequentially, but a full recovery would be visible in 2HFY25. Demand uptick during the festive season has helped to further liquidate trade inventory by 3 days. The implementation of ARS system has been driving inventory efficiency for distributors, resulting in better secondary order fulfilment. Primary growth was lagging behind secondary growth (~4% difference) due to high trade inventory; we believe it will converge in 2HFY25. Thereby, healthy volume growth is expected to sustain.
Ecommerce channel continues to outpace overall brand growth, mainly led by quick commerce. 1HFY25 ecommerce growth was 41%. We expect demand improvement to continue in 2HFY25.

Outlook

With PAGE’s strong execution history and a large market opportunity, we expect an uptick in the earnings cycle and the valuation will also see quick re-rating. We upgrade our rating from Neutral to BUY with a revised TP of INR54,000, premised on 60x Mar’27E EPS.

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