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Page Industries shares plunge 8% after Q3 numbers; expensive valuations a concern, say brokerages

Management commentary also failed to assuage concerns about the lack of earnings recovery in the near-term.

February 14, 2020 / 12:01 PM IST
 
 
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Shares of Page Industries fell 8 percent in morning trade on BSE on February 14, a day after the company reported its December quarter earnings.

The company said its net profit for nine months ended 31 December declined by 2 percent year-on-year (YoY) while Q3 net profit dropped by 14.6 percent to Rs 87 crore.

The company's reported operating margin was the lowest in 30 quarters and adjusted for the Ind-AS 116 impact, the margin was among the lowest ever.

Management commentary also failed to assuage concerns about the lack of earnings recovery in the near-term.

"PAG reported a disappointing set of numbers on both volumes and earnings, with EBITDA declining 16 percent YoY in Q3FY20," said brokerage firm Motilal Oswal Financial Services.

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The brokerages said it has a neutral call on the stock with a target price of Rs 22,250- which is a 5 percent downside from the current market price of Rs 23,528 - and said the stock's valuation is expensive.

"While the long-term growth potential is high and the past track record impressive, valuations of 55.7 times/47.6 times FY21/22E earnings per share (EPS) are expensive," said the brokerage.

Shares of Page Industries traded 5.47 percent down at Rs 22241.40 on BSE around 11:45 hours.

If the stock settles in the red today, it will be its third consecutive day of losses.

Brokerage firm Emkay Global Financial Services has a 'hold' call on the stock with a target price of Rs 21,500.

"Margin disappointment drives a steep 10 percent-14 percent cut in FY21-22E earnings. Valuations at 44 times FY22E not comfortable given downsides risks to our estimates - flat EBITDA for FY20E, followed by a 20 percent CAGR for FY21-22E. The key risk is increasing competition from new players," said Emkay Global.

Disclaimer: The views and investment tips expressed by investment experts 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.
Moneycontrol News
first published: Feb 14, 2020 11:53 am

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