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Last Updated : Feb 14, 2020 12:01 PM IST | Source: Moneycontrol.com

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.

Equities | Nifty50 as on 31 December 2018: 10,863 | Nifty50 as on 13 December 2019: 12,087 | Return: 11.27 percent | NAV (if you had invested Rs10,000 at the beginning of the CY2019): Rs 11,127
Equities | Nifty50 as on 31 December 2018: 10,863 | Nifty50 as on 13 December 2019: 12,087 | Return: 11.27 percent | NAV (if you had invested Rs10,000 at the beginning of the CY2019): Rs 11,127
 
 
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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.

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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.

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.

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First Published on Feb 14, 2020 11:53 am
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