Dolat Capital is bullish on Page Industries has recommended buy rating on the stock with a target price of Rs 24,866 in its research report dated May 27, 2019.
Dolat Capital's research report on Page Industries
Page Industries reported lackluster performance in Q4FY19. The revenue was significantly below our estimate (17% gr est) –the worst performance in the decade. Page’s revenue growth was flat and profitability fell 20%. Going ahead, we believe that the slowdown in the economy will pressurize the company’s performance in the short term. However, new product launches and efforts to increase penetration will help the company to grow revenue in double digits in the long term. We have revised our estimates from ` 498 and ` 601 in FY20E and FY21E to ` 457 and ` 553, respectively. The stock price has corrected significantly, we therefore maintain Buy with a TP of ` 24,866 (45x FY21E). The recent price hikes, coupled with the expected improvement in the economy, are likely to encourage revenue growth. Although the company’s strong brand positioning, ongoing innovations, increasing number of stores, and wide distribution reach are likely to help it withstand intense competition.
However, we believe that the company’s monopoly has come to an end in the category. Consequently, its historical P/E multiple will probably not sustain. Hence, we have revised our TP to ` 24,866 (45x FY21E) (10% discount to HUL versus 20% premium previously).
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