Buy Page Industries; target of Rs 36,500: Emkay Global Financial
Emkay Global Financial is bullish on Page Industries has recommended buy rating on the stock with a target price of Rs 36,500 in its research report dated May 28, 2021.
June 10, 2021 / 11:37 AM IST
An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.
Emkay Global Financial's report on Page Industries
We upgrade PAG to Buy from Hold as the strong Q4 beat and management's aggressive growth initiatives provide confidence of robust growth momentum ahead. Step-up in growth plans for athleisure/women/kids portfolios, faster network ramp-up (incl. MBO/EBO addition) and focus on rural penetration offer an improved mid-teens growth outlook. Q4 performance exceeded expectations. Sales grew 63% to Rs8.8bn (8% beat), led by 53% volume growth. Growth in EBITDA/PAT was in line with estimates and was impacted by higher overhead spends, up 37%, which should normalize ahead. Excluding the lockdown impact in Q1FY22, management commentary pointed to a strong growth outlook. Secondary growth was higher vs. primary in Q4. Margins are expected to remain stable as the 4-5% price hike effected in Apr'21 is likely to offset the input inflation.
Factoring in the strong revenue run rate in Q3/Q4, we raise our FY23 estimates by 15%. FY22E EPS is unchanged due to the lockdown impact. We raise the TP to Rs36,500, valuing PAG at 55x Jun'23E EPS (vs. 50x earlier) supported by DCF working.
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