Buy Page Industries; target of Rs 45,938: Anand Rathi

Anand Rathi's research report on Page Industries

Page’s Q3 FY23 revenue/EBITDA were 4%/21% below our estimates. It attributed the low revenue growth to poor consumer sentiment and ARS implementation, which hurt its primary sales. The EBITDA margin was hit by lower absorption of factory overheads, normalised media spends and high-cost stocks. Ahead, demand per management is still affected. Margins should improve now as its high-cost stocks are almost exhausted. In the past it maintained margins of 20-21% and will now control costs to ensure this continues. To bake in the slower demand, we reduce our FY23e-FY25e sales 2-3%.

Outlook

Our FY23e/FY24e/FY25e EPS are ~15%/14%/12% lower as we expect a slightly lower EBITDA margin. Key monitorables are growth and margins. Core-innerwear growth pace being maintained is a key positive. On the steep stock-price drop, we upgrade our rating to a Buy, with a TP of Rs45,938 (55x FY25e EPS of Rs835).