Buy Page Industries; target of Rs 57,500: Motilal Oswal

Motilal Oswal is bullish on Page Industries recommended buy rating on the stock with a target price of Rs 57,500 in its research report dated February 05, 2025.

Broker Research

February 10, 2025 / 13:00 IST

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Motilal Oswal's research report on Page Industries

Page Industries (PAGE) reported 7% YoY sales growth in 3QFY25 (est. 10%; 11% in 2QFY25), with 5% volume growth (est. 6%; 7% in 2QFY25) to 58m units. The festive demand in October provided an uplift, but November and December remained subdued due to overall growth weakness. Product realization was maintained at INR227/piece (similar in 2Q) and up by 2% YoY. The premium innerwear category saw strong consumer acceptance, driven by enhanced quality and product innovation. Trade inventory was reduced by 5 days to 38 days at the distributor level. Primary sales marginally lagged secondary sales in 3QFY25 but are expected to align from 4QFY25 onwards. GM expanded 340bp YoY to 56.3% (beat), supported by stable input costs. Improved operational efficiency drove a 460bp YoY expansion in EBITDA margin to 23% (11-quarter high). The company did not take any price hikes in 3Q, and none are expected in 4Q. It expects to increase IT costs for digitalization and marketing expenses. As such, management has maintained its EBITDA margin guidance of 19%-21% for FY25 despite achieving 21.6% in 9MFY25. We model an EBITDA margin of 20.5%-21% for FY25-FY27.

Outlook

We believe the valuation will remain rich but have comfort in both growth acceleration and margin expansion in FY26. We reiterate our BUY rating on the stock with a TP of INR57,500, premised on 65x Dec’26E EPS.

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