Neutral Page Industries; target of Rs 46,420: Motilal Oswal

Motilal Oswal's research report on Page Industries

PAG’s 1QFY23 result surprised on the revenue front, leading to a beat on overall estimates, despite a higher than expected pressure on gross margin. The management expects yarn costs to come off by Oct- Nov’22. Three year revenue CAGR (compared to pre-COVID levels) remains healthy ~17%. We expect the healthy momentum to continue. The management expects operating margin to be in line with its long-term average of 20-22%.  While the outlook remains robust, we maintain our Neutral rating on account of its rich valuation.

Outlook

PAG’s higher multiples will sustain, driven by healthy revenue and earnings visibility. However, valuations at 60.4x FY24E EPS are rich, which leads us to maintain our Neutral rating.