Page Industries’ results were below our estimates. The company reported 69% volume de-growth, primarily due to closure of stores during April and May’20. In addition to contraction in GM, employee expenses remained firm resulted in EBITDA loss during the quarter. GM contraction for the third consecutive quarter was the most discouraging. With the opening up of markets, the company was able to re-open 96% EBO’s and 90% LFS. Though secondary demand during the quarter was positive (+18%), supply issues resulted in de-growth in primary sales. Nevertheless, the company was able to match last year sales in August. Going ahead, re-opening of most markets would help address supply constraints. In addition, as the company has high contribution of own manufacturing, it is better placed compared to local manufacturers to address supply constraints, especially in the kids segment.
OutlookWe have downward revised our EPS estimates for FY21E and FY22E at Rs 113 (-54%) and Rs 371 (-3%) respectively to factor in extended lock down and decline in margins. We remain cautious until we notice real evidences of growth. Maintain Reduce with TP of Rs 20,380 (55x FY22E EPS).
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