Reduce Page Industries; target of Rs 40,000: Emkay Global Financial

Emkay Global Financial's research report on Page Industries

PAG’s Q3 EBITDA was 7-19% ahead of street/our estimates, largely led by 250- 370bps better margin, as topline was 1-5% lower. Revenue growth moderated to 7% (vs 11% in Q2) due to muted demand environment. Demand commentary remained subdued, albeit growth trends may improve slightly as growth impact due to the ARS implementation is largely over. PAG attributed stronger margin to better Gross Margin (RM/sewing efficiencies) and cost savings, but expects EBITDA margin to remain in the 19-21% band, with higher IT/marketing spends hereon. Encouragingly, channel inventory is down by 5 days in 9M. Among channels, E-com/EBOs have led most of the growth, while physical channels have seen muted trends.

Outlook

We remain conservative due to uncertain trends/high valuation (65x 1YF), and maintain REDUCE with revised TP of Rs40,000 (-4%; 50x Dec-26E EPS). WC optimization (10 days) is encouraging but we would like to see sustained trends before building in a multiple re-rating.

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