Page Industries’ Q1 results are insufficient; doubts about the resumption of growth are increasing


Until about two years ago, the title of Page Industries Ltd was in high demand on the streets. The company’s shares have risen roughly 80 times over the ten-year period between August 2008 and August 2018. But since peaking two years ago, the stock has almost halved. While the company’s revenue and profits were hit in the June quarter due to the pandemic, investors are more concerned about the potential for long-term growth.

“There is no indication that the company, which has reported flat earnings per share over the past two years, has passed the milestone of revenue and earnings growth,” analysts at Motilal Oswal Financial Services said. Ltd in a note in the first quarter of Page. earnings. The company’s shares have fallen more than 6% since reporting weak results for the June quarter. The company reported a loss of EBITDA (earnings before interest, taxes, depreciation and amortization) of nearly Rs35 crore in the last quarter.

Page said in his earnings article that August sales had almost reached last year’s levels. But not everyone is holding their breath. Kotak Institutional Equities said in a September 4 report: “Page reported a disappointing result for 1QFY21 as revenue does not do justice to the ultra-optimistic qualitative commentary offered by management on the call. to the results of 4QFY20.

The proof of the pudding will be in its consumption. For now, investors fear that the company’s problems are beyond the scope of covid, given the slow pace of growth over the past two years. “Over the past two years, (Page )’s growth has been much more modest, with sales / Ebitda increasing by around 7% / – 1%. The arrival of competition in high-end interior clothing, the general slowdown in demand and liquidity problems in trade are key factors affecting performance, ”said analysts at Motilal Oswal.

In the first quarter, revenue fell sharply 66% year-on-year to around Rs285 crore, which is lower than Street’s estimate. Reflecting the full impact of the covid-19 lockdown, sales volumes fell 69%. Despite this, the Average Selling Price (ASP) improved thanks to the better performance in the athleisure segment. In line with the time of the pandemic, Page said he has seen substantial growth in e-commerce.

But better ASPs and higher e-commerce growth haven’t moved the needle significantly. The biggest disappointment was the nearly 700 basis point drop in gross profit margin to 48.1%.

Despite the bleak backdrop, Page’s shares are still enjoying expensive valuations of around 46 times the estimated earnings for FY2022.

Looking ahead, uncertainty about the pace of the recovery remains high. “While Page appears to be relatively better positioned due to work-from-home demand for its track and field products, given the significant deceleration in growth in fiscal year 19-20, we expect more clarity on recovery trends, ”said Emkay Global Financial Services Ltd. analysts in a September 3 report.

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